TaxTMI 
TaxTMI 
2024 (3) TMI 1101
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....011, as detailed in Annexure-A and Annexure-B to the show cause notice against M/s Essel Shyam Communications Ltd., C-34, Sector-62, Noida under section 73(1) of Finance Act, 1994. Since party has deposited Rs 25,00,000/- vide Cyber receipt dated 25.03.2010 under Business Support Service therefore I order for appropriation of the same against the said demand. 2. I order to recover the above said demand along with appropriate rate of interest as provided under section 75 of the Finance Act, 1994. 3. I also impose penalty of Rs. 4,18,50,286/- (Rupees Four crores eighteen lacs fifty thousand two hundred and eighty six only) upon M/s Essel Shyam Communications Ltd., C-34, Sector-62, Noida under section 77 & 78 of Finance Act, 1994." 2.1 The Appellant was registered with the Department under the category of Online Information and Data service, Maintenance or Repair Service, Erection, Commissioning and Installation service, Transport of Goods by Road Service, Telecommunication Service. 2.2 The Appellant is engaged in the business of providing satellite communication services as well as uplinking services under licences/ permissions from Government of India 2.3 ....
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....ession of facts with intention to evade payment of service tax under Section 77 and 78 of the Finance Act, 1994; and (c) Interest should not be charged from them under Section 75 of the said Act at the appropriate rate applicable during the relevant period 2.7 The show cause notice was adjudicated as per the impugned order referred in para 1 above. Aggrieved appellant has filed this appeal. 3.1 We have heard Shri Atul Gupta and Shri Prakhar Shukla, Advoactes for the appellant and Shri Sarweshwar T Khairnar, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsels submit that: • No Service Tax is payable on uplinking facility under the head "Business Support Service" and for that matter "infrastructural support" • the activity of uplinking would not fall within the ambit of Business Support Service" as provided under Section 65 (104)(c) of the Act in as much as only the services as included in the 'means' clause or in the nature of such activities provided under the 'includes' clause could be termed as being activities in support of business activities and the principle of noscitur a sociis ....
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.... equipment and the effective control was with the customer; • The Appellant did not have any control over the equipment and the effective control was with the customer; • The Customer shall ensure and undertake that the operation and handling of DGNS is done at all the time by its fully trained, qualified and experienced engineers following guidelines/ instruction and using complete care and caution. In case of any problem, the DSNG is not forcibly operated, the DSNG is used as per the direction for the purpose it is meant for the provide the optimum functionality and life from the DSNG • Thus, it is submitted that the transaction between the Appellant and the customers would qualify as a transfer of right to use goods with the control and possession over the diesel generator sets passing on to the customers • Reliance is placed on the following decisions o Rashtriya Ispat Nigam Limited [(1990) 77 STC 182 (AP)] B.24 • thus in cases where the right to use any good is transferred to the customers along with the right of possession and effective control then the same would not be covered within the ambit of taxa....
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....r facts of the case, the party entered into agreements with M/s V & S Broadcasting Ltd. and M/s UTV Entertainment television Ltd. for providing uplinking services. On scrutiny of records and on basis of investigation it was found that such services provided by the party are covered under the definition of business support service and the party has been alleged to have not paid service tax amounting to Rs. 1,45,16,699/- for the period May, 2006 to March 2011. Similarly it has further been alleged that they are providing DSNG Van antenna and some other satellite communication equipments to the customers on rental basis. They are paying VAT on the possession and control of equipments with the customer and paying service tax when possessive and control of the equipment is with the company. Such service was noticed as covered under the head "supply of tangible goods service" and the party was alleged to have not paid service tax amounting to Rs. 2,73,33,587/- during the period May, 2008 to March, 2011. The said non-payments of service tax has been proposed recoverable under extended provision to section 73(1) of the Finance Act, 1994 as party did not disclose the fact ....
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....ent services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management of services, accounting and processing of transactions. operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Further Section 65 (105) (zzzq) defines taxable service means 'any service provided or to be provided to any person by any other person in relation to support services of business or commerce in any manner' The aforesaid definition of the taxable service clearly states that the services provided in relation to business or commerce, in any manner is covered in the category of Business Support Service. In the instant case party is providing uplinking services to various TV channels/ broadcasters through teleport (uplinking hub) situated at Noida which is an essential service for them to broadcast their programmes. Therefore I am of the view that party is providing support services to the TV channels/ broadcasters and is therefore covered under the category of business support service. It is true that uplinkin....
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.... observed that this circular is related to Broadcasting services and not uplnking services. Furthermore it is evident from the said circular that service provided to a client. by a broadcasting agency or organization in relation to broadcasting in any manner is taxable under service tax Act. Therefore the said circular is also of no help to the party. On the basis of above discussion I am of the considered view that the uplinking service provided by the party falls under the category of business support service chargeable to service tax. Since the party has not paid service tax amounting to Rs. 1.45,16.699/- for the period May, 2006 to March, 2011 therefore the same is recoverable from them under section 73(1) of the Finance Act, 1994 along with appropriate rate of interest as provided under section 75 of the Finance Act, 1994. Supply of tangible goods service:- As per the definition of taxable service 'Supply of Tangible Goods' under Section 65 (105) (zzzzj) of the Act, means "any service provided or to be provided to any person by any other person in relation to supply of tangible goods including machinery equipment and appliances for use, witho....
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.... The details of the charges collected for providing the uplinking service and for supply of communication equipments on rental basis (on the services provided and payments received, where Service Tax is not paid by the party) were submitted by the party vide their letter dated 21.06.2011, 16.08.2011 and 17.08.2011. The Service Tax not paid on the Uplinking Services amounting to Rs. 1,45,16,699/- (Rs. 1 41.01.858/- Service Tax, Rs 2.82,037/- Primary Education Cess and Rs. 1,32,804/- Secondary and Higher Education Cess) from May 2006 to March 2011 and on the Supply of Tangible goods Services amounting to Rs. 2,73,33,587/-(Rs 2.65,37,463/- Service Tax, Rs. 5,30,749/- Primary Education Cess and Rs 2.65,375/- Secondary and Higher Education Cess) from May 2008 to March 2011 enclosed with this Notice as Annexure-A for Service Tax not paid on Uplinking Services and as Annexure-B for Supply of Tangible Goods Services is recoverable from them. Further ESCL is a registered service tax assessee and well aware of the service tax laws but they have neither obtained registration for the business support service and supply of tangible goods service provided by them nor they disch....
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....f supply of DSNG Van to its clients can be classified and subjected to service tax under the category of 'Supply of Tangible Goods Service"? iii. Whether the demand is barred by limitation? iv. Whether the penalties imposed under Section 77 & 78 can be justified? 4.4 Whether the service of providing up-linking facility will be taxable under the category of "Business Support Service"? Undisputedly the Appellant entered into agreement with M/s V & S Broadcasting Ltd. and M/s UTV Entertainment television Ltd, for providing the up-linking facilities to them for broadcasting/ telecasting their programmes through teleport (uplinking hub) situated at Noida. This is an essential service for broadcasters/ telecasters to broadcast/ telecast their programmes. Commissioner has in the impugned order reproduced the definition of the "Business Support Services", as per Finance Act, 1994, hence we do not reproduce the same again. From the facts as above, broadcasters/ telecasters have outsourced the activity of up-linking their programme contents to the appellant, by use of teleport available with them. Definitely the services provided by the appellant will f....
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....g materials and to dissolve and seal the crevices in the refractory walls of the furnace to prevent leaking of the liquid metal from the furnace and to reduce the erosion of the refractory lining of the furnace and lose their identity and are consumed in the process. Some parts of these articles remain in the liquid metal and balance forms part of the residue or slug. The Court noticed the wider connotation of the phrase "in relation to" used in Rule 57A of the Rules. It was indicated that indisputedly ramming mass, dolopatch mix and manganese peas are "inputs" within the meaning of the Rule. The true question according to the Court is - "are the items inputs at all in respect of steel ingots?" and if the question is answered in the affirmative, the next question is "are the items within the excluded inputs?" The Court held - "Analysing the meaning of inputs as provided in the explanation it would appear that everything is an input if it is (i) manufactured and used within the factory of production or (ii) used in relation to the manufacture of the final products, and, (iii) paints and packaging material. The exceptions relate to items which woul....
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....hat sand mould is used "in relation to the manufacture" of final product, namely, steel castings. The larger Bench held that the view taken in Mukund Iron and Steel Works Ltd. v. Collector of Central Excise - 1990 (48) E.L.T. 552 (Tribunal) is not correct. Inevitably the same infirmity must attach to the decision in Collector of Central Excise v. Raipur Alloy Steels Ltd. - 1995 (78) E.L.T. 44 (Tribunal). 15. We may also refer to the decision of High Court of Madras in Ponds (India) Ltd. v. Collector of Central Excise - 1993 (63) E.L.T. 3. The appellant, manufacturer of cosmetics, used duty paid plastic granules to manufacture plastic containers and used the same as containers for the excisable final product, namely, cosmetics. The Court held that the cosmetic items are not marketable unless packed in containers which have to be treated as component part of the final product and that wider connotation should be given to the words "goods used in or in relation to the manufacture" of final product. Plastic granules would be component parts of the final product. The Court also relied on some of the chapter notes. 16. Under Rule 57A, inputs are not only goods used in t....
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....ods which do not enter directly or indirectly into the finished product, but are used in any activity concerned with or pertaining to the manufacture of finished goods. The only direct decision of a High Court on this aspect is that of the High Court of Calcutta in Singh Alloy Steel Ltd. v. A.C. of C.E. - 1993 (66) E.L.T. 594. Goods which are not raw materials converted into finished products and which are charged into furnace as fettling materials to dissolve and seal the crevices in the refractory walls of the furnace and are consumed in the process have been held to be goods used "in relation" to the manufacture of finished goods. The High Court explained that the exclusion clauses of the Explanation to Rule 57A relate to items which would otherwise have come within the definition of inputs. This would mean that machine, machinery and other goods referred to in exclusion Clause (i) would, but for the exclusion fall, within the ambit of the expression "inputs" that is, "goods used in relation to the manufacture of finished products". The Court stated that it does not matter that the goods are used in the machinery or for the purpose of the machinery. In the absence of any contrar....
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....and tool. The common factor or thread is the "self-contained and complete" nature of the goods comprehended by these words. Assuming there is any doubt about proper meaning of any of the words, it has to be understood in this sense, that is, as a complete unit and not as a part of it." 4.5 In case of Detergent India Ltd. [2015 (318) E.L.T. 559 (S.C.)], Hon'ble Supreme Court observed as follows: "12. When we come to the definition of "related person" the legislature has used a well-known technique. It first employs the expression "means" and states that persons who are associated with the assessee so that they have a direct or indirect interest in the business of each other would get covered. The definition then goes on to use the expression "and includes" thereby indicating that the legislature intends to extend the definition to also include various persons that would not otherwise have so been included. These include a holding company, a subsidiary company, a relative and a distributor of the assessee and any sub-distributor of such distributor. The necessity for including holding and subsidiary companies as defined under the Companies Act, 1956 is to lift the corpora....
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.... (i) comprise or reckon in as a part of a whole; (ii) treat or regard as so included. Collins Dictionary of English Language defines the word "includes" as: (i) to have as contents or part of the contents; be made up of or contain; (ii) to add as part of something else; put in as part of a set, group or a category; (iii) to contain as a secondary or minor ingredient or element. It is no doubt true that generally when the word "include" is used in a definition clause, it is used as a word of enlargement, that is to make the definition extensive and not restrictive. But the word "includes" is also used to connote a specific meaning, that is, as "means and includes" or "comprises" or "consists of." 48. The use of the term "includes" after talcum powder, followed by "medicated talcum powder" in this court's opinion can lead to only one inference, which is that the clear legislative intent was that all kinds of talcum powders, which contained medications (irrespective of the proportion, or at any rate, not containing predominant proportions) should necessarily be treated as cosmetics, falling under Entry 127. The pointed phraseology ....
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....t had to deal with an explanation that expanded the meaning of "packing". The court observed that explanations are also used to widen terms: "[..] The Explanation to Section 4(4)(d)(i) provides an exclusive definition of the term "packing" and it includes not only outer packing but also what may be called inner packing. Ordinarily bobbin, pirl, spool, reel and warp beam on which yarn is wound would not be regarded as packing of such yarn, but they are brought within the definition of "packing" by the Explanation. The Explanation thus extends the meaning of the word "packing" to cover items which would not ordinarily be regarded as forming part of packing. The Explanation then proceeds to say that "packing" means wrapper, container or any other thing in which the excisable goods are wrapped or contained. It is apparent from the wide language of the Explanation that every kind of container in which it can be said that the excisable goods are contained would be "packing" within the meaning of the Explanation and this would necessarily include a fortiori corrugated fibre board containers in which the cigarettes are contained. When Bombay Tyre International case was argued befo....
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....engaged in the business of providing uplinking services under the License Agreement with the Ministry of Information & Broadcasting (MIB), Government of India, governed by the provisions of the Indian telegraph ACT, 1885 AND Indian Wireless telegraphy Act, 1933 as modified from time to time. And whereas ESCL has offered its service to the customer for up-linking of TV channel(s) to the Customer (details given in Annexure I) and the Customer is desirous of utilizing these services of ESCL for uplinking of its TV Channels. And whereas at the request of the Customer, ESCL has agreed to provide uplinking of TV channel (s) of the Customer using ESCL Teleport (Uplinking Hub) at NOIDA on the terms and conditions mutually agreed upon as hereinafter appearing. Now the this agreement witnesseth and the parties hereto agree as follows: 1. Definitions ..... 2. Service/ obligations to e provided/ supported by ESCL. The services to be provided/ supported by ESCL are: a) Subject to receipt of MIB approval/permission, to provide uplinking of TV channel (s) (i.e. signals of audio, video and control signals including encryption keys of the Custom....
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....be provided by ESCL to the Customer on or before signing of these presents. The Service is as defined in Annexure II. ESCL undertakes to keep its license valid during the subsistence of this agreement. ESCL or its authorized representative, upon reasonable prior notice, shall have the right to inspect the sites/ locations from where the programmes are sent to ESCL's uplinking Hub for uplinking. ESCL shall in particular but not limiting to have the access to lines, junctions, trunks, terminating interface, processing hardware, uplinking equipment and software etc. Simultaneously upon reasonable prior notice to ESCL, the Customer and its authorized representative will have right to inspect the uplink site of ESCL from where the signals of the Customers are sent. 5.2 ESCL shall setup and maintain the uplinking facility to meet Customer requirements and shall also provide to the Customer the details pertaining to the equipments used by ESCL to render services herein including but not limited to the size of the antenna, antenna gain, electronics chain etc. 5.3 In the event that ESCL sets up a Commercial Teleport in Mumbai, ESCL shall shift the Customers operations to M....
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....h this agreement) of the Customer subject to the exceptions provided in Clauses 10.3 or 10.4 will result in a refund of the Service Charges paid hereunder and calculated in accordance with the provisions of Clause 10.5, with the e-refund of such service charge being paid by ESCL to the Customer by a separate payment contemporaneously with the next monthly installment of the service charges to be paid by the Customer. 10.2 The length of any interruption shall be measured from the time and date of occurrence duly notified in writing by the coordinator/ customer certified nominee up to such time and date as ESCL determines is the time and date which the interruption has ended. 10.3 ESCL shall not be liable for any interruptions caused by: .... 10.4 ESCL shall not be liable if interruption is the result of or is attributable to the failure or non-performance of the customer's satellite service provider regardless of who is operating or controlling the facilities or for reasons attributable to the Customer. 10.5 The refund in the Service Charge provided for in Clause 10.1 shall be calculated according to the following formula i. Interruptions....
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....ion of any future taxes, duty, levy or any other statutory charges shall be to the customer account, shall be solely borne by the Customer. 2. Placement of order: .... 3. Payment terms: ..... 4. Advance Deposit: .... 5. ESCL Bankers: .... SERVICE LEVELS o Uplinking c/no to be maintained within +/- 5 db o Facility up-time shall be 99.75% (All tests to be carried out on a professional standard decoder, with the professional test and measurement equipment at ESCL Hub). From the perusal of the above agreement it is evident that the Customer of the appellant has outsourced the activity of uplinking the programme feeds produced by them to the designated satellite, from the hub maintained and operated by the appellant (ESCL Hub). The appellant is charging service charges for the uplinking facilities provided by them. Appellant is required to maintain the desired service levels and provide the uninterrupted services. In case of outages/ interruptions appellant is penalized for the same. The service agreement also specifically provides that the service charges do not include any kind of taxes and levies, includ....
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....ed above, would show that it does not cover the activities undertaken by the Appellant since it only uplinks and downlinks satellite beams at agreed and desired bandwidth provided by Intelsat and hence such an activity cannot be Infrastructural Support Services. It is also evident from the CBEC Circular dated 28.02.2006 that the Infrastructural Support Service covered under BSS is with reference to only those services which has been outsourced. The Department has presumed that the Appellant has outsourced their activity of uplinking and downlinking signal beams at agreed and desired bandwidth. The said view is not correct since the Appellant has not outsourced their activity of uplinking and downlinking contents to be received and broadcasted but has purchased the desired bandwidth as they do not possess a satellite of their own to beam such signals. The transaction, therefore, comes within the ambit of 'sale' and is clearly covered by the decision of the Karnataka High Court in Antrix Corporation(supra), wherein it has been held that the transaction of providing transponder is one of 'sale' as per Article 366(29)A of the Constitution, and therefore, not amenable to....
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....1977 (1) SCR 878]. In certain situations the nature of included items would not only partake of the character of the whole, but may be construed as clarificatory of the whole. In the present case even considering the explanation for infrastructural support service is only defined in an inclusive way, still it will not be incorrect to hold such inclusive definition will throw light upon what are all the nature of services which are sought to be taxed." None of the above decisions support the case of the appellant or the merits of demand and are distinguishable. On examination of the terms of the contract between the appellant and their client it is clearly evident that appellant have provided the services which support the business activities of their client, by providing the uplinking facility from their teleport. Thus on merits these service would be classifiable under the category of business support services. Whether the services of supply of DSNG Van to its clients can be classified and subjected to service tax under the category of 'Supply of Tangible Goods Service"? 4.10 Commissioner has in his order relied upon clause 4.1 of the agreement entered between the appella....
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.... the DSNG Vehicle 2. CUSTOMER CONFIRMATION 2.1 The DSNG Vehicle shall be used strictly for the purpose of Live News / footage collection and point to point transmission only. 2.2 The Customer shall ensure and undertake that the operation-and handling of DSNG is done at all times by its fully trained, qualified and experienced engineers following guidelines / instructions and using complete care and caution; in case of any problem, the DSNG is not forcibly operated, the DSNG is used as per the direction for the purpose it is meant for to provide the optlmal functionality and life from the DSNG. In case of any negligence, neglect or default (wilful or otherwise) by the Customer or any of the representative resulting into malfunctioning, defect or damage to the DSNG the responsibility will be entirely of the Customer and any repair/ replacement charges shall be borne exclusively by the Customer. 2.3 Whether such default is wilful or result of negligence on part of the Customer and / or its representatives shall be mutually agreed upon by the Parties. The Customer and the Company shall cooperate with each other as required, for troubleshooti....
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....the manufacturer or seller of the DSNG Vehicle and has only given on rent the DSNG Vehicle to the Customer. The Company has deployed in the DSNG vehicle various Electronic and other equipments from OEMs across the globe supported / back up by their respective specifications / warranty terms 3. COMPANY'S CONFIRMATION The company confirms that it has the requisite relevant permissions and authority to enter into this Agreement and there is no violation by Company of any applicable laws of the country 4. TITLE, IDENTIFICATION, OWNERSHIP OF DSNG VEHICLE 4.1 Save as otherwise provided in this Agreement, no right, ownership., title or interest in the DSNG Vehicle shall pass to the Customer by virtue of these presents. The Customer shall at no time contest or challenge the Company's sole and exclusive ownership right, title and interest in the DSNG Vehicle 4.2 Customer shall not at any time assign, loan out, gift away, sub-let, pledge hypothecate, encumber or part with possession or otherwise deal with the DSNG Vehicle or the equipments nor shall create or allow to be created any lien on the same. 4.3 Upon expiry of the period ....
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....nd accepted by the Customer. b. The Customer shall pay to the Company the Invoice amount referred In the Invoice, on or before Due Date by cheque or bank draft issued in favour of the Company, payable at New Delhi. c. The Rental Charge is exclusive of Sales/Service Tax, WCT / Rental Tax, Octroi/ Entry Tax, road permit, Freight and any other statutory & other taxes or Government levies etc and these taxes shall be charged in addition to the charges, based on actuals i.e. all taxes relating to the services provided under this Agreement in respect of DSNG Vehicle shall be reimbursed by the Customer to the Company d. The Customer undertakes that all charges in respect of DSNG Vehicle including but not limited to- a. road tax, registration etc b. Statutory / Local Taxes / Levis shall be borne by the Customer. e. Any amount due under the Invoice and remaining unpaid after the Due Date shall bear interest at the rate of 1% per month for the period of default calculated from the date when payment became due till the day payment is made by the Customer. f. The responsibility of DSNG Vehicle transportation from Noida to Customer&....
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....be or is likely to be endangered, attached or taken in execution under any legal process or by public authority; or f. Fails to obtain Consents, licenses, approvals. permissions as are necessary and essential for the installation of the DSNG Vehicle as well as for the execution, enforceability and validity of this Agreement 10.2 An event of default shall occur by the Company, if the Company a. License to perform under this Agreement ls revoked or cancelled for any reasons; b. Shall fail to perform its obligation under this Agreement; c. Shall commit an act of bankruptcy or become insolvent or bankrupt or make an assignment for the benefit of creditors, or consent to the appointment of a Trustee or Receiver, or either shall be appointed for the Company or for a substantial part of its property without its consent or bankruptcy, reorganization or Insolvency proceedings shall be instituted by or against the Company, voluntary, or otherwise, or 11. TERMINATION 11.1 On termination of this Agreement by the Customer before the agreed period of the Agreement, the Customer shall pay to the Company an amount equal to the charges ....
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.... Default pursuant to what is stated herein above In Clause 11.3 and 11.4- 12.2.1 The Company shall be paid on pro rata basis and any advance received by the Company shall be refunded within 7 days from the date of such termination failing which the Company shall be charged 1% interest per month on such amount from the date of payment till realization. 13 DISPUTE RESOLUTION All disputes arising directly under the express terms of this Agreement or grounds for termination thereof shall be resolved as follows: 13.1 The nominated representatives of both parties shall meet to attempt to resolve such disputes. If disputes cannot be resolved by the nominated representatives either party may make a written demand for formal dispute resolution/Arbitration which shall be in accordance with the provisions of the Arbitration and Conciliation Act, 1996 and the Venue of Arbitration shall be New Delhi. The parties shall endeavor that such disputes are settled within a period of two (2) months from the date of submission of such disputes to Arbitration. 13.2 The court of-Delhi shall have Jurisdiction for the purpose of implementation of any arbitral awa....
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....l of the Company's suppliers, including but not limited to war (whether an actual declaration thereof is made or not) sabotage, insurrection. rebellion, riot or other act of civil disobedience, act of a public enemy, failure or delay in transportation (due to reasons beyond its control), act or action of any Government or any agency or subdivision thereof, Including any act or action by way of any statute, sale guidelines / regulation, amendments to license granted to the Company, any other act or action whether judicial action, , fire, accident, explosion, epidemic, quarantine restrictions or flood, lightning, earthquake or other Act of God, satellite / Transponder or related machinery failure where the Company has exercised due caution and care in the prevention thereof 18. NOTICES Any notice, invoice or other communication required or permitted under this Agreement shall be given in writing to the other party at that party's address specified hereunder. or as communicated in writing to the other party from time to time. Notices shall be deemed to have been given when personally delivered facsimile and acknowledged by the recipient or, if given by mail, ....
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.... of such subcontractors or any third party) for personal injury or death or for loss of or damage, destruction, deterioration or diminishing In the value to DSNG Vehicle resulting from the indemnifier's negligence or willful misconduct hereunder, or on account of breach of representations, warranties or the terms herein.. Where personal injury, death or loss of or damage to property is the result of the joint negligence or willful misconduct of Customer and the Company, the indemnifier's duty of indemnification shall be in proportion to its allocable share of joint negligence or willful misconduct. 22.3 The Company hereby agrees to indemnify, defend and hold harmless the Customer from claims, demands and causes of action asserted against the Customer by any person (including without limitation, Company's employees, subcontractors and employees of such subcontractors or any third party) for personal injury or death or for loss of or damage, destruction, deterioration resulting from the Indemnifier's negligence or willful misconduct hereunder. Where personal injury, death or loss of or damage to property is the result of the joint negligence or willful miscon....
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....SETH AND THE PARTIES HERETO AGREE AS FOLLOWS: 1. The Company hereby agrees to give on rent one additional DSNG Vehicle No. UP16T0348 (TATA 207 Standard) on an annual rental charges of Rs. 33,29,304/- (Rupees Thirty Three Lakhs Twenty Nine Thousand Three Hundred and Four Only) for a period of 4 (four) years from the date of commencement of payment of charges. Hence, the total rental charges be and is hereby Increased from Rs. 3,32,93,040/- (Rupees Three' Crores Thirty Two Lakhs Ninety Three Thousand And Forty Only) to Rs. 3,66,22,344/- (Rupees Three Crores Sixty Six Lakhs Twenty Two Thousand Three Hundred and Forty Four Only) w.e.f. 15^th July, 2008. 2. All other terms and conditions of the said Agreement shall remain same, unchanged & continue to be in full force and binding on the Parties accordingly. 4.11 Appellant has relied upon the clause 2.2, 7.4 and 7.6 of this agreement to argue that effective control and possession was transferred to the Customer by the Appellant and such transaction can been considered only as a deemed sale only, thus, the same was not susceptible to service tax. However on going through the agreement we do not find any merits in ....
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....sponsible for all repair and maintenance except in case where the same is on account of negligence of the Customer or its operators. f. Clause 6, empowers the appellant to undertake inspection with 24 hrs prior notice to the customer. g. Clause 7.3 and 7.4 clearly stipulates that the rental charges are exclusive of sales/ service tax, wct/ rental tax, octroi/ entry tax, road permit, freight and other statutory & other taxes or government levies etc and these shall be charged in addition charges, based on actual. h. Clause 9 provides that in the case of termination of agreement, Customer shall be liable to pay the appellant the premium/ charges for the comprehensive insurance which is reflected in the service charges paid by the customer to them. Customer has also to ensure that DSNG vehicle is delivered back to the company in good order and condition. 4.12 From the above we are clearly of the view that the agreement between the appellant and their customer is from the day one i.e. the day when it was entered into, was an agreement to provide these vehicles on rent to the appellant without transferring the effective control and possession of the vehicle....
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....le 366(29-A)(d) was discussed in a decision of this Court in Bharat Sanchar Nigam Limited and another v. Union of India and others 2006 (3) SCC (1) ("BSNL"). In BSNL, the Court held that the purpose of Article 366(29-A)(d) was to levy tax on those transactions where there was a "transfer of the right to use any goods" to the purchaser, instead of passing the title or ownership of the goods. Thus, by a fiction of law, these transactions were now treated as 'sale'. Elucidating on the "transfer of the right to use any goods", Dr A R Lakshmanan J. in a concurring opinion held: "97. To constitute a transaction for the transfer of the right to use the goods, the transaction must have the following attributes: a. there must be goods available for delivery; b. there must be a consensus ad idem as to the identity of the goods; c. the transferee should have a legal right to use the goods-consequently all legal consequences of such use including any permissions or licenses required therefore should be available to the transferee; d. for the period during which the transferee has such legal right, it has to be the exclusion to the transferor....
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....s of Article 366(29A)(d), we find that there is transfer of right to use tangible goods, which is determinative of deemed sale as per the Constitution of India and provisions of section 5C reflecting the said intendment. We are of the considered opinion that there is transfer of right to use exclusively given to charterer for six months, and the vessel has been kept under the exclusive control. The charterer qualifies the test laid down by this court in BSNL (supra)." (emphasis supplied) 17. Therefore, sales tax is levied in pursuance of Article 366(29-A)(d) on transactions which resemble a sale in substance as they result in a transfer of the right to use in goods, instead of the transfer of title in goods. The Finance Act, 1994, deriving authority from the residuary Entry 97 of the Union List, enabled the Central Government to levy tax on services. 'Service tax' was introduced as a response to the advancement of the contemporary world where an indirect tax was necessary to capture consumption of services, which are economically similar to consumption of goods, in as much as they both satisfy human needs. All India Federation of Tax Practitioners v. Union....
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....ies are supplied for use, with no legal right of possession and effective control. Transaction of allowing another person to use the goods, without giving legal right of possession and effective control, not being treated as sale of goods, is treated as service. 4.4.3 Proposal is to levy service tax on such services provided in relation to supply of tangible goods, including machinery, equipment and appliances, for use, with no legal right of possession or effective control. Supply of tangible goods for use and leviable to VAT / sales tax as deemed sale of goods, is not covered under the scope of the proposed service. Whether a transaction involves transfer of possession and control is a question of facts and is to be decided based on the terms of the contract and other material facts. This could be ascertainable from the fact whether or not VAT is payable or paid." (emphasis supplied) 19. The above circular clarified that Section 65 (105) (zzzzj) is applicable only to those transactions where there is a supply of tangible goods for use, without the transfer of possession or effective control to the recipient. This aspect has been interpreted by various c....
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....h machinery, equipment and appliances is not parted with. [...]" (emphasis supplied) 20. The taxable service is defined as a service which is provided or which is to be provided by any person to another "in relation to supply of tangible goods". The provision indicates that the goods may include machinery, equipment or appliances. The crucial ingredient of the definition is that the supply of tangible goods is for the use of another, without transferring the right of possession and effective control "of such machinery, equipment and appliances". Hence, in order to attract the definition of a taxable service under sub-clause (zzzzj), the ingredients that have to be fulfilled are: (i) The provision of a service; (ii) The service is provided by a person to another person; (iii) The service is provided in relation to the supply of tangible goods, including machinery, equipment and appliances; (iv) There is no transfer of the right of possession; (v) Effective control over the goods continues to be with the service provider; and (vi) The goods are supplied for use by the recipient of the service. There is a....
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....of the respondent (as the seller of gas) and of their purchasers, from the issue of whether the measurement equipment (SKID equipment) is supplied for the use of the purchaser of gas, without transferring the right of possession and effective control. 25. The purchaser of gas has an interest in ensuring the accuracy of billing and regulation of supply. The respondent is interested in ensuring that it receives payment for the quantity of gas which is contracted to be supplied to the purchaser. The 'SKID' consists of regulators, valves, filters and the metering equipment. The SKID equipment regulates and records supply. Under the terms of the GSA, the obligation of the seller is to deliver gas to the buyer at the Delivery Point. The gas pipeline from the nearest distribution main to the buyers' metering station is constructed and maintained by the seller at the cost of the buyer. The measurement equipment is supplied, installed and maintained by the seller at the cost of the buyer, inspite of ownership of the equipment resting with the respondent as the seller. The measurement equipment is installed and maintained exclusively by the seller. Clause 5.6 indicates t....
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.... the use of a pen, or his machines are in use. Also the fact of being used or employed habitually; usage, as, the wear and tear resulting from ordinary use. Berry-Kofron Dental Laboratory Co. v. Smith, 345 Mo. 922, 137 S.W. 2d 452, 454, 455, 456. The purpose served; a purpose, object or end for useful or advantageous nature. Brown v. Kennedy, Ohio Appellant. 49 N.E. 2d 417, 418. To put or bring into action or service; to employ for or apply to a given purpose. Beggs v. Texas Dept. of Mental Health and Mental Retardation, Tex. Civ. App., 496 S.W.2d 252, 254. To avail oneself of; to employ; to utilize; to carry out a purpose or action by means of; to put into action or service, especially to attain an end. State v Howard, 221 Kan. 51, 557 P.2d 1280, 1281. Non-technical sense. The "use" of a thing means that one is to enjoy, hold, occupy or have some manner of benefit thereof. Use also means usefulness, utility, advantage, productive of benefit." 27. The expression "use" does not have a fixed meaning. The content of the expression must be based on the context in which the expression is adopted. The use of an article may or may not result in a visible change in its fo....
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....tity of gas supplied and delivered under the GSA. To postulate, as did the Tribunal, that the measurement equipment is only for the benefit of the seller in measuring the quantity of the gas supplied would not be correct. The GSA is an agreement reflecting mutual rights and obligations between the seller and the purchaser. Both have a vital interest in ensuring the correct recording of the quantity of gas supplied. Additionally, delivery of gas in a safe and regulated manner, enabled by the SKID equipment, is an essential component of the GSA. The SKID equipment subserves the contractual rights of both the seller and the purchaser of gas. Indeed, without the SKID equipment there would be no gas supply agreement. In fact, in the GSA, the buyer has also provided a warranty to ensure that the "Buyer's Facilities" remain technically and operationally compatible with the "Seller's Facilities", both of which include the 'measurement equipment'. This warranty would not have been provided if the measurement equipment was not of 'use' to the buyer. The equipment is thus a vital ingredient of the agreement towards protecting the mutual rights of the parties and in ens....
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....e registration in respect of these services, not paying the service tax and not filing any returns in respect of these service they have suppressed the facts form the department with the intent to evade payment of service. Hence he has invoked extended period of limitation as per proviso to Section 73 of the Finance Act, 1994. The issue before us is in respect of two services which are based on two separate contractual agreements. We take up the for discussion the issue on limitation in respect of these separately. 4.15 Uplinking facility from the teleport: In this case we find that issue involved is purely of interpretation of the terms of agreement vis a vis the provisions of the Act. On going through the terms of agreement which we had earlier reproduced and discussed we are of the view that appellant were entertaining a bona fide belief that these service would not be classifiable under any of the taxable categories. There is nothing in the agreement to show that appellant could not have entertained such a belief. Also we find that there has been dispute in respect of interpretation of the term "infrastructural support facility" used in the definition of Business Support Ser....
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....per Section 65 (105) (zzzzj) of the Finance Act, 1994. It is settled law that contract be interpreted in terms of the clauses stated in the contract and the manner in which the parties to contract understood it. In our view there is nothing to show that appellant could have entertained a bona fide belief or doubt in respect of this contract/ agreement. It is also not the case of the appellant that they consulted the departmental authorities or even informed about such an agreement at any time. It is case of suppression with intent to evade payment of duty. In case of Van Shah Fragrances Pvt Ltd [2022-TIOL-903-CESTAT-KOL] Kolkata Bench held as follows: "4.15 appellants have not been able to show any ground by which they could claim that they entertained a bona fide belief that goods manufactured and cleared by them were not subject to excise duty or attracted nil rate of duty or were exempt from payment of duty. It is settled law that the bona fide belief is not the blind belief and need to be established before that plea can be taken. In case of Bharat Bijlee Ltd [2014 (314) E.L.T. 74 (Tri. - Mumbai)] = 2014-TIOL-374-CESTAT-MUM tribunal has observed as follows: "5....
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.... belief raised by the appellant is only an argument of convenience and not based on any conviction, whatsoever. The ratio of the Larger Bench could not have been applied to the facts of the present case inasmuch as the said decision applied to LSHS used in the manufacture of steam, which in turn, was used in the manufacture of various dutiable goods as well as exempted goods as also for generation of electricity. It is the settled position of law that the ratio of a decision can be applied only if the facts are identical. Even if the facts vary slightly, the said ratio cannot be applied as held by the Hon'ble Apex Court in the case of Alnoori Tobacco Ltd. [(2004) 6 SCC 186 = 2004 (170) E.L.T. 135 (S.C.)] = 2004-TIOL-85-SC-CX wherein it was held as follows :- "Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments....
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..... Penalty for short-levy or non-levy of duty in certain cases.- where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined: [Provided that where such duty as determined under sub-section (2) of section 11A, and the interest payable thereon under section 11AB, is paid within thirty days from the date of communication of the order of the Central Excise Officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent of the duty so determined: Provided further that the benefit of reduced penalty under the first proviso shall be available if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso: Provided also that....
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....The converse of this, equally true, is that in the absence of such an allegation in the notice the period for which the escaped duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under section 11A (2) there would be no application of the penalty provision in section 11AC of the Act. On behalf of the assessees, it was also submitted that sections 11A and 11AC not only operate in different fields but the two provisions are also separated by time. The penalty provision of section 11AC would come into play only after an order is passed under section 11A(2) with the finding that the escaped duty was the result of deception by the assessee by adopting a means as indicated in section 11AC. 19. From the aforesaid discussion it is clear that penalty under section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. 20. At this stage, we need to examine the recent decision of this Court in Dharmendra Textile (supra). In almost every case relating to penalty, the decision is referred to on behal....
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....tory provisions, in paragraphs 26 and 27 of the decision, the court observed and held as follows: 26. In Union Budget of 1996-97, Section 11AC of the Act was introduced. It has made the position clear that there is no scope for any discretion. In para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the Notes on Clauses also the similar indication has been given. 27. Above being the position, the plea that the Rules 96ZQ and 96ZO have a concept of discretion inbuilt cannot be sustained. Dilip Shroff's case (supra) was not correctly decided but Chairman, SEBI's case (supra) has analysed the legal position in the correct perspectives. The reference is answered . 21. From the above, we fail to see how the decision in Dharamendra Textile can be said to hold that section 11AC would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. 22. There is another very strong reason for holding that Dharamendra Textile could not have interpreted section 11AC in the manner as suggested bec....