AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1521
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....tures" etc.. For the said services, the appellant filed a declaration under Sub-section (1) of Section 107 of the Finance Act, 2013 read with Rule 4 of the Service Tax Voluntary Compliance Encouragement Rules, 2013 in Form VCES-I dated 24.12.2013, which was received by the VCES Cell under declaration No.KOL1125 dated 24.12.2013, wherein they declared tax dues as under : Period Category of Services Total Dues Declared (In Rs.) Apr/2012 to Dec/2012 Erection, commissioning & Installation Services Rs.2,89,261/- Apr/2012 to Dec/2012 Maintenance and Repair Service Rs.41.45,013/- Apr/2012 to Dec/2012 Site Preparation and Clearance Rs.34,48,930/- Apr/2012 to Dec/2012 Supply of Tangible Goods Service Rs. 1,17,526/- Apr/2012 to Dec/2012 Works Contract Service Rs 21,018/- Apr/2012 to Dec/2012 Transport of Goods by Road Rs.3,752/- Total Rs.80,25,500/- 2.1 On scrutiny of documents and records submitted by the appellant, it appears that the above mentioned declaration dated 24.12.2013, made in Form VCES-1 under Service Tax Voluntary Compliance Encouragement Scheme, 2013 is substantially false in as much as the appellant had ....
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....ce, 'tax dues' of the said appellant, as quantified on the basis of the data/information submitted and intimated by them to SIV, Service Tax, Kolkata amounts to Rs.48,02,767/- including (Rs.46,62,881/- as service tax Rs.93,258/- for education cess and Rs.46,629/- for S.H E. Cess) only under the category 'Supply of Tangible Goods for Use Service' during the period 01.10.2007 to 31.12.2012. 2.6. Thus the total 'tax dues' of the said appellant, as quantified on the basis of the data/information submitted and intimated by them to SIV, Service Tax, Kolkata amounts to Rs.1,28,28,267/- (including Rs.1,24,54,618/- as Service Tax! Rs.2,49,119/- as E. Cess and Rs.1,24,531/- as S.H.E. Cess) only during the period 01.10.2007 to 31.12.2012. However, the appellant while filing the VCES application for the period from April, 2012 to December, 2012 declared their 'tax dues' as Rs.80,25,500/- only. Thus the appellant had suppressed the true amount of 'tax dues' and their VCES application was substantially false. 2.7 A show-cause notice dated 19.12.2014 was issued to the appellant demanding service tax of Rs.1,28,28,267/-. 2.8 The matter was adjudicat....
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....of interest and imposition of penalty shows the passing of the order in closed mind and/or without application of mind. Further imposition of penalty of Rs.10,000/- under Section 77(2) is also erroneous since the sad provision has no manner of application in this case. 3.3 He further submits that the demand was also barred by limitation. The period of dispute is from 2007-08 (October to March) to 2012-13 (April to December) and the Show Cause Notice was issued on 19.12.2014 demand is barred by limitation. Since the order passed by the Ld. Commissioner cannot be maintainable either on merit or on point of limitation, the order passed by him may be set-aside along with consequential benefit to the appellant. 3.4 In support of his contention, he relies on the following judgments: (i) Express Engineers & Spares Pvt. Ltd. Versus Commissioner of CGST, Ghaziabad : 2022 (64) GSTL 112 (Tri-All.); (ii) Lindstrom Services India Pvt. Ltd. Versus Commr. Of C. Ex. & S.T., Faridabad : 2020 (33) GSTL 391 (Tri-Chan.); (ii) MSPL Limited Commissioner of C. Ex. & Cus, Belgau 2023 (69) GSTL 289 (Tri-Bang.). 4. The ld.A.R. for the Revenue, has justified the impugned o....
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....y, - (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim" 16. Section 65(105)(zzzzj) of the Finance Act, which would be relevant for the period prior to 1-7-2012, under which the demand under STGU has been confirmed is as follows : "65. Definition. - In this Chapter, unless the context otherwise requires, "taxable service" means any service (105) provided or to be provided, - to any person, by any other person in (zzzzj) 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 appliance." 17. For the period post 1-7-2012, the demand has been confirmed under Section 66E of the Finance Act. Section 66E(f) of the Finance Act was inserted with effect from 1-7-2012 and subsection (f) of Section 66E is as follows : "66E....
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....urchase or any system of payment of instalments; (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; (e) xx xx xx (f) xx" xx xx (Emphasis supplied) 22. It would be seen from the aforesaid that the Constitution empowers the State to levy Sales Tax/VAT on transactions in the nature of transfer of right to use goods, which were earlier not exigible to sales tax as such transactions were not covered by the definition of "sale" as given in the Sale of Goods Act, 1930. 23. It needs to be remembered that the term "transfer of right to use goods" has neither been defined in the Constitution nor in any of the State VAT Acts or Central Sales Tax Act. The said phrase was interpreted by the Supreme Court in Bharat Sanchar Nigam Ltd., wherein the Supreme Court laid down five attributes for a transaction to constitute a "transfer of right to use goods". In this connection Paragraph 91 of the judgment is reproduced below : "91.To constitute a transaction for the transfer of the right to use the goods, the transaction....
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.... (ix) In some cases the responsibility of maintenance of diesel generator sets was on the appellant; (x) The diesel/fuel and lubricant required to run the diesel generator sets was to be provided by the customers; and (xi) The equipments could not leave or enter the premises of the customers without a pass issued by the customers. 26. Thus, the transaction between the appellant and the customers would qualify as a transfer of right to use goods with the control and possession over the diesel generator sets passing on to the customers. ........................................................................................ 39. What also needs to be noticed is that payment of VAT is also a factor which needs to be taken into consideration while determining whether the transaction is that of sale. The clarification issued by the Department in TRU dated 29-2-2008 supports this view. The relevant portion of the Circular is reproduced below : "Payment of VAT on supply of goods is also a factor to determine whether the transaction is that of sale. In this regard, reliance has been placed on the clarification issued by the Depar....
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....ion can be claimed on the cost of consumables that get consumed during the course of providing service? Service tax is not leviable on a transaction treated as sale of goods and subjected to levy of sales tax/VAT. Whether a given transaction between the service station and the customer is a sale or not, is to be determined taking into account the real nature and material facts of the transaction. Payment of VAT/sales tax on a transaction indicates that the said transaction is treated as sale of goods. (Emphasis supplied) 41. Thus, for all the reasons stated above, it is more than apparent that the supply of diesel generator sets to the customers would not amount to STGU service for the period from 1-4-2011 to 30-6-2012, or a declared service from 1-7-2012 to 2014-15. The orders passed by the Commissioner (Appeals), therefore, cannot be sustained." 9. Further, in the case of Lindstrom Service India Pvt. Ltd. (supra), this Tribunal has examined the issue and observed as under : "25. From the perusal of these judgments, it is evidently clear that the some of the activities of regarding the maintenance and washing of work-wear rented to the clients, by the appel....
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....ys remains within the exclusive possession of their clients and nobody else can use the those work-wear at the same time and hence effective control to lie with the users/clients. The appellant, therefore, does not have control over the use of the work-wear. Thus the activity is not in the nature of 'service' under the Finance Act in both during the period prior to negative list regime and thereafter as held in the impugned order. The order under challenge is, therefore, not sustainable." 10. Further, this Tribunal has examined the issue in the case of MSPL Ltd. (supra), wherein this Tribunal has observed as under : "3.1 We find that the relevant provisions of law as follows : "Section 65(015)(zzzzj) of the Finance Act, 1994 defines taxable service in respect of "supply of tangible goods" as under : "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 the right of possession and effective control of such machinery, equipment and appliances". Section 65B(44) of the Finance Act, 1944 def....
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....dated 20-6-2018 before the Advanced Ruling Authority of Karnataka VAT and the proceedings of Deputy Commissioner of Commercial Taxes, Davangere dated 26-12-2018 wherein it was ordered inter alia that : "Later it has come to the notice of the undersigned that, during the tax period from April, 2007 to March, 2008, the dealer company have leased, Railway wagons to South Western Railways, Hubli and received an amount of Rs. 12,11,68,095/- and this turnover is liable to tax under Entry No. 76 of the IIIrd Schedule to the Karnataka Value Added Tax Act, 2002. Incorporating the same, following notice under sub-section (1) of Section 69 of the KVAT Act, 2003 read with sub-section (1) of Section 36 and sub-section (2) of Section 72 of the KVAT Act, 2003 was issued on 14-11-2018. xx xx xx The Commercial Tax Officer (Enforcement-3), Bellary Inspected your business premises of the dealer company on 6-6-2018 and during the course of inspection, the inspecting authority found that, the dealer company have received Rs. 12,11,68,095/- towards leasing of Railway wagons to South Western Railways, Hubli and not reported this taxable turnover in the monthly return of turnove....
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....should have a legal right to use the goods consequently all legal consequences of such use including any permissions or licenses required therefor 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. 3.3 We find that Supreme Court in the Great Eastern Shipping Company Ltd. v. State of Karnataka (supra) held that : "33. When we peruse the various terms and conditions of the Charter Party Agreement (Annexure I), clause 1 provides that the contractors "let" and the charterer "hire" the goods vessel for six months. The expression 'let' has been used, and the vessel most significantly during the charter period has been placed at the "disposal" of the charterers and under their control in every respect. The charterers have been given the right ....
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....d Grasim. The vehicles are maintained by the petitioners. They appoint the drivers and fix their roster. The licences, permits and insurances are taken in their names by the petitioners, which they themselves renew. The Transit Mixers go to Grasim'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." 3.5 We find that Supreme Court in the case of Aggarwal Brothers v. Haryana and Another (supra) have held that : ....