TaxTMI 
TaxTMI 
TaxTMI 
2025 (3) TMI 1136
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.... M/s ASF Buildcon Pvt. Ltd. [ASF Buildcon] with M/s TATA Consultancy Service Ltd. and M/s CMC Limited. The builtup spaces in the property were agreed to be given on lease by ASF Buildcon as per schedule II and the said premises were also to be fully furnished with fitments and equipments as specified in Schedule III. It is, therefore, clear that fitments and equipments were fitted in the leased out premises in accordance with Schedule III. According to clause 7(a) of the lease agreement, rent for lease of buildings and amount for lease of fitouts was separately provided. 3. The department believed that the amount received by ASF Buildcon towards the fitouts and equipments would have to be added to the value received by ASF Buildcon for the lease of immovable property in terms of the agreements but ASF Buildcons did not pay service tax on the amount so received towards fitouts and equipments. 4. According to ASF Buildcons, the amount received for the fitouts was towards "deemed sale" contemplated under article 366(29A) of the Constitution for which it had paid VAT and, therefore, would not be subject to levy of service tax under renting of immovable property services. 5. ....
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....s. Commissioner of Central Excise & CGST, Bhopal -2024 (11) TMI 615- CESTAT NEW DELHI as also to a decision of the Chennai Bench of the Tribunal in M/s Khivraj Techpark Pvt Ltd. vs. The Commissioner of Service Tax, Chennai -2018 (7) TMI1674- CESTAT CHENNAI. 8. The submissions advanced by the learned authorised representative appearing for the department and the learned counsel appearing for ASF Buildcons have been considered. 9. To appreciate the issue that has been raised in this appeal, it would be pertinent to refer to Entry 54 of List II of the Seventh Schedule to the Constitution. It empowers State to levy tax on sales and purchase of goods. The relevant Entry is reproduced below: "54. Taxes on the sale or purchase of goods other than newspaper, subject to the provisions of Entry 92 A of List I" 10. The forty-sixth amendment to the Constitution extended the meaning of "sale or purchase of goods" by giving an inclusive definition to the phrase "tax on the sale or purchase of goods" under article 366(29A) of the Constitution. The said amendment is reproduced below: "366(29A) "tax on the sale or purchase of goods" includes- (a) a tax on transfer, otherwise that in ....
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....ogies Limited - (2023) 5 Supreme Court Cases 469 summed up the principles relating to a "deemed sale" in the following manner: "53.1. The Constitution (Forty-sixth Amendment) Act intends to rope in various economic activities by enlarging the scope of "tax on sale or purchase of goods" so that it may include within its scope, the transfer, delivery or supply of goods that may take place under any of the transactions referred to in sub- clauses (a) to (f) of clause (29-A) of Article 366. The works contracts, hire purchase contracts, supply of food for human consumption, supply of goods by association and clubs, contract for transfer of the right to use any goods are some such economic activities. 53.2. The transfer of the right to use goods, as distinct from the transfer of goods, is yet another economic activity intended to be exigible to State tax. 53.3. There are clear distinguishing features between ordinary sales and deemed sales. 53.4. Article 366(29-A)(d) of the Constitution implies tax not on the delivery of the goods for use, but implies tax on the transfer of the right to use goods. The transfer of the right to use the goods contemplated in sub-clause (d) ....
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....cessions, licences and permits in relation to goods would also be available to the user of goods, even if such licences or permits are in the name of owner (transferor) of the goods. 54.6. During the period of contract exclusive right to use goods along with permits, licenses, etc. vests in the lessee." (emphasis supplied) 14. In G.S. Lamba & Sons and others vs. State of Andhra Pradesh-2012-TIOL-49-HC-AP-CT, the issue that arose before the Andhra Pradesh High Court was whether the contract with M/s. Grasim Industries Limited for transporting the Ready Mix Concrete was for transfer of the right to use Transit Mixers and the following principles were summarised: "40. That brings us to the construction of the agreement between the parties which indisputably came into force on 01.10.2002. The intention of the parties as noticed supra has to be understood by reading the entire agreement; reading a word here or a clause there is not sufficient. Grasim was looking for a transporter to take care of the transporting need of their RMC plants in Hyderabad. The petitioners, who are owners of Transit Mixers, were looking for advancing their business interest in Hyderabad. The la....
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....s batching plants in Miyapur and Nacharam, where they are loaded with RMC and then proceed to the construction sites of customers. The product carried is manufactured by Grasim, which is delivered to the customers and the customers pay the cost of the RMC to Grasim and the petitioners nowhere figure in the process of putting the property in Transit Mixers to economic use. The entire use in the property in goods is to be exclusively utilised for a period of 42 months by Grasim. The existence of goods is identified and the Transit Mixers operate and are used for the business of Grasim. Therefore, conclusively it leads to the only conclusion that the petitioners had transferred the right to use goods to Grasim. For these reasons, we are not able to countenance any of the submissions made by the petitioners counsel." (emphasis supplied) 15. In Petronet LNG Ltd. vs. Commissioner of Service Tax, New Delhi - 2016 (46) STR 513 (Tri.-Delhi), the Tribunal observed as follows: "25. The issue that therefore falls for our consideration is whether the transactions involving the two long-term charters and one short-term charter (of the vessels Disha, Rahi and Trinity Glory, respective....
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....rpose it is hired and shall not misuse or abuse the equipment. Similarly in Cl. 13.3, it is provided that the hirer will ensure the safe custody of the equipment by providing necessary security, parking bay, etc., and will be responsible for any loss or damage or destruction. Cl. 13.5 provides that the hirer shall be solely 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 t....
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....at its sole discretion. The above features of the contract, in our considered view, makes it abundantly clear that it is the ONGC and not the contractor who has exclusive control and dominion over the crane during the subsistence of the contract, though, during the aforesaid period, at times, physical possession of the crane may come back to the contractor. Such temporary physical possession of the contractor, according to us, would hardly be relevant as under the contract the ONGC is vested with the authority to requisition the crane for operational purposes at any time. Besides, such temporary possession of the crane by the contractor does not mitigate against the transfer of the right to use the crane which event, as already indicated on the authority of the decision of the Apex Court in 20th Century Finance Corpn. Ltd. (supra), constitutes the taxable event under article 366(29A)(d) of the Constitution." (emphasis supplied) 18. From the decisions referred to above, it clearly transpires that: (i) Whether there is a transfer of right to use or not is a question of fact which has to determined in each case having regard to the terms of the contract under which there is ....