TaxTMI 
TaxTMI 
2026 (8) TMI 1751
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich had initially adjudicated the four show cause notices. Subsequently, the present O-I-O dated 31.03.2017 has adjudicated only first SCN. The facts in brief relevant for the present adjudication are as follows: - 1.1 M/s Indian Compressors Ltd.(ICL), the assessee herein are registered with the service tax department for providing, "maintenance or Repair Services", Erection Commissioning and Installation Service". The respondents-asseessee are also engaged in manufacturer of "Industrial Air and Gas Compressor" and thus are registered with Central Excise Department also. 1.2 During the course of audit of assessee's records it was observed that the assessee had entered into "Wet Leasing Agreements" with various CNG Gas Vending Companies like Mahanagar Gas Limited, Green Gas Limited etc. for compression of natural gas (CNG) at their outlets. Department observed that under these agreements the assessee was to operate and maintain compressor package and other related equipments at assessee's own cost. The skilled and trained technical manpower to operate those equipment's on 24x7 hours basis was also agreed to be provided by the respondent-assessee. The department formed an opin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rized Representative of the department submitted that four of the impunged show cause notices, the proposal therein was initially confirmed vide the order-in-original dated 02.12.2016. The assessee did not file any appeal against the said order but filed an application requesting for rectification of mistake in the said order only on the ground of inaccuracy of demand calculated in the said O-I-O dated 02.12.2016. Subsequently writ petition was filed before Delhi High Court that too on the ground of seeking rectification as well as clarification with respect to calculation of the amounts as was mentioned to be submitted vide the assessee's letter dated 24.11.2016, that the same have not been dealt with. The impunged order, despite is pursuant to High Court interim order dated 31.03.2017 in the said writ petition, however, has been passed with respect to only one (show cause notice-I dated 24.07.2013 for period of 2008-09 to 2011-12). Remaining three show cause notices for the period of 2012-13, 2013-14 and 2014-15 have not been dealt with in the impunged order. However, the findings arrived that viz-a-viz the merits of the issue involved have been reiterated by Ld. AR. It is furthe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....us to sale / deemed sale of Article 366 (29A) (d) of Constitution of India. The activity is wrongly alleged to be taxable under section 65(105) (zzzzj) of Finance Act 1994for the period till 30.06.2012. For the subsequent period in question(till march 2015). The activity is wrongly alleged taxable under section 65B (44) (a) of Finance (Amendment) Act 2012. 3.3 It is submitted that the possession as well as the effective control of such machinery in question was duly transferred to the lessees / gas companies. Ld. Counsel for the assessee has relied upon the decision of the Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Limited and Anr. Vs. Union of India and others reported as 2006 (2) SCR 823. 3.4 Ld. Counsel for the assessee further submitted that the assessee was paying Sales Tax pursuant to the adjudication order passed by Commissioner of Sales Tax, Bombay as well Commissioner of Sales Tax of NCT of Delhi, that too, to the knowledge of the department. Even the Sales Tax Returns were also provided to the department. The question of claiming service tax thereon does not arise. The decision of Hon'ble Supreme Court in the case of Commissioner of Service Tax-V, Mum....
X X X X Extracts X X X X
X X X X Extracts X X X X
....service tax vide four show cause notice on such amount for such period as mentioned in the table above. The assessee, however, have been treating the said activity as "Transfer of Property" and were discharging the Sales Tax Liability and thus have denied the service tax liability as confirmed under the impugned order. Hon'ble High Court of Delhi vide order dated 04.11.2024 has observed as follows: "(i) Gujarat Adani Energy Ltd. (GAEL) "Wet leasing of booster Compressors" "...we are pleased to award you the Work Order for Wet Leasing of 2 nos. of booster compressors with 2 nos. of dispensers as per the agreements terms and conditions jointly signed by GAEL and ICM authorized signatory. 2. Contractor's Scope of work: - • Delivery of booster along with dispenser at M/s Neelu Motors & Mitesh near APMC CNG refueling stations. • The supplier shall bear the transportation cost & octroi incurred from the suppliers end to the said destination. • The supplier shall install and commission the booster compressor & dispense at his cost. • The operation and maintenance of compressor as well as dispensers....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 15 days of receipt of bills. The monthly billing shall be made as per average derived slab. For the certification of monthly bills, the lessor shall also submit a separate statement giving the station wise log book on breakdowns, non-availability of equipments for that month. This statement shall be duly signed by the SIC. 4.1 All the six Wet Leases have been discussed in detail by the adjudicating authority in the initial O-I-O dated 28.11.2016 (the order is with respect to four of impunged show cause notices). It has been observed from those agreements / wet leases that the Supplier / Lessor / assessee agreed to install and commissioned the CNG Compressor and relevant equipment's including Booster Compressor, Dispenser, Capacitor, Bank, MCB, UPS etc at respondent's own cost. The maintenance thereof was also agreed to be carried out by the respondent at respondent's cost. The compressor / equipment's were to be operated by adequate number of qualified, skilled, trained engineer and technical manpower of the respondent / lessor. 5. Thus it is cleared that the assessee was in possession and was exercising the effective control over the compressor / equipment leased t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dequate number of skilled and trained engineers including technical support manpower to ensure seamless operation of the outlets/machines/on! inc stations or daughter booster stations as the case may be. Thus, the Noticee was in possession and has exercised effective control over such compressors etc supplied to their customers. Therefore, there is no iota of doubt that the wet lease agreements for leasing the compressors and other equipments is a service falling under the taxable category of Supply of Tangible Goods Service. Transfer of right to use any goods is leviable to Sales Tax/VAT as deemed Sale of goods. Transfer of right to use involves transfer of both possession and control of goods to the user of goods. However, in the instant case, going through the various provisions of the agreement, it is evident that there is no transfer of right to use as features of command, domination, regulation etc. is very much in the hands of the noticee. Thus effectively, if the lessee has been provided with control of use of goods it will tantamount to transfer of right to use of goods and service tax will not be chargeable. However, in this case there is a transaction of another person t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ve discussion we hold the extended period has rightly been invoked while issuing the impugned show cause notices. 9. We further observe that the remaining three show cause notices have been adjudicated vide the initial O-I-O dated 02.12.2016. Even Hon'ble High Court Delhi has affirmed those findings while reliing upon Section 65B (44) (a) of the Finance Act for the period post July 2012. The said section read as follows : "65 (44) "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 (ii) a transaction in money or actionable claim;" 10. Article 366 (29A) of the Constitution of India is already held not applicable to the given circumstances. The transfer, delivery or supply of goods other than those which can be viewed as deemed sale by virtue of said article 366 amounts to Taxable Service in light of the aforesaid section 65B (44) of the Finance Act. From the above discussion it stands clear the proposal of all....