TaxTMI 
TaxTMI 
2025 (7) TMI 1142
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.... had obtained the Service Tax registration number AFAP P2570F SD002 on 31.07.2012. The Department classified the said service as "SUPPLY OF TANGIBLE GOODS" services mentioned under Section 65(105)(zzzzj) of Finance Act, 1994 and demanded Service tax of Rs. 33,31,038/- for the period from April 2010 to June 2012 vide SCN dated 20.10.2015. Appellant was of the view that the said service was not taxable as it is transportation of cash service. The Adjudicating authority held that the appellant was rendering "supply of tangible goods service" and confirmed the service tax of Rs. 33,31,038/- demanded in the SCN dated 20.10.20215 along with Interest u/s 75 of the Finance Act, 1994 and imposed equal penalty under Section 78 besides, Penalty of Rs. 10,000/- or Rs. 200 per day whichever is higher under section 77(1)(a) and a penalty of Rs. 1000/- under Section 77(2) of Finance Act, 1994. 1.2 The Commissioner (Appeals) upheld the order of the Adjudicating authority and rejected the appeal filed by the appellant. Hence, the present appeal where the issue to be decided is "Whether or not the appellant has provided 'supply of tangible goods service' to the bank". 2. The contract betwe....
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....upply of Tangible Goods Service'. A reading of the definition of this service as incorporated in Section 65 (105)(zzzzj) of the Finance Act read with Circular/Letter D.O.F No.334/1/2008-TRU dated 29.02.2008 would show that said service would get attracted only when the goods are supplied without transferring right of possession and effective control of such goods. The said circular incorporates that "Transfer of Right to Use any goods" is leviable to Sales Tax / VAT as deemed sale of goods [Article 366 (29A)(d) of Constitution of India]. Transfer of Right to Use involves transfer of both possession and control of goods to the user of such goods. Service Tax is payable only in cases where there is no deemed sale and no Sales Tax/VAT is payable. 3.5 When a cash van is provided with a driver, under a contract entered in to with the Bank, the driver will no doubt have the custody of the van but the bank will have the possession and effective control of the van as the driver has to drive the van as per the bank's instructions. This may contrast with a situation where there is no contract but bank randomly requests owner/driver of a cash van to transport cash which he may deny in ab....
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....th these judgements, Salmond's Jurisprudence was relied. It is held that even if driver is provided by the owner of the vehicle, if said driver has to follow the instructions of the person/institution who has taken vehicle on hire, the effective control and possession is said to be transferred. In such case, Sales Tax is payable. 3.8 In the present case, a reading of the contract would show that the effective control and possession of the "Cash Delivery Van" would be passed on to the Bank. It being so, the activity would not be covered under the scope of "Supply of Tangible Goods Service" as the same would be considered as 'deemed sale'. 3.9 Without prejudice to the aforesaid submission, Learned Advocate submitted that even otherwise also, the demand fails as it is confirmed under "Supply of Tangible Goods Service". He drew our attention to following judgements/decisions where service was classified by the department as Security Service' but Hon'ble Tribunal held that the service was "Cash Van Service and not the Security Service". It set aside the demand as wrong classification was made by the department and demand was wrongly confirmed. The judgements are as....
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....ot for firing of weapons from inside. 9. Securing of the cash boxes with the vans, thick iron chains should be provided with big pad locks. 10. The Cash Van should be "CASH VAN passing, preferably and have comprehensive insurance covering all risks etc. Accident coverage will be the owner's responsibility The owner should have service tax registration. 11. The owner will have to provide alternate vehicle in case of failure, break down or Servicing etc. 12. Ex-servicemen is preferred as Drivers with a valid driving licence. The drivers/stand by driver verification should be done by the POLICE AUTHORITY, a stand by driver also should be there in case of need. 13. The Cash Van will be required on all working days from 0930 HRS to 1900 HRS. However, its services may be required on Sundays/Holidays, for this, no additional charges will be given. Moreover, on certain occasions Van/Car can be used for late hours. For this purpose, no additional charges will be given. Cash Van will be parked in the Bank's premises after cash remittance. 14 Kilometer will be counted from our reporting branch/office. The entries to this effect should be maintained in a log book on daily b....
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....2006 (2) STR. 101 (SC) in para 97 expounded as to what would constitute transfer of "right to use" and held as under:- "97. To constitute a transaction for the transfer of the right to use the goods, the transaction must have the following attributes: (a) there must be goods available for delivery, (b) there must be a consensus ad idem as to the identity of the goods. (c) the transferee should have a legal right to use the goods consequently all legal consequences of such use including any permissions or licences required therefore 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." 5.3 Thus, to decide whether there is a "deemed sale" or "provision of service", in a case, it has to be tested on five parameters as mentioned by Hon'ble Supreme Court in BSNL case. The ....
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....e cranes supplied by the contractor. It thus held that the tests laid down in para 97 of the BSNL decision are not fulfilled in the case. Therefore, on conjoint reading of the aforesaid clauses, it observed that the use of cranes provided by the contractor to ONGC will be by way of a permissive use. The relevant Para 35, 42, 44 of the said decision are reproduced below: "35. On a conjoint reading of the aforesaid terms of the contract, it is apparent that the contractor has an option of replacing the cranes in case one of the cranes was not working properly. Only the contractor is liable to take care of the legal consequences of using the cranes. The contractor must maintain the cranes, and it is for the contractor to pay for consumables like fuel, oil, etc. Even the cranes must be moved and operated by the crew members appointed by the contractor. Moreover, in case of any mishap or accident in connection with the cranes or connection with the use of the cranes or as a consequence thereof, the entire liability will be of the contractor and not of the ONGC. Thus, in short, the contract is for providing the service of cranes to ONGC. The reason is that the transferee (ONGC) is not ....
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....vehicles have been contracted to be provided by the owner to the bank. The vehicle owner is under obligation to make alternate vehicle available to the bank in case of failure, break down or servicing etc. The contractor to provide driver to operate the cash van and the preferred choice was ex- service man. The owner to also provide stand by driver in case of some emergency. The vehicle owner to pay salary and other perquisites as applicable to the driver without any extra payment for this purpose. He has to make all expenses towards running fuel, lubricant, engine oil etc. Maintenance of the vehicle including its wear and tear is the responsibility of the vehicle owner. In case of unsatisfactory service or service detrimental to the interest of bank, the bank could terminate the contract by giving 15 days notice. The vehicle owner on the other hand also has right to discontinue the contract by giving 30 days notice. The terms of the contract, in this case are similar to the ONGC case cited supra. Here also, though the cash van is used for carrying out the work as per the requirement of the bank but the control over the cash van is retained by the contractor who provides the driver....