TaxTMI 
TaxTMI 
2024 (7) TMI 999
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....cause notice. It is his submission that post 01.07.2012, the entire law has changed and definition of service has been departed by bringing the activity under service tax net with reference to negative list. Therefore, due to massive change in the service tax provisions, post 01.07.2012, the statement of show cause notice issued for the previous period is not tenable for the period 01.07.2012 onwards. Therefore, the entire proceeding is liable to be set-aside on this ground itself. He further submits that even for post 01.07.2012, the service which was subject matter of taxation under Section 66B of the Act specifically excluded the transaction of sale of goods including deemed sale contemplated by Article 366 (29A) of the Constitution of India. Therefore, even post 01.07.2012, the service of leasing or renting of DG Set on which VAT has been paid is not liable to service tax. In support, he placed reliance on the following judgments and board circulars:- (a) Circular No. 334/1/2008-TRU dated 29.02.2008 (b) Circular No. 198/8/2016-S.T dated 17.08.2016 (c) Gujarat Powerfield Pvt Limited Vs CST - 11928-11930/2023 (d) Quippo Energy Pvt Ltd Vs CST - Order No.11873-11875/2022 ....
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....er, sell, rent out supplied DG set to any other person during the tenure of agreement. h) DG set stands supplied for a substantially longer period of time which indicates intention of the parties as to possession and control. i) Cost of diesel is to be borne by client and not by your appellant. j) DG set once supplied gets attached permanently to earth with loads of connections, cables and attachments to present setup of client's plant. k) DG set once commissioned at the client's plant / premises, it looses it characteristic of isolated machinery but works in synchronization with existing plant/machinery setup of client. l) Client shall be responsible for obtaining approvals, licenses, permissions if any required for generating of electricity. Helping by your appellant in obtaining permissions does not mean that permissions are obtained by your appellant as contemplated by show cause notice." From the above terms, it is observed that the appellant have supplied the DG Set to their client for a fixed period and during the period the DG Set is permanently installed in the premises of the client and the same is operated as per the requirement of the client. The departm....
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....nt are registered with the Gujarat VAT department and discharging VAT on the same supply of DG Set to their client. The Central Board of Excise and Customs in Circular No. 334/1/2008-TRU dated 29.02.2008 with regard to taxability of "Supply of Tangible Goods" clarified as under: "4.4 Supply of tangible goods for use : 4.4.1 Transfer of the right to use any goods is leviable to sales tax / VAT as deemed sale of goods [Article 366(29A)(d) of the Constitution of India]. Transfer of right to use involves transfer of both possession and control of the goods to the user of the goods. 4.4.2 Excavators, wheel loaders, dump trucks, crawler carriers, compaction equipment, cranes, etc., offshore construction vessels & barges, geo-technical vessels, tug and barge flotillas, rigs and high value machineries 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, eq....
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....red to be satisfied - (1) there should be a supply or transfer of goods for use; (2) The transfer must be by way of hire or lease or licences for using the goods; and (3) The right of possession and effective control of such goods must not have passed on to the transferee. Once these above three conditions are satisfied, the provisions of the said entry will be attracted. 4.3 We find that in the present matter there is no dispute related to the above first two conditions. The disputes, centres around the third conditions, that whether the transaction between the Appellant and its customers would involve the transfer of right of possession and effective control or a transfer of right to use. To examine this issue, it would be appropriate to refer to the agreement entered into between the appellant and its customers. As noted, the appellant suppliesPower Generating Equipments / gas genset (Plant) to Customers on standby charges and variable charges basis under the agreement. We find that during the subsistence of the agreement, the lessee alone has the right to use the Plant and even the Appellant cannot trespass that right of the lessees/ customers. The Lessees fix the patte....
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.... right to use such equipment or apparatuses. 91. 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 therefor 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 this is the necessary concomitant of the plain language of the statute - viz. a "transfer of the right to use" and not merely a licence to use the goods; e. Having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others." 4.5 In the light of above discussion and observations of Hon'ble Supreme Court, we note that Appellant have complied with all the tests as laid down in the above case to hold that there is transfer of right to use gas genset. Thus the activity is not in the n....
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....an excess profits tax; (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, deferred payment or other valuable consideration; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those go....
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....lso been considered by this Tribunal in Mumbai Bench and passed the following decision in the case of UFO Moviez India Limited 2018 (11) GSTL 391 which is reproduced below: "5. We have carefully considered the arguments and written submissions made by both sides. 6. We find that the first demand of service tax is on lease rentals collected by the appellant from the theatre owner. The appellant is receiving film in analogue format from the distributors/producers and converting into compressed encrypted digital format for which they are charging digitalization fee from the distributors/producers and are also discharging service tax on the same. The distributors on the other hand are entering into agreements with the theatre owners for exhibition 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 rece....
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.... case laws that agreement should be read as a whole and not few clauses in isolation to decide the nature of service. 6.1 Further the fact that 600 theatres had exhibited the IPL matches and none of the content was provided by appellant. None of these submissions has been taken into account while passing the impugned order. We also find that in addition the appellant had made various other submissions which do not find mention in order and are discussed in later part of this order. The appellant has contended that the DCE equipments could be operated on standalone basis by the Theatre owner for screening of any content which the theatre owner would procure. The appellant had no say in all such actions of the theatre owner. The role of smart card 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 ....
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....e theatre were having absolute authority to run the Cinema Equipments as per their liking with no right of the appellant to interfere or to be forced by the appellant to run the Equipments as per their directions or control. The appellant has also relied upon the order of Tripura HC in case of Bharti Telemedia Ltd. v. The State of Tripura - 2015-TIOL-2983-HC-TRIPURA relating to identical situation and the Ld. Senior Counsel has argued that the ratio of said judgment would squarely applicable to the case. 6.2 We also find that the appellant had regularly been filing their returns and even the department from time to time had initiated enquiry with the appellant which was properly responded. The DGCEI also investigated the issue in 2008-2009 and after response by the appellant vide their letter dated 17-6-2009 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 V....
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....services of the appellant. We also find that there was no contract or agreement between the theatre owners and the persons whose advertisements were exhibited in cinema theaters. Only the appellant had an agreement with such persons to exhibit the advertisements. Thus there is no ground to hold that the appellant were providing any business supports service to theater owner. The DCE equipment at the most can be said to have been jointly used by the appellant and the theater owner to provide the services of Sale of Space for Advertisement. The DCE Equipment being specified capital goods as defined under Rule 2(a) and having been used for providing output service are eligible for availment of credit. In terms of Rule 3(1) of Cenvat 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 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 regard we find that though the DCE was deemed so....