TaxTMI 
TaxTMI 
2024 (9) TMI 1727
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.... Frame) etc. on lease rent to M/s. Arvind Ltd under lease agreements dated 13.12.2005, 11.08.2009, 06.07.2010 and 24.07.2013 but fail to pay the service tax under the category of supply of tangible goods for use service. Hence, periodical show cause notices were issued for recovery of service tax along with interest and penalty. The show cause notices were adjudicated vide Orders-In-Original No. AHM-SVTAX-000- ADC-40-16-17 dated 06.03.2017 wherein demand of service tax was confirmed along with interest and penalty. Being aggrieved by the said Orders-In-Original the Assessee filed the appeals before the Commissioner (Appeals) who upheld the Order-in-original vide Orders-In-Appeal No. AHMEXCUS-001-APP-158-17-188 dated 08.12.2017 and AHM-EXCUS-002-APP95/2022-23 dated 28.12.2022 and rejected the appeals filed by the Assessee. 1.1 As regard the Revenue's case, the Ld. Commissioner (Appeals) has dropped the demand against Assessee and allowed the appeal against this impugned order, the Revenue filed the appeal bearing No. ST/10444/2020. 2. Shri S.J Vyas, Learned Counsel appearing on behalf of the Assessee at the outset submits that the Assessee have leased out their textile machineries....
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....service provided or to be provided xx xx xx (zzzzj) 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." 4.1 From the plain reading of the above definition, to bring a lease agreement under ambit of service tax under the category of supply of tangible goods for use service it is necessary that during the lease period the right to possession and effective control must be with the lessor and if the right to possession and effective control is transferred to the lessee then such lease will not be covered under the category of supply of tangible goods for use service. To ascertain whether right to possession and effective control has been passed on to the lessee or remains with the lessor, it is necessary to go through the terms of the agreement. Extract of the relevant conditions of the lease agreement dated 11.08.2009 are as below:- THIS INDENTURE OF LEASE made at AHMEDABAD this 11th Day of AUGUST, Two Thousand and Nine By and Between Amol Dicalite Limited, a company incorporated under....
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....hed to the "Said Machinery", and at all time during the continuance of this demise to observe and conform to all such rules, regulations and by-laws relating theretofore the time being in force and at all times during the continuance of these present at their own expenses to execute or cause to be executed all such works as are or ay under or in pursuance of the statutory provisions, orders, rules or bye-laws e directed or required to be executed upon or in respect of the "Said Machinery" or other works in connection therewith.. 4.2 From the reading of the agreement in particular the above terms, it is clear that right to possession and effective control of machineries have been transferred to the lessee M/s. Arvind Ltd. Moreover since the right to possession has been transferred, the transaction is of deemed sale in terms of Article 366 (29A) of the Constitution of India and the Assessee are admittedly paying the said VAT. Therefore, this fact also reinforces the contention of the Assessee that right to possession and effective control have been transferred to the lessee M/s. Arvind Ltd. Therefore, The transaction is of deemed sale and not of supply of tangible goods for use ser....
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....emed sale discharged the VAT liability to the state Government. Therefore, the transaction which is a domain of VAT department, the same cannot be liable to service tax. In the identical facts, the issue has been considered in various judgments wherein the following orders were passed. (i) In the case of G.S. Lamba & Sons Vs. State of Andhra Pradesh Hon'ble Andhra Pradesh has passed the following order: "6. The two issues that spring up from the background facts and the rival submissions are : Whether the petitioners' contract is for transfer of the right to use Transit Mixers to M/s. Grasim Industries Limited for transporting the RMC? And whether the State Sales Tax Appellate Tribunal has committed any error warranting interference under Section 22(1) of the Andhra Pradesh General Sales Tax Act, 1957? Revisional jurisdiction under APGST Act 7. We will first deal with second issue. The petitioners would contend that the exercise of jurisdiction under Section 20(2) of the Act is barred when two views are equally possible and one of which is accepted by the original authority. This argument is sought to be sustained relying on Malabar Industrial Co. Ltd. v. Commissioner o....
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....the assessment, or canceling the assessment and directing a fresh assessment. (Explanation and subsections (2) and (3) are omitted.) (emphasis supplied) 8. The power under Section 263(1) of the Income-tax Act conferred on the Commissioner is exercisable only when an order passed by the assessing officer, "is erroneous insofar as it is prejudicial to the interest of the revenue". In Malabar Industrial Co., Ltd., the Supreme Court held that, "the Commissioner of Income Tax has to be satisfied of twin conditions, namely, (i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue (and) if one of them is absent - if the order of the Income Tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be had to Section 263(1) of the Act". On the other hand, Section 20(1) of the Act confers suo motu power on the Commissioner of Commercial Taxes and other prescribed authorities to call for the record and modify or set aside the order of any assessing authority, "if such order or proceeding recorded is prejudicial to the interests of....
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....n 2(n) defines "sales" to mean transfer of the property in goods for cash in the course of trade or business and includes mortgage, hypothecation, pledge or charge on goods. This definition has eight Explanations. Fourth of them was inserted by Andhra Pradesh Act No. 18 of 1985 with effect from 2-2- 1983. It is to the effect that "a transfer of the right to use any goods for any purpose" shall be deemed to be sale. When is the right to use goods said to have been transferred? To appreciate this, a brief journey into the past relating to tax on sale of goods under Entry 54 of List II of the Seventh Schedule to the Constitution of India may be necessary. 12. The Sale of Goods Act, 1930 defined "sale" as a contract of sale of goods whereby the seller transfers or agrees to transfer the property in goods to a buyer for price. "Goods" means 'every kind of movable property other than actionable claims and money and includes stock and shares, growing crops, grass and things attached or form part of the land which are agreed to be severed before sale or under the contract of sale'. In the pre-constitution era, for the purpose of sales tax law, the expression "sale of goods" was construe....
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....e taxability of various transactions are due to the fact that one (or more) of the ingredients mentioned above are missing from the transaction. This will be clear if the ingredient and its antithesis are represented as in the following chart, which also mentions the situation where the antithesis exists. Ingredient Antithesis (i) Agreement to transfer title Title passing without agreement, or no transfer of title. (ii) In goods Title passing under the agreement but not for goods. Illustrative situation - Works contracts (No agreement to transfer the very goods which come into existence). (iii) For money Title passing for value other than money. Illustrative situation - Barter. (iv) Passing of title as a result of the agreement Title does not pass because there is only an agreement (or some prior step), and no complete sale. Illustrative situations - (a) Hire-purchase (b) Consignment transfer. 2. The basic defect in the present scheme is that a very limited type of economic activity is taxable by the States, -- and other economic activities are not taxable, except by way of excise duties or indirectly by way of stamp duties. This leaves room for loopho....
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....cating), 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 goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. 15. The expression 'tax on sale or purchase of goods' is an inclusive definition. It must receive a wide and expansive meaning. The latter part of clause (29A) contemplates that 'such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods'. The sub-clauses (a) and (b) use "transfer"; sub-clause (c) uses "delivery"; sub-clause (d) uses "transfer of the right to use goods", and sub-clauses (e) and (f) use "supply" of goods while defining deemed sale. Thus under the sub-clause (d) there would be deemed sale if the right to use goods is transferred even though delivery is not an essential part of such transfer of the right to use goods. In other words, the moment the right to use goods is transferred, the taxable event happens. When would such transfer of the right to use goods de facto comes within the gravitati....
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....a specified period, to any lessee or licensee for cash, deferred payment or other valuable consideration, in the course of his business shall, on the total amount realized or realizable by him by way of payment in cash or otherwise on such transfer or transfers of the right to use such goods from the lessee or licensee, pay a tax at the rate of five paise in every rupee of the aggregate of such amount realized or realizable by him during the year : Provided that no such tax shall be levied if the total turnover of the dealer including such aggregate is less than Rs. 1,00,000. 18. The challenge to the above provision failed before this Court in Padmaja Commercial Corporation v. Commercial Tax Officer - (1987) 66 STC 26 : (1987) 4 APSTJ 26. 19. In all probability, for the first time, the scope of above provision fell for consideration before the Division Bench in Rashtriya Ispat Nigam Limited v. CTO - (1990) 77 STC 182 (AP) (RINL-I) comprising Jeevan Reddy and Syed shah Mohammad Quadri, JJ (as they then were). In certain civil works by contractors, RINL provided special machinery like cranes, docers, dumpers, road rollers, compressors etc., for hire charges. The plea was tha....
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.... the State, the fact that subsequently the goods have reached the State where the tax is sought to be imposed, cannot be a ground for determining the tax liability. The decision of the Bombay High Court in 20th Century Finance Corporation Limited, (1989) 75 STC 217, proceeds on the footing that a transfer of the right to use is different from sale without considering the fiction introduced by clause (29A) of Article 266 of the Constitution. .... .... The principle that where a State law while defining the expression "sale" makes the situs a relevant consideration for the purpose of determining a deemed sale, the same cannot bring within its ambit inter-State sales or sales in the course of import and export was again emphasized by the Supreme Court in Builders Association of India v. State of Karnataka, (1993) 88 STC 248 : AIR 1993 SC 991. 21. In order to get over the above dicta, by A.P. Act No. 22 of 1995, Section 5-E was substituted, which reads as under. 5-E. Tax on the amount realized in respect of any right to use goods : Notwithstanding anything contained in this Act;- (a) Every dealer who transfers the right to use any goods for any purpose, whatsoever, whether or ....
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....f goods; and sub-clause (f) on supply of services. The words "and such transfer, delivery or supply ..." in the latter portion of clause (29A), therefore, refer to the words transfer, delivery and supply, as applicable, used in the various sub-clauses. Thus, the transfer of goods will be a deemed sale in the cases of sub-clauses (a) and (b), the delivery of goods will be a deemed sale in case of sub-clause (c), the supply of goods and services respectively will be deemed sales in the cases of subclauses (e) and (f) and the transfer of the right to use any goods will be a deemed sale in the case of sub-clause (d). Clause (29A) cannot, in our view, be read as implying that the tax under sub-clause (d) is to be imposed not on the transfer of the right to use goods but on the delivery of the goods for use. Nor, in our view, can a transfer of the right to use goods in sub-clause (d) of clause (29A) be equated with the third sort of bailment referred to in Bailment by Palmer, 1979 Edn., p. 88. The third sort referred to there is when goods are left with the bailee to be used by him for hire, which implies the transfer of the goods to the bailee. In the case of sub-clause (d), the goods a....
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....am Limited - (2002) 3 SCC 314 : AIR 2002 SC 1305 : (2002) 126 STC 114 (SC) = 2013 (31) S.T.R. 513 (S.C.), the decision of the High Court in RINL-I was affirmed by the Apex Court holding that so as to attract levy of tax under Section 5-E, the essential requirements of the transfer of the right to use must be shown to exist and collection of mere hire charges is not excisable to sales tax. The relevant observations are as under. The High Court after scrutiny and close examination of the clauses contained in the agreement and looking to the agreement as a whole, in order to determine the nature of the transaction, concluded that the transactions between the respondent and contractors did not involve transfer of right to use the machinery in favour of the contractors and in the absence of satisfying the essential requirement of Section 5-E of the Act, i.e., transfer of right to use machinery, the hire charges collected by the respondent from the contractors were not exigible to sales tax. On a careful reading and analysis of the various clauses contained in the agreement and, in particular, looking to Clause 1, 5, 7, 13 and 14, it becomes clear that the transaction did not involve ....
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....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; and (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. 26. At this stage, the following principles to the extent relevant may be summed up. (a) 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 subclauses (a) to (f) of Clause (29A) 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. (b) The transfer of the right to use goods, as distinct from the transfer of goods, is ....
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....ed attention of this Court to the decisions of the Supreme Court in 20th Century, BSNL, RINL-I and RINL-II, and decisions of various High Courts in Ahuja Goods Agency v. State of Uttar Pradesh - (1997) 106 STC 540 (All.), Lakshmi Audio Visual Inc v. Assistant Commissioner of Commercial Taxes - (2001) 124 STC 426 (Kar.), Commissioner, VAT, Trade and Taxes Department v. International Travel House Limited - 2009-10 DST J-77 (Del.), State of Orissa v. Dredging Corporation of India Limited - 25 VST 522 (Ori.) and Indian Oil Corporation v. Commissioner of Taxes - 22 VST 70 (Gau.). 28. The Special Counsel for CT relies on the contract between the petitioners and Grasim, and the observations made by this Court in RINL-I as well as BSNL, to refute the petitioners' case. He also brought to our notice an unreported Judgment of this Division Bench in Jasper Aqua (P) Limited v. State of Andhra Pradesh (T.R.C. No. 270 of 2010, dated 3-11-2010). He also pointed out that the Judgment of the learned single Judge in Indian Oil Corporation was expressly disapproved in Deepak Nath v. ONGC - (2010) 31 VST 337. 29. We have culled out the principles to be applied to determine the nature of the tran....
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....him, and without reference to him to do what he pleases with regard to the captain, the crew, and the management and employment of the ship. That has been called a letting or demise of the ship. The right expression is that it is a parting with the whole possession and control of the ship. Time charters almost always contain expression such as "letting:, "hiring", "hire", "delivery" and "redelivery", which are really apt only in charters by demise. These expressions serve to distinguish such charters from voyage charters, but they do not in themselves characterize such charters as chatters by demise. Indeed many time charters expressly provide that the charter should not be construed as a demise of the vessel. (emphasis supplied) We may now tabulate various precedents in the following statement. Statement of Judicial Decisions Sl. No. Citation Goods and nature of transaction Finding of the Court 1. (1997) 67 STC 199 (Cal) (Bank of India v. CTO) Bank lockers - Hiring of bank lockers fixed and/or attached to the walls and embedded in the floors of strong room specially built for the purpose. The bank collects rent. The transaction is not merely transfer of the r....
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....livery of possession of goods is essential ingredient. If erected tents are given to customers, it will not be "goods" and any transfer of right to use shall be exercisable to sales tax. The transfer of chairs, tables, crockery would be deemed sale. Hiring of shuttering material to builders/contractors amounts to transfer of the right to use goods. The supplying of purified acetylene gas cylinders to customers is transfer of the right to use goods. The hiring of buses for transportation of personnel of the company with effective or general control with the transferee amounts to transfer of the right to use goods. 7. (1999) 9 SCC 317 : AIR 1999 SC 2868 : (1999) 113 STC 317 (SC) (Aggarwal Bros v. S. Har) Shuttering material - Business is to hire of shuttering to builders and contractors who use in the construction of building. Rejecting the challenge to the provision to levy sales tax, High Court of Punjab and Haryana found that possession was transferred for use that customers were in effective control during the contract period and hence transactions fell within the ambit of the transfer of the right to use shuttering material. The Supreme Court affirmed the High Court's view....
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....the State tax. The attributes that qualify transaction for the transfer of right to use the goods are availability of goods for delivery, consensus ad idem about identity of goods. Legal right of transferee to use goods along with permissions or licences for such use, exclusive use by the transferee and owners disentitlement to transfer again to others during the period of contract. 11. (2009) 22 VST 70 (Gau.) (IOC v. Commr., of Taxes) Petroleum Trucks/ Tankers - IOC hires these for delivering petroleum products to dealers paying hire charges - the insurance, fuel, maintenance and expenses for drivers and cleaners have to be borne by owner of the Tankers The learned single Judge held that there is no transfer of the right to use goods for the reason that there was only agreement for paying hire charges that the contractor retained possession and effective control of vehicle and that even though the vehicles were identified, there is a provision for substitution of vehicles. 12. (2010) 31 VST 337 (Gau.) (Deepak Nath v. ONGC) Trucks, Trailers, Tankers and Cranes - the owner makes available these to ONGC under contracts in writing - the owner is paid operational charges as....
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.... to be determined on a construction of the contract. 32. At this stage, we need to visit the principles of interpretation of contracts. In Dr. K. Subbaiah v. C.N. Krishnamacharyulu - Appeal Suit No. 151 of 1991 and batch, dated 29-12-2010, one of us (VVSR, J) after referring to the seven rules of interpretation of deeds from ODGERS' 'Construction of Deeds and Statutes' (1967 5th edn., by Gerals Dworkin - 1st Indian Reprint 1996), and seventeen rules of interpretation treatised in Herbert Broom's Legal Maxims, (1939, 10th edn. by R.H. Kersley), deduced four principles of interpretation of documents, which are as follows. 33. The first principle is to construe the document as a whole. It is common in Courts that the scope of rights and obligations and limitations thereto created under a document are in issue. Unless a document is thoroughly scrutinized and read as a whole, it would not be possible to know the intention of the parties with regard to all these aspects. Quihaeret in litera haeret in cortice [He who considers merely the letter of an instrument goes but skin-deep into its meaning. The intention and parties of the document is more relevant than words used in the docu....
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....s and technical legal terms will always be given their legal meaning. When the language is very clear, the interpreter is precluded from supplying the words or reading something depending on the oral evidence. But as postulated by the maxim Ambiguitas verborum latens verificatione suppletur nam quod ex facto oritur ambiguum verificatione facti tollitur [Latent ambiguity may be explained by evidence; for an ambiguity which arises by proof of an extrinsic fact may be removed in like manner], latent ambiguity may be explained by evidence because the ambiguity often arises by proof of an intrinsic fact, which may be removed in like manner. Sections 91 to 95 of the Indian Evidence Act, 1872 incorporate this principle. 36. The fourth principle is that in the event of the intrinsic incongruities and inconsistencies flowing from the words and language used in the document, "the intention would prevail over the words used." The intention of the parties has to be determined from the attending circumstances leading to the transaction. This principle is an exception to the first three principles. If the language used in the document is very clear, while determining the nature of the documen....
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....by the Special Counsel. The agreement which is part of the record does not contain the day or date and the place of execution of the contract by the parties. From this, Revenue would like the Court to draw an inference that the agreement is not genuine; it is created post transaction to avoid tax, and it is an attempt to project the case that there is no transfer of the right to use transit mixers. It is axiomatic that a document or deed of contract is an instrument written on parchment or paper, ordinarily complying with ten things viz., (i) writing; (ii) on parchment or paper; (iii) date and parties; (iv) recitals; (v) operative part; (vi) exceptions and reservations; (vii) general words; (viii) Habendum [(i) The clause usually following the granting part of the deed which defines the extent of the ownership in the thing granted to be held by the grantee. "The purpose of the Habendum is to limit the estate so that the general implication of the estate which by construction of law passeth in the premises is by the Habendum controlled and qualified (Advanced Law Lexicon by P. Ramanatha Aiyar 3rd edition reprint 2007)] (ii) The part of a deed or conveyance which states the estate....
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....l transporting solution needs. These essentially form part of the recitals. The Habendum of the agreement speaks of the petitioners providing a dedicated fleet of five Transit Mixers painted in a particular style and colour as well as brand name of 'Grasim' to transport RMC, on 24 hours basis every day of the week as instructed by the lessee, failure of which will attract penalties. The staff of the petitioners were required to obey the instructions issued by Grasim, and they should use safety equipment like helmets. These Transit Mixers cannot move or carry RMC to the work sites as per their convenience but are to be used as per the delivery schedule given by Grasim. The counsel also does not dispute that the agreement between the parties speaks of a dedicated fleet of vehicles to be made available on 24/7 basis duly painted in a particular style and colour, and staff being under the instructions of Grasim alone. It is, however, submitted that the parties agreed for five dedicated vehicles as RMC needs to be transported immediately after it is manufactured in the batching plant, and the manufacturer cannot identify and negotiate with the transporter for carrying the products every....
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....style and color. The Second party has agreed to get the same done at their cost and have also assured the First party that they shall paint the vehicles every six months. E. That the Second party has also agreed that the drivers will be suitably dressed in a uniform at all times and the uniform would be neat and clean. The drivers will be qualified and licensed and will not consume any intoxicating substance while on job-whether at the plant or at the site of the customers of the First party. The staff of the Second party engaged in providing services to the First party will also ensure that they obey all the lawful instructions of the officials of the First party and conform to the norms of decency while interacting. All the personnel of the Second party will carry identification cards with them at all times. F. Omitted G. Omitted H. That the Second party will obtain proper receipts from the customers of the First party after the goods are delivered and also submit reports to the First party in the formats supplied by the First party at the required intervals. I. Omitted J. Omitted K. Omitted L. That this agreement will come into force from the 1st October ....
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....o be painted in a particular style and colour which has to be re-painted once in six months. For any third party, during these 42 months, the goods as visible in use would create an immediate impression that they belong to Grasim. No reasonable man would even think that the Transit Mixers, being used for transporting RMC of Grasim, belong to the petitioners and they are only being used to meet the transportation needs of Grasim. 44. The third aspect deals with the petitioners indemnifying Grasim, paying all taxes for permits, insurance etc., the rent/lease amount payable by Grasim, the dispute resolution mechanism and the mutual rights of the parties to modify the agreement. Standing alone all of them by themselves have no meaning. They are clauses intended for working out the contract which is essentially for the petitioners placing the Transit Mixers painted with brand name at the disposal of Grasim for a period of 42 months for transporting RMC manufactured by Grasim. 45. Reading the recitals and various clauses, indeed there is a transfer of the right to use Transit Mixers. All the tests as indicated hereinabove exist in the contract between the petitioners and Grasim. Th....
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....r the supply of cylinders are with or without transferring right of possession and effective control for which a Memorandum of Association needs to be perused. The relevant clauses of the MOU are reproduced below: 4.1 As per sub clause (ii) of main clause 3, the lessee paying the rent, reserved and observing and performing the several covenants of the MOU on its part contained shall peacefully hold gas cylinders without any disturbance by the lesser or any person. 4.2 As per sub clause (ii) of main clause 2, the lessee will have to ensure all registration to use the gas cylinders will be in full force of time during the MOU period. As per sub clause (iii) of main clause 2, the repair and operation of the cylinders has to be carried out by the lessee without any interruption on the part of the lesser during the period of MOU. As per sub clause (iv), maintenance responsibility is with the lessee. 4.3 As per the above terms of the MOU, it is absolutely clear that after giving the cylinders on lease during the entire period of MOU, the effective right of possession, the effective control is with the lessee and not with the appellant. As per the definition of 'supply of tangibl....
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.... Constitution of India. Since the entire value of the transaction is liable to Sales Tax as per the above provision the same would not again leviable to Service Tax under the head of "supply of tangible goods'. On the similar issue this Tribunal passed a judgment in the case of Gimmco Ltd. by relying on the Andhra Pradesh High Court judgment in the case of GS Lamba (supra). In Gimmco Ltd. following finding was given: 5. We have carefully considered the submissions made by both sides and perused the records. 5.1 Section 65(105)(zzzzj) defines the taxable service in respect of supply of tangible goods for use as follows :- "Taxable service" means 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." While the assessee contends that what they have transferred is right to use which is a deemed sale, the Revenue's contention is that the right of possession and effective control remained with the assessee and hence, the transaction has to be treated as....
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....sim, manufacturer of ready mix concrete (RMC) for providing transportation service for shipping RMC by hiring specially designed Transit Mixers. Under the contracts, the transit mixers are never transferred and effective control over running and using of these vehicles, as well as disciplinary control over the drivers, always remained with petitioners. It was petitioner's responsibility to obtain route permits, to take the risk or loss of transportation, to decide the shifts for the drivers and vehicles, to maintain and upkeep the vehicles in good condition. The petitioners contention was that the contract was for transport service and not the transfer of the right to use the goods. 5.4 The Hon'ble High Court observed that the essential requirement of a transaction for transfer of the right to use goods are : (1) it is not the transfer of the property in goods, but it is right to use property in goods; (2) Article 366(29A)(d) read with the latter part of the Clause (29A) which uses the words, "and such transfer, delivery or supply" would show that the tax is not on the delivery of the goods used, but on the transfer of the right to use goods regardless of when or whether t....
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....und for dropping of demand does not exist. The issue relates to demand prior to the period 16-5-2008 needs reconsideration. 7. As per our above findings, we pass following order : 1. Assessee's Appeal No. ST/654/2012 is allowed. 2. Revenue's Appeal No. ST/712/2011 is allowed by way of remand to the original adjudicating authority passing a fresh order only in respect of the demand for the period prior to 16- 5-2008. All other issues related thereto are kept open. 3. Cross objection No. ST/CO/45/2012 stands disposed of. 5. As per the above judgment, being on similar facts and the legal issue, this tribunal has observed that the services would not fall under the category of 'tangible goods for use'. Similar issue has been settled in various judgments as cited by the Ld. Counsel. Considering the facts of the present case, and various judgments on the issue, we are of the view that the transaction of the appellant of leasing of gas cylinders to the group company does not fall under 'supply of tangible goods' services. Accordingly, demand raised under the said category is not sustainable. Hence, the impugned order is set aside. Appeal is allowed." (iii) In the case of ....
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....ity, 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.B.E. & C. also clarify that if VAT is payable on the transaction, then service tax levy is not attracted. 5.3 A similar issue arose for consideration before the Hon'ble High Court of Andhra Pradesh in the G.S. Lamba case cited supra. The petitioners therein entered into a contract with M/s. Grasim, manufacturer of ready mix concrete (RMC) for providing transportation service for shipping RMC by hiring specially designed Transit Mixers. Under the contracts, the transit mixers are never transferred and effective control over running and using of these vehicles, as well as disciplinary control over the drivers, always remained with petitioners. It was....
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.... 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 position the main ground of the ld. Commissioner for dropping of demand does not exist and not relevant. Though the ld. Commissioner in a passing reference mentioned in the impugned order that the service prior to 16-5-2008 does not fall under the "Business Auxiliary Service" but not given the detailed findings. Therefore when the main ground for dropping of demand does not exist. The issue relates to demand prior to the period 16-5-2008 needs reconsideration. 7. As per our above findings, we pass following order : 1. Assessee's Appeal No. ST/654/2012 is allowed. 2. Revenue's Appeal No. ST/712/2011 is allowed by way of remand to the original adjudicating authority passing a fresh order ....