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2024 (7) TMI 999 - AT - Service TaxTaxability - renting of DG Sets - supply of tangible goods for use service - period from 01.07.2012 onwards - HELD THAT - In the appellant s own case 2023 (9) TMI 868 - CESTAT AHMEDABAD for the period before 01.07.2012, this Tribunal has passed the order holding that leasing of DG Set does not amount to service under tangible goods for use. It is clear that in the appellant s own case, their activity does not fall under the supply of tangible goods for use, particularly for the reason that transaction is in the nature of deemed sale under article 366 (29A) of Constitution of India. Though the period involved is post 01.07.2012, and the definition of individual service was done away however even considering the statutory provisions post 01.07.2012, the deemed sale under article 366 (29A), continues to be excluded from the purview of service tax. Therefore, though the above decision is for the period 01.07.2012 but on the point that activity is deemed sale, is clearly applicable even in the present case also. Their activity of leasing of DG Sets in the present case is not liable to service tax - the impugned order is set-aside - appeal allowed.
Issues Involved:
1. Taxability of renting DG Sets under the category of "supply of tangible goods for use service" for the period from 01.07.2012 onwards. Issue-wise Detailed Analysis: 1. Taxability of Renting DG Sets Post 01.07.2012: The central issue in this case revolves around whether the renting of DG Sets falls under the category of "supply of tangible goods for use service" and is thus subject to service tax for the period starting from 01.07.2012. Arguments by the Appellant: - The appellant's representative, Shri Rahul Patel, argued that a previous order by the Tribunal for the period before 01.07.2012 had already determined that leasing DG Sets does not constitute a service under the "supply of tangible goods for use" category. - Post 01.07.2012, the entire service tax framework changed with the introduction of the negative list, which excluded transactions of sale of goods, including deemed sales as per Article 366 (29A) of the Constitution of India. - The appellant contended that since VAT was paid on the leasing of DG Sets, it should not be liable for service tax. He supported his arguments with several judgments and board circulars, including Circular No. 334/1/2008-TRU and Circular No. 198/8/2016-S.T. Arguments by the Respondent: - The respondent's representative, Shri Anoop Kumar Mudvel, reiterated the findings of the impugned order, which classified the service under "supply of tangible goods for use." Tribunal's Findings: - The Tribunal reviewed the previous order and noted that the terms of the agreement indicated a transfer of right to use, possession, and effective control of the DG Sets to the client. This arrangement did not fall under the definition of "supply of tangible goods for use" as per clause 65(105)(zzzzj) of the Finance Act. - The Tribunal emphasized that the supply of tangible goods, where VAT is paid, is considered a deemed sale under Article 366 (29A) of the Constitution and is not subject to service tax. - The Tribunal cited several judgments, including those of Quippo Energy Pvt Ltd and UFO Moviez India Limited, which supported the view that transactions involving deemed sales are excluded from the purview of service tax. Conclusion: - The Tribunal concluded that the appellant's activity of leasing DG Sets is not liable to service tax, as it falls under the category of deemed sale, which is excluded from service tax under Article 366 (29A) of the Constitution. - The impugned orders were set aside, and the appeals were allowed. Final Pronouncement: - The judgment was pronounced in the open court on 16.07.2024, affirming that the supply of DG Sets by the appellant is not liable to service tax for the period post 01.07.2012. This detailed analysis highlights the Tribunal's reasoning and reliance on previous judgments and statutory provisions to determine the non-taxability of the appellant's service under the changed legal framework post 01.07.2012.
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