TaxTMI 
TaxTMI 
2026 (9) TMI 1921
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....r 'Supply of Tangible Goods' on transfer of right to use of machinery. * Service Tax of Rs. 31,31,200/- has been confirmed under RCM for the FY 2011-12 and 2012-13, for importing software. * Cenvat Credit of Rs. 21,39,314/- has been denied, on the credit taken under Rule 10 of CCR, 2004 upon demerger. * Cenvat Credit of Rs. 10,40,181/- has been denied for want of documents 3. Regarding the demand of Service Tax of Rs. 3,72,32,281/- confirmed under 'Business Auxiliary Services', the Appellant submits that they have entered into a contract with Caterpillar Inc., USA for developing and promoting the sale of the goods of Caterpillar Inc. For undertaking the activity of soliciting orders. The Appellant submits that they have earned commission based on the sales directly made to customers located in India and countries like Nepal, Bhutan, Myanmar and Sri Lanka by Caterpillar Inc., USA, for the period from October 2011 to May 2014. Since such activity qualifies as export, they did not pay service tax on the same. The Appellant submits that the Ld. Adjudicating authority has confirmed the demand on the ground that the fact of export could not be substantiated ....
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....nditions. As per the agreements, the possession, custody and effective control of the equipment was transferred to the customers during the rental period. Accordingly, the Appellant discharged VAT on such a 'deemed sale' transaction. Since, they have already paid VAT on the said transaction, no service tax was payable. 4.1. In the instant case, the Appellant transferred the effective control, possession and custody of the equipment rented and hence the transaction is in the nature of 'deemed sale' and not a service. The Appellant submits that the instant issue is no longer res integra since in the Appellant's own case, the CESTAT has set aside the demand of service tax on the income earned from renting of equipment, specifically since the Appellant discharged VAT on such rental income : (i) Gainwell Commosales v. Commr. of ST, Kolkata, 2025 (8) TMI 931 - CESTAT Kolkata (ii) Gainwell Commosales Pvt. Ltd. (Formerly Known As Tractor India Pvt. Ltd.) v. CCE, Cus. & ST, Ghaziabad, 2026 (4) TMI 1513 - CESTAT Allahabad (iii) Tractors India Pvt. Ltd. v. Commr. of ST, Kolkata, 2026 (2) TMI 670 - CESTAT Kolkata 4.2. Thus, the Appellant submits that the servic....
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....ts distribution arm. Pursuant to order of the Hon'ble Calcutta High Court dated 12.07.2010, the Appellant was demerged. Accordingly, the Appellant obtained Service Tax registration on 23.03.2010 and in their ST-3 Return filed for the period April 2010 to September 2010, the Appellant took the Cenvat credit of TIL, amounting to Rs. 21,39,314/- in its opening balance as per Rule 10 of the CCR, 2004. Such fact was duly intimated to the Department vide letter dated 26.10.2010. These credits were admittedly availed by the Appellant in its ST-3 return filed for the period April 2010 to September 2010. The period of dispute in the present case is October 2010 to May 2014. The SCN was issued on 19.04.2016. Thus, raising any demand for the period April 2010 to September 2010 as on 19.04.2016 is even beyond the extended period of limitation of 5 years and is liable to be set aside on this ground alone. 6.1. Further, even otherwise, it is submitted that as a result of the demerger from M/s TIL, the Appellant was eligible to carry forward the closing balance of Cenvat Credit in terms of Rule 10 of the CCR, 2004. Accordingly, in the absence of a specific column for availing such credit, the ....
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....vice tax returns filed by the Appellant and the information made available by the Appellant, extended period of limitation ought not be invoked. Reliance in this regard is placed on: a. H.V. Transmission Ltd. v. CCE, Jamshedpur, (2025) 26 Centax 369 (Tri.-Cal) b. Hero Motocorp Ltd. v. CCE, Delhi-III, 2014 (36) S.T.R. 1128 (Tri. - Del.) 8.2. Thus, the Appellant submits that extended period has been wrongly invoked and the demand from October 2011 to March 2014 is liable to be set aside on this ground alone. 8.3. As the demands are not sustainable, no interest is payable. As the allegation of suppression of facts with intention to evade the tax is not established, no penalty imposable. 9. The Ld. A.R. reiterated the findings in the impugned order. 10. Heard both sides and perused the appeal documents. 11. We find that Service Tax demand of Rs. 3,72,32,281/- has been confirmed under 'Business Auxiliary Services'. It is on record that the Appellant had entered into a contract with Caterpillar Inc., USA for developing and promoting the sale of the goods of Caterpillar Inc. For undertaking the activity of soliciting orders, the Appellant have earned commi....
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....tive control, possession and custody of the equipment rented, which is evident from the following relevant terms of the agreement with the customers: "2.2: ... The equipment shall be under the control, custody and possession of the Customer during the tenure of the Agreement for use by them for the purpose for which the equipment is manufactured. 2.3. ... Besides the above, the Customer shall be liable to pay Sales Tax/ VAT/ CST and any other statutory levies, as applicable. 2.7. ... TIL upon the delivery of the equipment at the worksite of the Customer shall not use the same for any other purpose or withdraw the same till the termination of the Agreement except in the event of a default. 3.3. ... The equipment so deployed shall be under the overall supervision of the Customer. 4.4. ... The Customer may also operate the equipment through own skilled and trained operators subject to prior concurrence from TIL in writing. In that event, the Customer will be responsible for any damages/ accidents arising from mishandling or misuse of the equipment." 12.2. We also find that the instant issue is no longer res integra since in the Appellant....
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.... the following decisions: c. Forum Retail Private Limited v. CCE & & C.G.S.T., Kolkata, 2026 (2) TMI 15 - CESTAT Kolkata d. Aditya Dhanraj Enterprises Pvt. Ltd. v. CCE & CGST & Excise, Ranchi, 2024 (3) TMI 405 - CESTAT Kolkata 13.3. Therefore, we hold that on account of revenue neutrality, the entire demand is time-barred. Reliance in this regard is placed on the following decisions: c. Jet Airways (India) Ltd. v. Commissioner [2018 (1) TMI 210 - SC ORDER] d. Forum Retail Pvt. Ltd. v. CCE & CGST, Kolkata, 2026 (2) TMI 15 - CESTAT Kolkata 14. Regarding the disallowance of Cenvat Credit of Rs. 21,39,314/, availed by the Appellant under Rule 10 of CCR, 2004 upon demerger, we find that Prior to 01.04.2010, the Appellant was a division of M/s TIL Ltd., working as its distribution arm. Pursuant to order of the Hon'ble Calcutta High Court dated 12.07.2010, the Appellant was demerged. Accordingly, the Appellant obtained ST registration on 23.03.2010 and in their ST-3 Return filed for the period April 2010 to September 2010, the Appellant took the Cenvat credit of TIL, amounting to Rs. 21,39,314/- in its opening balance as per Rule 10 of the CCR, 20....