TaxTMI 
TaxTMI 
2025 (7) TMI 79
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....espondent and their customers ? b. Whether the service provided by the respondent as supply of 'Tangible Goods Service' when there is an activity of supply of tangible goods for use by its customer and the said tangible goods have been supplied by the respondent to its customer without transferring right of possession and effective control of such tangible goods ? c. Whether the learned Tribunal erred in holding that the effective control of the equipment is with the service recipient though the agreement contains that the effective control of the supplied equipment was with the respondent ? d. Whether the transfer of right to use of the equipment by the respondent to its customer on rental basis for limited purpose comes within the purview of supply of tangible goods for use as per provision of Section 65(105)(zzzzj) of the Finance Act, 1994 ? e. Whether the payment of VAT on rentals of the equipment is a deemed sale within the meaning of Article 366(219A) of the Constitution of India ? f. Whether the learned Tribunal is erred in passing the impugned order dated 06.06.2024 by not considering the principles laid down by the Hon'ble Supre....
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....mount against the said service in the ST-3 return and did not pay service tax thereon during the period April, 2011 to March, 2015. The department referred to Section 65(105)(zzzzj) of the Finance Act, 1994 and after referring to the decision of the Hon'ble Supreme Court in Bharat Sanchar Nigam Ltd. vs. Union of India, 2006 [2] STR 161 [SC] proceeded to examine the terms and conditions of the agreement entered into between the assessee and their clients. In the show cause notice it was alleged that the assessee are providing server, computers, printers, computer peripherals, etc. to different clients on hire without transferring right to use of such tangible goods as they have restricted removal/shifting of the equipment from one location to another. According to the department such restricted right to use the equipment can never be construed as 'transfer of right to use'. Furthermore, the maintenance and repairing of the said computers and accessories are being carried out either by the assessee or by their approved agent. Thus, it was alleged that the assessee are effectively retaining control over the said computers and accessories and such transaction cannot be termed as 'deeme....
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....) of the Constitution of India. Further, it was stated that in terms of the agreement effective right to use and control of the equipment was transferred to the clients of the assessee, it paid state VAT/GST as applicable and, as such, the revenue did not suffer service tax, be deemed to sale under the Constitution of India. The assessee referred to the decision of the Hon'ble Supreme Court in Bharat Sanchar Nigam Limited [supra] and in paragraph 91 of the judgment where the Hon'ble Supreme Court has laid down the conditions/attributes to constitute transfer of right to use the goods. The assessee also referred to the letter of the Ministry dated 29.2.2008 and contended that based on such instruction, in assessee's case since the entire amount of rental charges has suffered VAT that does not arise any question of payment of service tax on the same account. Several decisions of the learned Tribunal were referred to as well as the ruling given by the authority for advance ruling. With regard to invoking the extended period of limitation the assessee submitted that the extended period cannot be invoked since there was no fraud, collusion or any willful mistake or suppression of fac....
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....ective control of the equipment supplied to the customers all along during the entire period of the agreement and the customers were making use of the equipments under the effective control of the assessee who exercised its right over the equipment during the entire period when the agreement was in existence. The adjudicating authority referred to the decision of the Hon'ble Supreme Court in BSNL and held that the tests/conditions laid down therein do not stand fulfilled in the case of the assessee. Several other decisions of the learned Tribunal were also referred to and the contentions raised by the assessee were rejected and the proposal to levy service tax as made in the show-cause notice was affirmed. The objection raised by the assessee with regard to invoking the extended period of limitation was also rejected and ultimately the entire proposal made under the showcause notice was confirmed. 7. This order was put to challenge before the learned Tribunal by the assessee and the assessee has been successful and aggrieved by the same the Department is on appeal before us. 8. In the preceding paragraph we have mentioned upon the salient features of the agreement entered int....
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....use including any permission or licenses required there for 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 goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others." 10. The first two attributes to be fulfilled is that there must be goods for delivery. These tests stand satisfied and is not in dispute. The next attributes is that there must be consensus/ad idem as to the identity of the goods. Department has not raised any objection. Therefore, this attribute also stands satisfied. The third attribute is that the transferee should have a legal right to use the goods - secondly, all legal consequences for such use including permission of license required therefor should be available to the transferee. Admittedly, the computers, printers, servers, computer peripherals and other equipments are hired by the as....
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....of suppression amounts to that which one is legal to state but one intentionally or deliberately or consciously does not state. In other words, the terms were mainly to deliberately omit to state certain things and it was held that the extended period of limitation is inapplicable in the absence of suppression of facts and hence absence of an intent to evade payment of duty. In Uniworth Textiles Ltd. Vs. Commissioner of Central Excise, Raipur, reported in 2013 (288) ELT 161 (SC), it was held that every non-payment/non-levy of duty does not attract extended period. There must be deliberate default. The conclusion that mere non-payment of duty is not equal to collusion or willful misstatement or suppression of facts is untenable. Furthermore, it was held that the act contemplated a positive action which buttresses the negative intention of willful default. Furthermore, the section contemplates two situations, namely, inadvertent non-payment and deliberate default and that the word 'willful default' introduces a mental element and hence requires looking into the mind of the assessee by gauging its actions which is an indication of one's state of mind. Further, the show cause notice ma....