TaxTMI 
TaxTMI 
TaxTMI 
2023 (9) TMI 1495
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....ants are required to dismantle and take away the equipment. 1.2 For the said purpose the appellants have entered in to lease agreement with its customers to give the FLOXAL Unit, storage tanks, cylinder, toners along with vaporizer on lease for which the rent is recovered from the customers. The FLOXAL Unit, storage tank, cylinder and toners were installed by the appellant free of charge and after installation the unit would be at the disposal of the customers throughout the duration of the contract. The customers were required to bear the expenses of goods and supplies required for functioning of FLOXAL Unit, storage tanks, cylinders, toners. 1.3 The appellant would be responsible for the operation of the FLOXAL Unit. The use of gas is a complete responsibility of the customer. also customer being keeper and user of FLOXAL Unit, storage tanks, cylinders, toners would be held responsible for claim made due to injury or damage to 3rd parties for leasing of the FLOXAL unit, storage tank, cylinder, toners. A fixed monthly amount is to be paid by the customers to the appellants. On the amount collected by the appellant under the lease agreement the VAT/ CST is discharged by the appel....
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....ransaction does not fall under the activity of supply of tangible goods service. Therefore the demand is not sustainable. He placed reliance on the following board circulars and judgments: * Circular No. 334/1/2008-TRU dated 29.02.2008 * Circular No. 198/8/2016-S.T dated 17.08.2016 * Quippo Energy Pvt. Ltd Vs CST 20220-VIL-937-CESTAT-AHM-ST * Air Liquide North India Pvt. Ltd Vs CCE 2017 (4) GSTL 230 (T) * CST Vs UFO Moviez India Ltd 2022-VIL-07-SC-ST * CST Vs UFO Moviez India Ltd 2021-VIL-11-SC-ST * UFO Moviez India Ltd Vs CST 2017-VIL-774-CEST AT- ST * Subhash Light House Vs CGST 2022-VIL-106-CEST AT- DEL-ST * Express Engineers & Spares Pvt. Ltd Vs CGST 2022 (1) TMI 564- CESTAT ALLAHABAD * You Broadband & cable India Ltd Vs CCE 2020 (2) TM1187-CESTAT Ahmedabad * GE Power Services India Pvt. Ltd Vs PCCST 2021 (2) TMI 83-CESTAT * Compucom Software Ltd Vs CST 2019(25) GSTL 75 (T) * GIMMCO Ltd Vs CCE 2017(48) STR 476 (T) * Century Pulp and Paper Vs CCE 2019 (29) GSTL 42 (T) * CCE VS Brindavan Bottlers Ltd 2019(27) GSTL 354 (T) * Satish Crane Services Vs CCE 2019 (25) GSTL 115 (T) * Bharat Sanchar Nigam Ltd VS UOI 2006 (2) STR 161 (SC) * Rashtriya Is....
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....r production of gas which is further used in their production activity during the lease period the possession of equipment and effective control is undoubtedly with the customers as the same was operated and used by the customer only during the lease period. this fact also gets reinforced on the basis that the appellant for such supply registered under VAT Act and discharging the VAT on the same transactions on which the revenue has demanded the service tax. The present nature of the transaction has been included as a deemed sale under Article 366 (29A) of the constitution of India which is reproduced below: [(29A) tax on the sale or purchase of goods' includes- (a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (c) a tax on the delivery of goods on hire-purchase or any system of payment by instalments; (d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferr....
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...., 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." 4.4 From the above circular it is abundantly clear that in a case where there is a transfer of right of use in any goods the same is leviable to Sale Tax / VAT as deemed sale of the goods where the transfer of right to use involves transfer of both possession and control of the goods to the user of the goods, the same is not excigible to service tax under the category of supply of tangible goods service. This issue has been considered in various judgments time and again. Some judgments are cited below: Quippo Energy Pvt. Ltd Vs CST 20220-VIL-937-CESTAT-AHM-ST "4. Heard both the sides and perused the records. To appreciate the rival contentions, it would be appropriate to first reproduce Section 65(105) (zzzzj) of the Act....
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....s fix the pattern in which the plant is to be used and the time when it will function. All the permission to be obtained from the statutory authorities to be obtained such as Electrical, Pollution, CCR have to be taken by the Customers, the lessee shall ensure the safety of the plant in a manner similar to its own plant. Customers have to provide fuel, Jacket water & feed water, the site and other facilities. Further, as per clauses of lease agreements, the customers will also indemnify the Lessor against the loss or damage arising to or in connection with plant for the reason other than Lessor's personnel. We also find that the clause 8.6 of agreement between the Appellant and Shah Pulp & Paper Mills Ltd. (Customer) provide as under : - "8.6 By virtue of the agreement, the lessee shall be considered to have possession of the plant and shall have the right to use the plant for the purpose for which it is leased to him." In view of such conditions, the effective control of the gas genset are purely in the hands of customers of the Appellant, as the customers is at his liberty to use the equipments hired by him. It is seen from the agreements that there is no dispute as to the ....
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....tivity is not in the nature of 'service' under the Finance Act in both during the period prior to negative list regime and thereafter as held in the impugned orders. 4.6 We find that the adjudicating authority has held that since as per contract the equipment will remain sole property of equipment provider and skilled manpower supplied by the Appellant are responsible for maintenance operations of gas genset/plant, it is clear that the legal right and effective controls rests with the appellant. We find that except the above findings the Commissioner has not dwelled upon any of the submission and facts made by the appellant. The terms and condition of the agreement are its essence and is deciding factor for determination of nature of contract/agreement. As per agreement the equipment is delivered to the customers ; in terms of Clauses of agreements as discussed above customers are required to get all permissions for installation of equipments; Clause of agreements also provide that customers shall be responsible for all injuries, losses and damages cause to the equipment and shall also indemnify the appellant against any loss or damage arising to or in connection with the; Furth....
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....e deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made;" In view of the Article 366(29A) (d) of the constitution, 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, has to be considered as deemed sale or purchase of goods. It is clear that a tax on the sale or purchase of goods includes a tax for transfer of right to use goods as that is deemed sale. 4.8 It is observed that the appellant have been paying VAT on such leasing of equipments since year 2007-08. We also find that DOF No. 334/1/2008-TRU, dated 29-2-2008 Circular in Para 4.4 also states that "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". It i....
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....on of movies. The agreement between the Distributors and Theatre owners are based on number of shows. The Distributor also enters into a content distribution agreement with the Appellant to deliver the digital content in movie Theaters and to monitor the number of shows exhibited. The Appellant track the number of show with the help of smart card inserted into the DCE as part of the service to Distributors. The Theatre owner in order to receive the Digital content and exhibit cinema require Digital Cinema Equipments which are either owned by them or are taken on lease by them. The Appellant has leased such equipments to some of the Theaters. The Appellant in order to fulfil contract with the Distributors are inserting smart cards to monitor the number of shows in such DCE. They are also collecting Registration fee from Theaters for conducting feasibility study which is reimbursement of expenses. The demand against them is on lease of DCE equipments given to the Theatre owners on the ground that since the effective control and possession of such equipments has remained with the Appellant, hence the services are of "supply of tangible goods for use". We find that the adjudicating aut....
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....rd was limited to keeping track of shows to be played and deducting credit which is available on the smart card for running of shows. It was installed on the direction of the Distributors who had entered into agreement with the Theatre owners for exhibiting their movie and the Appellant had no connection with the Theatre owner in respect of such smart card. Thus the smart card were not an, instrument to control the operation of DCE on behalf of Appellant or has no bearing on the agreement between the Theatre owner and Appellant in case of leasing of DCE Equipments. As far as insurance of the DCE equipment is concerned the Appellant were owners of the equipments and the nature of leasing agreement does not change for the reason that the insurance was done by the Appellant. For bringing any service under the category of "supply of supply of tangible goods for use" in terms of Section 65 (105) (zzz)) it is imperative to see that such service is in respect of services towards supply of tangible goods for use "without transferring right of possession and effective control". In the present case once the DCE were transferred to Theatre owner the Appellant had no control over running of su....
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....d the issue in 2008- 2009 and after response by the Appellant vide their letter dt. 17.06.2009 no further action was taken which shows that even the revenue appears to have satisfied regarding non applicability of tax on activities of the Appellant. Further it is also not in dispute that the Appellant had been paying VAT even before the levy of service tax which is being demanded in the instant case. Even the circular issued in 2008 referred above clearly states that VAT and Service Tax are mutually exclusive. Considering all above factors it appears there is no suppression of fact on appellant's part. It is also observed that the appellant obtained DDQ (Determination of Disputed Question) dt. 26.6.2008 from Commissioner of Sales Tax, who held that lease rental is liable for VAT. The appellant accordingly was discharging the VAT liability even before the taxability on 'Supply of Tangible goods for use. With the above undisputed facts. We are of the clear view that there is no suppression of facts with intent to evade payment of Service Tax on lease rentals on DCE, on the part of the appellant. Therefore we hold that the demand for extended period is clearly time barred. ....
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....Credit Rules and proviso to Rule 3 (5) it transpires that the credit is available even if the Capital goods are removed outside the premises of the provider of output service for providing the output service. As regard a submission of Ld. AR that while removing capital goods to theatre, the appellant was supposed to reverse the cenvat credit as said capital goods was purportedly sold to Cinema theatres. In this regar we find that though the DCE was deemed sold to Cinema Theatre but ultimate ownership of DCE remains with the Appellant. The DCE admittedly used for exhibiting advertisement. The appellant paid service tax on service of sale of space for advertisement which was provided through the said DCE. It therefore leaves no doubt that credit on Capital goods is available even if they are removed outside from the premises of the Appellant for providing output service. We are therefore of the view that there is no ground for denial of cenvat credit on Capital goods to the Appellant. 6.5. We also find that while invoking extended period for demand of Cenvat Credit on DCE, in para 33 of the order in Original, Adjudicating Authority has admitted that the Appellants have disclosed C....