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2024 (7) TMI 621 - AT - Service TaxNature of activity - deemed sale or taxable service, namely, Supply of Tangible Goods (STGU) - extended period of limitation - suppression of facts or not. Classification of service - HELD THAT - From the provision of Finance Act and of the Constitution of India, it can safely be said that transfer of use of goods is leviable to VAT under Sales Tax if goods to be used are transferred with possession and effective control in goods. If there is transfer of goods for use but the possession and effective control while transferring the goods is retained with the supplies of goods, the transaction is SUTG taxable under service tax. After perusing the clauses relied upon by the adjudicating authority specifically clause 3, 4, 8 13 of the agreement pursuant whereto the cranes were given on hire it is held that the effective control and possession of cranes was retained with the appellant while giving those on hire to various other parties. In view thereof and in view of the above discussion about various statutory provisions and the case law, there are no reason to differ from the findings arrived at by the original adjudicating authority - Mere presence of another clause agreeing for VAT to be paid at the rate of 5% is held highly insufficient to call the impugned transaction as a transaction of deemed sale in terms of article 366 (29 A) of the Constitution of India. Extended period of limitation - HELD THAT - The activity in question is a taxable service namely Supply of Tangible Goods . Payment of VAT is insufficient to alter said status when apparently complete possessions and the effective control of cranes was not transferred by the appellants. Hence this act of appellant is rightly been held as an act of misrepresentation getting themselves not registered with the service tax department. Despite rendering a taxable service is rightly held as an act of suppression. Hence, there are no fault when the extended period of limitation has been invoked while issuing the show cause notice. There are no infirmity in the order under challenge/Order-in-Original - appeal dismissed.
Issues Involved:
1. Classification of the appellant's activity as 'Deemed Sale' or 'Supply of Tangible Goods Service' (STGU). 2. Applicability of VAT and service tax on the transaction. 3. Invocation of the extended period of limitation for issuing the show cause notice. 4. Allegations of suppression of facts and misrepresentation by the appellant. Detailed Analysis: 1. Classification of the Appellant's Activity: The primary issue was whether the supply of cranes on hire by the appellant constituted a 'Deemed Sale' under Article 366(29A) of the Constitution of India or a taxable service under the category 'Supply of Tangible Goods' (STGU). The Tribunal analyzed the statutory provisions prior to 01.07.2012, particularly Section 65(105)(zzzzj) of the Finance Act, which defines taxable STGU as a service provided without transferring the right of possession and effective control of the goods. The Tribunal emphasized that for a transaction to be considered a taxable service, the right of possession and effective control must not pass to the transferee. 2. Applicability of VAT and Service Tax: The appellant argued that they were paying VAT at 5% on the value involved, indicating that the transaction should be treated as a 'Deemed Sale'. However, the Tribunal noted that the agreements showed that the cranes were operated by the appellant's staff, and all repairs and supplies were managed by the appellant. This indicated that the appellant retained effective control and possession of the cranes, aligning with the definition of STGU. The Tribunal held that the mere presence of a clause for VAT payment was insufficient to classify the transaction as a 'Deemed Sale'. 3. Invocation of Extended Period of Limitation: The appellant contended that there was no suppression of facts and that they had cooperated during the investigation. However, the Tribunal found that the appellant's failure to register with the service tax department and the misrepresentation of their activity as a 'Deemed Sale' constituted suppression. Consequently, the invocation of the extended period of limitation for issuing the show cause notice was justified. 4. Allegations of Suppression and Misrepresentation: The Tribunal upheld the findings of the original adjudicating authority, which had meticulously examined the agreements and concluded that the appellant's activity was a taxable service. The Tribunal noted that the appellant's intent to misrepresent their activity as a 'Deemed Sale' to avoid service tax liability was evident. The Tribunal also referenced the CBEC Circular No.334/1/2008 TRU dated 29.02.2008, which clarified that transactions involving the supply of tangible goods without transferring possession and control are taxable services. Conclusion: The Tribunal dismissed the appeal, upholding the order of the original adjudicating authority. The Tribunal confirmed that the appellant's activity of supplying cranes on hire was a taxable service under STGU, and the invocation of the extended period of limitation was justified due to the appellant's suppression of facts and misrepresentation. The Tribunal found no infirmity in the original order and pronounced the judgment in the open court on 10/07/2024.
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