TaxTMI 
TaxTMI 
2026 (8) TMI 1606
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....e. Dialysis equipment, consumables and others and also providing services of Comprehensive Maintenance Contract (CMC), Annual Maintenance Agreement (AMC) and leasing of equipment. The appellant was paying service tax on AMC and CMC, while they are not paying any service tax on leasing of equipment and considering the same as 'deemed sale' in terms of Article 366(29A) of the Constitution of India and subjected to VAT. However, the said service i.e. leasing of equipment appeared to the department to be a declared service and falls under clause (f) of Section 66E of the Finance Act,1994 which reads as "transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods". The same did not appear to be excluded from the definition of "service" as per Section 66B(44)(a)(ii) of the Finance Act, 1994. 1.2 Department alleged that the appellant had not only retained the ownership of equipments but had also not transferred possession and effective control of said equipment as terms of the agreement appear to indicate that the assessee was providing services only and there was no transfer of the right to use the equipments. The contract/a....
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.... the ambit of service tax with effect from May 16, 2008 by insertion of Section 65(105)(zzzzj) in the Finance Act. 3.1 This was further clarified by TRU of CBEC vide M.F. (DR) Circular No. D.O.F. No. 334/1/2008-TRU dated February 29, 2008 that a transaction would be subject to service tax only in cases where the transaction was that of allowing another person to use the goods, without giving legal right of possession and effective control to such person. The Circular also mentioned that it was relevant to see whether VAT was payable/paid on the transaction. In 2012, negative list based service tax regime came into force w.e.f. 01.07.2012. Section 65B(44) of the amended Finance Act, 1994 contained the definition of "Service": "Service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely:- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or 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....
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....maintenance responsibility lies with the appellant will not conclude the effective control and possession is not with the lessee. Reliance in this regard is placed on the judgment in the case of M/s. Gainwell Commosales Pvt. Ltd. Vs. Commissioner of Customs and Central Excise and Service Tax, Ghaziabad reported as 2026 (4) TMI 1513 - CESTAT Allahabad. 3.4 Learned counsel impressed upon that it is settled principle that mere responsibility for maintaining and repairing machines does not mean that transaction does not involve transfer of the right to use goods. Reliance is place on the following decisions: (i) Great Eastern Shipping Company Ltd. Vs. State of Karnataka reported as 2020 (32) GSTL 3 (ii) Express Engineers and Spares Pvt. Ltd. Vs. Commissioner of CGST Ghaziabad, reported as 2022 (64) GSTL 112 (Tri.- All.) (iii) Petronet LNG Ld. Vs. Commissioner of Service Tax, New Delhi, reported as 2016 (46) STR 513 (Tri.-Del.) (iv) Gimmco Ltd. Vs. Commissioner of C.Ex. & S.T., Nagpur reported as 2017 (48) STR 476 (Tri-Bom) (v) Krushna Chandra Behera Vs. State of Orissa reported as (1991) 83 STC 325 (Orissa) (vi) G.S. Lamba and So....
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.... transactions as "Supply of Tangible Goods Services" (STG) under Section 66E(f) of the Finance Act, 1994, because there was no transfer of the right to use or effective control." 6. Foremost, we need to peruse both the provisions and even the definition of service w.e.f. 01.07.2012 (the period in dispute is Financial Year 2012-13 to June 2017). Transactions involving transfer of right to use goods are to be treated as sales by virtue of the deeming fiction created vide Article 366 (29A) of the Constitution of India. The said Article reads as under: "(29A) "tax on the sale or purchase of goods" includes - (a) ******** (b) ******** (c) ******** (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) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for hum....
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....ation Guide issued by the Central Board of Excise and Customs issued on 20 June 2012, it has been mentioned as under: "It is thus evident that the activities specified as declared services in section 66E do not encroach upon the area of deemed sales. In fact most of the declared services has been specified with the intent of clarifying the distinction between deemed sales and activities related thereto which are outside the realm of deemed sales but qualify as a service." Hence, from the above, it is evident that the scope/ambit of deemed sales is different from that of the service of transfer of goods without transferring the right to use the goods followed by CBE Circular in 2016 (being Circular No. 198/08/2016-Service Tax dated 17.08.2016) to explain the applicability of service tax in case of transactions involving hiring of goods without the transfer of the right to use the goods. Therefore, it is held that sales tax is levied in pursuance of article 366(29A)(d) on transactions which resemble a sale in substance as they result in a transfer of the right to use in goods, instead of the transfer of title in goods. The Finance Act, 1994, deriving authority from the re....
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.... all legal consequences of such use including any permissions or licences 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." 7. Reverting to the facts of the present case, we have first perused the agreement dated 23.03.2015 executed between appellant and the Fortis Hospital, Amritsar and observed following clauses: 7.1 Lease Fee per Treatment In consideration of Fresenius providing or leasing the Equipment to FORTIS AMRITSAR upon and subject to the terms of this Agreement, FORTIS AMRITSAR shall, without need of demand, pay Fresenius a lease fee on a 'per treatment' basis (in aggregate, the "Lease Fee") plus applicable taxes in accordance with the rates and the payment term or cycle prescribed in Schedule B at....
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....dules attached hereto, shall prevail. In the event that any amendments are required to be carried out to this Agreement pursuant to any such approved guidelines, the parties agree to follow the procedure to amend this Agreement as set forth in Clause 11.5 below. 7.2.4 The guidelines accepted and approved by parties in accordance with clause 4.3, and any amendments to this Agreement carried out, as applicable, in terms of clause 11.5, shall be binding on the parties as well as their respective employees, directors, agents, representatives, personnel and other staff. 7.3 Other Obligations of Parties 7.3.1 Obligations of Fresenius Fresenius shall provide, all at its own cost, the following: (a) The Equipment listed in Schedule A hereof; (b) User manuals/operations manual required to operate and maintain the Equipment; (c) The maintenance and supply of necessary spare parts and materials for the Equipment; (d) The insurance for the Equipment. 7.4 Installation of the Equipment FORTIS AMRITSAR shall use the Equipment only within the premises of the Haemodialysis Centre and shall not remove the Equipment, nor....