TaxTMI 
TaxTMI 
2024 (7) TMI 999
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.... i.e. in the form of statement of first show 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....
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....ll, desire and requirement. f) Switch on/off of the DG set is controlled by the client and not by your appellant. g) Your appellant is not entitled to transfer, 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 D....
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....upply of tangible goods will attract service tax or otherwise is that whether such arrangement of supply of tangible goods attracts VAT under the State VAT Act or otherwise. In the present case, admittedly the appellant 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 ....
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....ds without transferring the right of possessions or by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods, were liable to service tax. 4.2 To fall within the definition of taxable service, fallowing three conditions are required 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 Equipmen....
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....s to use the goods?" The Hon'ble Supreme Court in the said case on this issue inter alia observes as under :- "90. The entire infrastructure/instruments/appliances and exchange are in the physical control and possession of the petitioner at all times and there is neither any physical transfer of such goods nor any transfer of 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 go....
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.... one person to another in the course of trade or business, includes the transfer of right to use of any goods for any purpose. The Section of the said Act also provides levy of tax on the transfer of the right to use any goods. Article366(29A)(d) inserted by the Constitution (46th Amendment) Act, 1982 on 2-2- 1983 also reads as under : "366. (29) "tax on income" includes a tax in the nature of 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,....
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....e tax can be demanded, as held in various judgments and relied upon by the Appellant in the present matter. 4.9 Following the cited decisions and our independent observations in the facts of the present cases, we are of the considered opinion that the demand raised cannot sustain and requires to be set aside. 5. Accordingly, the impugned orders are set aside. The appeals are allowed with consequential relief if any, as per law." The similar issue has also 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 ....
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....l also indemnify the appellant against any loss or damage arising to or in connection with the equipment for the reason other than normal wear or tear; Clause 16A as per which the appellant has transferred the right to use of DCE exclusively to the theatre owner and the theatre owner shall have effective control of the DCE and shall be free to make its own use for theatrical exhibition purpose at its sole discretion. The Ld. Senior Counsel appearing on behalf of appellant has argued by citing 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 ....
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....ellant were paying VAT since 2006 and the services of "supply of tangible goods" came into service tax net later. The subject DOF was issued before the enactment and intended that the "proposed service" would not include the transaction on which VAT is "Payable or paid". The theaters are free to choose which movie to be displayed, the number of shows, the timing of shows, weather to play a movie or not and also have operational control over equipment. From these facts, it prima facie appears that the 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....
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.... case may be. The advertisers were into agreement with the appellant for such advertisement. Further we find that as per Rule 2(a) of Cenvat Credit Rules, 2004 specified capital goods used for providing output service would be eligible for credit. In this case the capital goods are specified capital goods and has been used for providing the output services of the appellant namely content delivery services and sale of space for advertisement service. It is not in dispute that equipments are used for providing the output 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 e....
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....merit to the adjudicating authority. The demand of service tax on lease rentals and corresponding interest and penalty for the extended period is set aside being time-bar. 8. The appeal is disposed of in the above terms." The above decision has been upheld by the Hon'ble Supreme Court as reported at UFO Moviez Private Limited 2022 (61) GSTL 4 (SC), wherein the Hon'ble Apex Court held as under: "2. In the facts of the present case as it is not disputed that the respondent had regularly paid amount towards VAT liability in respect of the subject goods during the relevant period, the question of claiming service tax thereon does not arise. 3. Accordingly, in the facts of the present case, the civil appeal is dismissed." From the above decisions it can be seen that in a case where supply of goods has been treated as deemed sale under article 366 (29A) of Constitution of India. Accordingly, it was held that on such transaction no service tax is payable. 5. In view of the above settled position and discussion and findings given by us hereinabove, we are of the considered view that the supply of DG Set to the client of the appellant is....