TaxTMI 
TaxTMI 
2026 (7) TMI 460
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.... Appeal No. Period SCN OIO OIA Tax Demand (Rs.) 1. JVR Enterprises ST/60268/2018 2011-12 and 2012-13 30.08.13 27.02.15 03.01.18 14,24,711/- 2. JVR Enterprises ST/60715/2018 April 2013 to August 2014 13.04.15 23.01.17 23.02.18 8,30,095/- 3. JVR Enterprises ST/60783/2018 2012-13 to 2014-15 22.03.16 23.02.17 15.03.18 8,55,479/- 2. Brief facts of the present case are that the appellants were registered with excise department and also with service tax department as receiver of service of "Goods Transport Agency Service". 2.1 During the relevant period, the appellants entered into lease agreement with another parties for renting out machineries, for which they had received the rent; Machineries were physically moved from appellant's premises to the premises of lessee with all risks. All the repairs, insurance, taxes etc., were to be borne by the lessee party. Moreover, lessee party was bound to indemnify the appellant against any loss and damage to machineries and against third party claim. Further, the lessee party is to use these machineries for its own use and not to further sub-let the....
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...., then in that case service tax is attracted. He further submits that the Hon'ble Apex Court M/s Bharat Sanchar Nigam Limited vs Union of India reported in 2006 (2) STR 161 (SC) has laid down the test to determine whether a transaction involves transfer of right to use goods, which has been followed by the Supreme Court and various High Courts, is as follows: 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 legal right to use the goods consequently all legal consequences of such use including any permissions or licenses required therefore should be available to the transferee; 4.1 He further submits that the transfer of a right to use goods implies that full liberty is vested in the transferee to have the right to use goods to the exclusion of all other including owner of goods. He also submits that a mere contract of hiring, without transfer of control, may be a contract of bailment and not a contract for transfer of right to use goods. Learned Counsel for the appellant further refers to terms of the agreement and submits that it is clear from the agreeme....
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....ession and control has not been transferred to the lessee and the decisions relied upon by the appellant are distinguishable on facts. He further submits that no transfer of right to use the goods has been undertaken in the present and therefore the transaction will be of rendering service within the meaning of Section 65(105)(zzzzj) of the Finance Act. 6. We have considered the submissions of both the parties and perused the material on record. We have also seen the various clauses in the lease deed; after seeing the agreement between the parties, we find that as per the agreement that renting out of machineries for which the lessor appellant receives the rent, the agreement provides that the machinery has been provided to the lessee and set up at the premises of the lessee by the lessor for a period agreed upon. The Revenue depends on the clauses relating to repair, loss and damage and argues that the possession and effective control of the tangible goods is not given to the lessee. 7. Further, we find that right to use tangible goods service was brought under Service tax net by the Finance Act 2008 w.e.f. 16.05.2008 vide Notification No. 18/2008-ST dated 10.05.2008. Furthe....
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....n of the machinery has been transferred as the machinery is set up at the premises of lessee. Thus, out of the two conditions of Transfer of Right of Possession and Effective Control, the first one is not satisfied as the possession of the machinery has been given. Unless the two conditions are satisfied, the service cannot be said to be of supply of tangible goods. On this count alone, the Department's argument falls. The conditions regarding repair loss and damage in the above agreement are of general nature and do not indicate that the right of effective control is not transferred. Further, as the appellants paid applicable VAT on the deemed sale, one should not have a doubt about the right of possession being transferred." 10. Similarly, in the case of MSPL Ltd. Vs. Commissioner of Central Excise and Customs, Belgaum, Karnataka reported in 2024 (129) GSTR 212 (CESTAT-Bang.), it is held as under: 3.2 We find that this issue of "supply of tangible goods" has come before various courts and Tribunals for scrutiny. We find that honourable Supreme Court in the Bharat Sanchar Nigam Ltd. v. Union of India(s) have enunciated the principle of transfer of right to goods an....
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....f right to use the vessel. In our considered opinion there is not even an iota of doubt that under the charter agreement coupled with the instructions to tenderers, general conditions and special conditions for the contract as specified in the tender documents and charter-party clauses, there is a transfer of right to use the vessel for the purposes specified in the agreement. 34. To constitute a transaction for the transfer of right to use of goods, essential is, goods must be available for delivery. In the instant case, the vessel was available for delivery and in fact, had been delivered. There is no dispute as to the vessel and the charterer has a legal right to use the goods, and the permission/licence has been made available to the charterer to the exclusion of the contractor. Thus, there is complete transfer of the right to use. It cannot be said that the agreement and the conditions subject to which it has been made, is not a transfer of right to use the goods, during the period of six months, the contractor has no right to give the vessel for use to anyone else. Thus in view of the provisions inserted in article 366(29A)(d), section 5C, and definition of ....
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....ransaction must be like a lease. 6. Where there is a transfer of a right to use goods for consideration, the requirement of the abovementioned provision of the said Act is satisfied and there is deemed to be a sale. In the instant case, the assessees owned shuttering. They transferred the shuttering for consideration to builders and building contractors for use in the construction of buildings. There can, therefore, be no doubt that the requirements of a deemed sale within the meaning of the abovementioned provision of the said Act are satisfied." 3.6 We find that Tribunal in the case of Kinetic Communications Ltd. v. Commissioner of Central Excise, Pune-l' held that: "7, It is seen from the records that there is no dispute as to the fact that the capital goods are in the possession of the lessee and is being used by him for the intended purpose without any interference or hurdle from the appellants. On going through the clauses of agreement as produced before us, we find that the appellants had handed over the capital goods' possession to the lessee as also the right to use. These two important factors that determine the requirement as to whether....
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....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 Eastem 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 1), 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 to use all outfits, equipment, and appliances on board the vessel at the time of the delivery, Including the whole reach, burthen, and deck capacity. Thus, in our considered opinion, merely by providing the s....
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....ves 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: "5. The said Act defines 'sale' to mean the transfer of property in goods for cash or deferred payment or other valuable consideration and Includes the "transfer of the right to use any ....