2024 (8) TMI 789

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....nder 65B(44)(a)(ii) with effect from 01.07.2012 and Sales Tax/VAT/CST has been paid. 2. Shri Sachin Chitnis with Shri Viraj Reshamwala appearing for the appellant at the outset submits that, in the present case the period involved is post negative list regime i.e. 01.07.2012 and according to amended statutory provisions, the deemed sale in terms of Article 366 (29A)(d) of Constitution of India is not covered under service as defined under Section 65B(44)(a)(ii) of the Finance Act, 1994. He submits that the appellant have paid VAT considering the transaction as deemed sale as right to possession and effective control has been transferred to the service recipient. He further submits that both the lower authorities have decided the matter considering the definition of Supply of Tangible Goods for use in terms of Section 65(105)(zzzzj) of Finance Act, 1994 whereas the individual service definitions were done away with effect from 01.07.2012 therefore the entire basis of the impugned order is without authority of law and on that ground itself the demand is not sustainable. He further submits that this issue is no longer res-integra as in the appellant's own case, it has been decided ....

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.... the renting of Earth Moving Equipment by the appellant is liable to be Taxed under the category of 'Supply of Tangible Goods for Use of Service'. 2. Shri Sachin Chitnis, Learned Counsel along with Shri Kiran Chava, Advocate appearing on behalf of the appellant at the outset submits that in the appellant's own case the with reference to the identical contract this Tribunal has already considered the case and it was held that the renting of Earth Moving Equipment to various clients does not fall under the category of 'supply of tangible goods for use' services on the ground that the right to possession and effective control of such equipment were transferred to the lessee and the same being a deemed sale in terms of Article 366 (29A) of Constitution of India. The transaction is of deemed sale and the appellant have admittedly paid the VAT. Therefore, the impugned order is not sustainable. He placed reliance on the following judgments: GMMCO-2017 (48) STR 476 (T) G.S.Lamba & Sons - 2012-TIOL-49-HC-AP-CT Dipak Nath - 2009 SCC Online Gau 420 Express Engineers & Spares Pvt. - 2022 (64) G.S.T.L. 112 (T) Altech Equipment - 2018-TIOL-2067-CESTAT-DEL ....

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....olely responsible and liable to handle any dispute entered with any third party in relation to the use and operation of the equipment. Further Cl. 14 dealing with title and ownership specifically provides that "equipment is offered by GIMMCO Ltd. only on 'rights to use' basis". Cl. 15 relating to damages provides for compensation to be paid by the hirer to the assessee in case of damage to the equipment during the period of use. These responsibilities cast on the hirer clearly show that the right of possession and effective control of the equipment rest with the hirer; otherwise the hirer cannot be held responsible for misuse/abuse, safe custody/security, liability to settle disputes with third parties in relation to use etc. Further Cl. 4.3 of the agreement provides for charging of VAT at 12.5% on the monthly invoice value which shall be payable by the hirer. These terms and conditions stipulated in the agreement, lead to the conclusion that the transaction envisaged in the agreement is one of "transfer of right to use" which is a deemed sale under Section 2(24) of the Maharashtra Value Added Tax Act, 2002. The Finance Minister's speech and the budget instructions issued by the C.....

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....the lessee. Applying these principles and examining the terms of the contract, the Hon'ble High Court held that the transaction involved was a transfer of right to use Transit Mixers and not transport service and the petitioners had transferred the 'right to use goods' to Grasim. If we apply the ratio of the above decision to the facts of the present case, the transaction involved herein is "transfer of right to use" which is a deemed sale and not "supply of tangible goods for use" service. 6. In view of the foregoing, we are of the considered view that the assessee's activity of giving various equipments on hire does not fall under the category of "Supply of tangible goods for use", hence the same is not liable to service tax w.e.f. 16-5-2008. Now coming to the Revenue's appeal, we find that the ld. Commissioner dropped the demand for the period prior to 16-5-2008 mainly on the ground that the service is of "Supply of tangible goods for use" which came into effect on 16-5-2008, therefore prior to that date the service was not taxable. However, we, in our above findings, held that the service in question is not the service of "Supply of tangible goods for use". In this pos....