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2025 (2) TMI 956
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....upply of tangible goods services and paid service tax on the services. 3. The department, on verification of records of the assessee, found that no service tax had been paid and no service tax returns were filed for the period from April, 2010 onwards in respect of the supply of the said services. It is alleged by the department that, on examination and verification of records, it was noticed that the service tax not paid on the amounts received by appellant from its clients during the period from August, 2010 to December, 2010 was approximately Rs. 90,39,826/-. For the period January, 2011 to September, 2011, the total service tax not paid on the amounts received was approximately Rs. 1,33,32,190/-. It is alleged that on being pointed out by the department, appellant paid the entire service tax amount, except Rs. 1,87,313/-. Appellant also paid proportionate interest of Rs. 26,75,499/-. 4. However, from January, 2011, appellant had stopped paying service tax on the ground that the nature of activity provided by appellant attracts Value Added Tax (VAT) and, hence, service tax was not applicable. 5. In response to the letter received from the department, appellant, vide its....
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.... h) Penalty should not be imposed on the assessee for non-filing of Service Tax returns for the period from April 2010 to March 2014, under Section 77 of the Finance Act, 1994; and i) Penalty should not be imposed on the assessee in respect of demand made in (a), (e) and (f) above, under Section 78(1) of the Finance Act, 1994." 7. Subsequent to the above, a statement of Demand No.29/2016- C(ST-II) dated 15.04.2016 was issued to appellant for the further period from April, 2014 to December, 2015 demanding an amount of Rs. 5,73,43,165/- under Section 73(1) of the Finance Act, 1994, with interest under Section 75 and penalty under Sections 76(1) and 77 of the Finance Act, 1994, respectively. 8. Appellant replied to the show cause notice vide letter dated 19.01.2016 read with another letter dated 31.05.2016. Appellant reiterated the stand that its role is limited to mere hiring out cinematographic equipment such as cameras, lenses, generators, cranes, etc., which are then operated by experts engaged by the customers. Appellant stated that its customers take delivery of the equipment and use it in the shooting of films, using their own technicians. Appellant furthe....
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....) I confirm the demand of Rs. 4,53,47,222/- (Rupees Four Crore Fifty Three Lakh Forty Seven Thousand Two Hundred and Twenty Two only) being the service tax payable in respect of 'trade receivable' as on 01.10.2011 in respect of billing made prior to 01.01.2011. g) I order that the assessee shall pay interest under Section 75 of the Finance Act, 1994 in respect of demand confirmed at S. No. (e) and (f) above, from the due date till the date of actual payment. h) I impose a penalty of Rs. 10,000/- (Rupees Ten Thousand only) on the assessee for non-filing of Service Tax returns for the period from April 2010 to March 2014, under Section 77(2) of the Finance Act, 1994; and i) I impose a penalty of Rs. 20,03,54,472/- (Rupees Twenty Crore Three Lakh Fifty four Thousand Four Hundred and Seventy Two only) on the assessee in respect of demand made in (a), (e) & (f) above, under Section 78(1) of the Finance Act, 1994. This penalty amount shall however be reduced to 25% of the Service Tax demanded, if the Service Tax and the interest are paid by the assessee along with the reduced penalty within 30 days from date of receipt of this order in terms of second p....
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....upply of tangible goods would mean any service provided or to be provided to any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances. Therefore, transaction between the company (in liquidation) and the lessee would be a taxable service in relation to supply of tangible goods and since there is no transfer of ownership, there also cannot be any sale/deemed sale and hence, the relationship between the company (in liquidation) and lessee would fall under the definition of taxable service and service tax was payable. ... 13. Having considered the submissions of Mr. Shah and Mr. Adik and the agreement between the company (in liquidation) and the lessee, copy whereof is annexed to the petition, we are satisfied that the relationship between the company (in liquidation) and the lessee cannot fall under the definition of taxable service under Section 65 (105)(zzzzj) of Finance Act, 1994. Section 65 (105)(zzzzj) will apply only where a service is provided in relation to supply of tangible goods wit....
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....keep the Lessor indemnified in full against all costs, expenses, damages and losses (whether direct or indirect), including any interest, fines, legal and other professional fees and expenses awarded against or incurred or paid by the Lessor as a result of or in connection with any claim made against Lessor by a third party arising out of, or in connection with this Agreement to the extent that such claim arises out of the breach, negligent performance or failure or delay in performance of the Agreement by the Lessee, its employees, agents or subcontractors. xxxxxxxxxxxxxxxxxx 6.1. All risk of loss of or damage to the Equipment shall pass immediately from the Lessor to the Lessee on the Commencement Date or on delivery under clause 6.3 as the case may be. 6.2. The Lessee acknowledges that execution of this Agreement shall be conclusive evidence that the Lessee shall have taken delivery of and unconditionally accepted the Equipment on 1st day of April 2011 listed in Schedule I for the purpose of this Agreement and found it to be complete, in good working order, of satisfactory quality, fit for the purpose for which it is required and acceptable in every re....
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....ners to anyone else and the right to use the containers during the period of lease is effectively transferred. 15. Section 65B (44) of the Finance Act, 1994 reads 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) xxxxxxxxxxxxxxxxxx (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29-A) of Article 366 of the Constitution; or xxxxxxxxxxxxxxxxxx 16. Clause (29A) of Article 366 of the Constitution of India reads as under: (29A)-tax on the sale or purchase of goods includes xxxxxxxxxxxxxxxxxx (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; xxxxxxxxxxxxxxxxxx (f) xxxxxxxxxxxxxxxxxx and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of thos....
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....ar ending immediately before the appointed day shall, if his turnover of sales or purchases has, in the said year under any of such earlier laws, exceeded rupees five lakh, or, as the case may be, who was an importer in the said year and his turnover of sales or purchases in the said year had exceeded rupees one lakh, be liable to pay tax, with effect from the appointed day, in accordance with the provisions of this Act, till his certificate or licence is duly cancelled under this Act. Explanation.--For the purposes of this sub-section, the expressions--turnover of sales,--turnover of purchases and-- importer shall have the respective meanings assigned to them under the relevant earlier laws. (2) A dealer to whom sub-section (1) does not apply and whose turnover, [of all sales] made, during the year commencing on the appointed day or any year subsequent thereto, first exceeds the relevant limit, specified in subsection (4), shall, until such liability ceases under subsection (3), be liable to pay tax under this Act with effect from the 1st day of April of the said respective year: Provided that, a dealer shall not be liable to pay tax in respect of [such ....
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....t to the provisions of this Act, any person covered by sub-clause (a), (b) or (c) of clause (8) of section 2 shall be liable to pay tax under this Act, whether, or not the principal is a dealer and whether, or not such principal is liable to pay tax under this Act and whether or not the principals are disclosed. (7) [***] (8) Where a dealer liable to pay tax under this Act is succeeded in the business by any person in the manner described in clause (a) of sub-section (1) or sub-section (4) of section 44, then such person shall, notwithstanding anything contained in this section, be liable to pay tax on the sales or purchases of goods effected by him on and after the date of such succession and accordingly nothing contained in the proviso to sub-section (2) shall apply to him in any year. (9) Any person who is not liable to pay tax under the foregoing, provisions of this section but has been voluntarily registered under the provisions of this Act shall be liable to pay tax from the date of effect of the certificate of registration duly granted to him and accordingly nothing contained in the proviso to subsection (2) shall apply to him in any year. ....
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....e the containers for valuable consideration. Clause (29A) of Article 366 of the Constitution does not distinguish between an owner or a lessor of the goods. Only requirement is there should be a transfer of the right to use the goods for valuable consideration. Factually there has been and, as Mr. Adik fairly agreed, there is no evidence to the contrary, except surmises. 22. Further, service tax is applicable on provision of services and for this purpose, 'service' has been defined under Section 65B(44) of the Finance Act, 1994. Additionally, a 'declared service' is defined under Section 66E(f) of the Finance Act, 1994 to include the following: transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods; 23. "Transfer of right to use goods" is excluded from the definition of 'service' as well as 'declared service' and hence, the same is not subject to service tax. Therefore, it is clear that a transfer of goods which does not involve a transfer of right to use, would be in the nature of a declared service and would be subject to service tax. Thus, only those cases....
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....eferred to BSNL (Supra) where the Apex Court has outlined the pre-requisites for an activity to qualify as a transfer of right to use goods. Respondent no. 3 does not elaborate why these were not applicable to the facts of the case at hand. Respondent No. 3 has proceeded on the incorrect presumption that the company (in liquidation) was not the owner of the containers and hence cannot again transfer the same right to others. The activities outlined by the Apex Court, in our view, squarely applies to the case of the company (in liquidation). 28. In the present case, it is not in dispute that the company (in liquidation) had given the containers to the lessee on rental basis and possession and control was always with the lessee and the sole ground on which the demand is confirmed is that the company (in liquidation) was not owner of the containers. 29. For a transaction to be deemed sale there is no requirement of transfer of ownership and once it is not disputed that the containers are given on lease and possession and control is transferred, it is a deemed sale within the meaning of Article 336(29A)(d) of the Constitution of India and outside the purview of Financ....
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....Moviez India Ltd. MANU/SCOR/02981/2022 : 2002-VIL- 07-SC-ST where the Apex Court has observed that where VAT liability has been discharged during the relevant period, the question of claiming service tax thereof does not arise." Therefore, no service tax will be leviable for the period 1 st July, 2012 to 31 st December, 2015. 14. Before we consider the position for August, 2010 to June, 2012, it would be useful to reproduce the relevant provisions from the Finance Act, 1994. The charging section is Section 66 and what is taxable service is in Section 65(105) of the Finance Act, 1994. Clause zzzzj applies to the case at hand. The said provisions, namely Sections 66 and Section 65(105)(zzzzj) of Finance Act, 1994, read as under: "66. Charge of service tax - There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent. of the value of taxable services referred to in sub-clauses ... (zzzzj) ... of clause (105) of section 65 and collected in such manner as may be prescribed." "65.(105)(zzzzj): "taxable service" means any service provided or to be provided - to any person, by any other person in relation to supply of tang....
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....then prevailing or in force irrespective of whether the hirer is responsible or not for such loss, destruction or damage.... He will allow the owner o or his authorized agent to inspect the said cinematographic equipments as and when required on any day but such inspection shall not be for more than once in a month. He will not part with possession other person. of the cinematographic equipments or ar any item in favour of any other person. He will not sell, hypothecate or pledge the said cinematographic equipments or any item thereof and will have the equipments insured at its full value at its own costs. The hirer agrees that he will not inter-mingle the lenses and other equipments and mount the same on equipments owned by others which may be used by hirer for his production. The owner is not liable for any defects in the said cinematographic equipments or a and the hirer has taken inspection thereof and is satisfied with the condition thereof. any item thereof The owner as part of the package as provided for power generators which shall be used only to operate the equipments supplied by the hirer and shall, not be used for an....