TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 622
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....ioner (Appeals) set aside the order in original and allowed relief to the respondents. Aggrieved by the said order the revenue is an appeal before Tribunal. 2.1. Learned DR pointed out that the agreement for supply of wagons under Wagon Investment Scheme to Indian Railways contains following clauses. 2.1 The Respondent are providing "Wagon" under "Wagon Investment Scheme" to the Indian Railway which comes under the purview of "Service" as envisaged under Section 65B(44) of the Finance Act 1994 (herein after referred to as "the act"). The respondent entered into various agreements with Indian Railway. Examination of the such agreements revealed that:- i. Clause 2.5 of the agreement under head "FREIGHT REBATE' mentions that "the Railway shall give rebate @ 10% on the normal tariff rate to the investor". ii. Clause 2.7 of the agreement under head "DURATION OF FREIGHT REBATE" mentions that "the freight rebate mentioned under clause 2.5 shall be given for a period of 10 years from the commencement date". Clause 3.0 of the agreement under head "GUARANTEE/WARRANTY" mentions that "In case of direct procurement of wagons, investors will be required to incorporate guarantee/w....
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....ing in railway wagon will be assured a supply of guaranteed number of Rakes every month, based on the number of rakes procured and the turnaround time of the type of wagon with 10% concession in freight. He further pointed out that no lease charges are payable under the scheme and that ownership of wagon procured under the scheme shall get transferred to Indian railways only after period of 10 years. He further pointed out that freight rebate shall be granted by railways for a period of 10 years. 2.4. Learned DR further argued that if the respondents had not invested in wagon investment scheme, the freight rebate would not be available to them. He pointed out that although Indian railways uses these wagons for transporting goods of other entities as well the railway wagons supplied under scheme remain under ownership of the respondents. Learned DR pointed out that in this circumstances the supply of wagons under the scheme can be considered as provision of service and the freight rebate obtained by the respondents is nothing but a consideration in lieu of the hiring of Wagons. He pointed out that this argument get additional force on account of the fact that respondents have not d....
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.... is made;] 1 [(30) "Union territory" means any Union territory specified in the First Schedule and includes any other territory comprised within the territory of India but not specified in that Schedule." It is seen that it includes transactions involving transfer of right to use as deemed sale. Section 658(44) of the Finance Act, 1994 defines "service" as under: "(44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- i. a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or ii. such transfer, delivery or supply of any goods which is deemed to be sale within the meaning of clause (29A) of article 366 of the Constitution: or iii. a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment: (c) fees taken in any Court or tribunal established under any law for the time being in force." Thus, it is seen that Section 658 (44) of Finance Act, 1994, the Article 366 (29A) to draw a line between ....
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.... Hon'ble Apex Court in the case of Quick Heal Technology Limited MANU-SC-0968-2022. 4. In the appellant own case the tribunal vide order no. 51108/2023 dated 18.08.2023 has observed as follows: 6. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 7. The only point to be decided in this appeal is as to whether the appellant had transferred possession and effective control of the wagons to the Indian Railways under the terms of the Agreement. There is no manner of doubt that in terms of Clause 4.1 of the Agreement, the right of possession and effective control of the wagons had been transferred by the appellant to the Railways as the wagons provided by the appellant merged and operated under the general pool of wagons of the Indian Railways. This fact also finds support from the Certificate dated 25.03.2015 issued by the Indian Railways. 8. such being the position, the Commissioner was not justified in recording a finding that the appellant had provided supply of tangible goods service to the Indian Railways. In the aforementioned case the Tribunal was examining the....
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....e This agreement shall remain in force for a period of 20 years from the date of commencement. 5.0 Lease Charges 5.1 Lease charges will be paid by the Indian Railways to the leasing companies in advance on quarterly basis. The calculation of the lease charges will be based on the cost of procurement which will include the transfer price of free supply items provided by the Railways. Central Excise (Net of MODVAT) and any other statutory tax/duty paid by the Lessor will also form a part of the cost of wagons for the purpose of lease charges. 5.2 The lease charges shall be paid on the Asset Value as indicated in Clause 5.1, comprising (i) a base lease charge @ Rs. 40/- per thousand per quarter for the primary period of ten years subject to the variation formula contained in following clauses and (ii) at a flat rate of Rs - 10 /- per thousand per year for the secondary lease period of ten years. This will not be subject to any variation. 6.0 Freight charges: The freight will be levied at normal tariff rate in force and will be paid by Lessor in the prescribed manner. 7.0 Guaranteed Clearance of Traffic: The Railway will provide guaranteed clearance of 11 (Eleve....
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....o supply of tangible goods including machinery, equipment and appliances for use, without transferring the right of possession and effective control of such machinery, equipment and appliances". Section 658(44) of the Finance Act, 1994 defines "service" as under - "(44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be sale within the meaning of clause (294) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force." The above provisions indicate that to be a taxable service, the supply of tangible goods, etc., for use should be without transferring the right of possession and effective control and such transfer of goods....
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....11,68,095/- towards leasing of Railway wagons to South Western Railways, Hubli and not reported this taxable turnover in the monthly return of turnover filed in Form VAT 100 for the tax period from April 2007 to March 2008 and not paid the taxes. The inspecting authority confirmed the information already with the undersigned. In response to the said notice, the dealer company have filed their written objections on 21/11 / 2018 which is reproduced as under: The advance ruling was given by the prescribed authority on 20th June 2018 showing that VAT liability accrued on lease rental income which was manifested in the form of tax demand dated 17th July 2018 relating to period FY 2006-07 to FY 2016-17. The liability is amounting to Rs. 5,95,04,180/- along with interest accrued thereon for the period concerned together with penalty imposed on the said sum amounting to Rs.6,64,57,938/- and Rs.59,50,418/- respectively totalling to Rs.13,19 ,12,536/- . We agree with your demand for the year 2007-08 Rs. 48,46,724/-tax. The matter has already been dealt with by Commercial Tax Officer (Enforcement-3), Bellari. We have already requested Hon'ble Chief Minister, Government of Karn....
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....ht to use all outfits, equipment, and appliances on board the vessel at the time of the delivery, including the whole reach, burthen, and deck capacity. Thus, in our considered opinion, merely by providing the staff, insurance, indemnity, and other responsibilities of bearing officials costs. Effective control for the entire period of six months has been given to the charterers. It is a case of transfer of right to use the vessel for which certain expenses and staff are to be provided by the contractor, which is not sufficient to make out that the control and possession of the vehicle are with the contractor. The possession and control are clearly with the charterer. As in essence, it has to be seen from a conjoint reading of various conditions whether there is a transfer of right to use the vessel. In our considered opinion there is not even an iota of doubt that under the charter agreement coupled with the instructions to tenderers, general conditions and special conditions for the contract as specified in the tender documents and charter-party clauses, there is a transfer of right to use the vessel for the purposes specified in the agreement. 34. To constitute a transaction f....
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....said Act defines 'sale' to mean the transfer of property in goods for cash or deferred payment or other valuable consideration and includes the "transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration." Such transfer of the right to use goods for consideration is "deemed" to be a sale. The provision expressly speaks of "transfer of the right to use goods" and not of transfer of goods. There is, therefore, no merit in the submission that to be a deemed sale within the meaning of the abovementioned provision of the said Act there must be a legal transfer of goods or that the transaction must be like a lease. 6. Where there is a transfer of a right to use goods for consideration, the requirement of the abovementioned provision of the said Act is satisfied and there is deemed to be a sale. In the instant case, the assessees owned shuttering. They transferred the shuttering for consideration to builders and building contractors for use in the construction of buildings. There can, therefore, be no doubt that the requirements of a deemed sale within the meaning of the abovementione....