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TMI Blog2013 (7) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of the transaction for the transfer of the right to use goods. Control over the Goods – Held that:- the effective or general control does not mean always physical control but it would be under the effective or general control over the goods - the approvals, concessions, licence and permits would also be available to user of the goods - during the period of contract exclusive right to use goods along with permits, licence, etc., vests with the lessee. Stay application - Held that:- Prima facie the appellant has made out a strong case in his favour for grant of waiver of pre-deposit of the dues and stay recovery - The petition is allowed in the favour of the assessee. - ST/654/12 - S/413/13/CSTB/C-I - Dated:- 15-3-2013 - P R Chandrasekharan And Anil Choudhary, JJ. For the Appellant : Shri M H Patil, Adv. For the Respondent : Shri Rakesh Goyal, Addl. Commr. (AR) Per: P R Chandrasekharan: The appeal and stay application arise from Order-in-Original No. 11/ST/2011-12/C dated 22-09-2011 passed by the Commissioner of Central Excise, Nagpur. The said order was challenged by the appellant, M/s. GMMCO Ltd., Nagpur, before the hon'ble High Court of Bombay, Nagpur B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of "deemed sales" and therefore, service tax can not be levied on the same transaction under the category of "supply of tangible goods for use". (b) At the time of introduction of service tax levy on "supply of tangible goods for use", the hon'ble Finance Minister, in para 156 of the Budget Speech for the year 2008-09 had clearly stated that the levy would fall on "right to use goods, in case where VAT is leviable". In the Budget instructions vide Circular MF (DR) 224/1/2008-TRU dated 29-2-2008, it was clarified that "supply of tangible goods for use and leviable to VAT/sales tax as deemed sale of goods, is not covered under the scope of the proposed service". Hence service tax liability is not attracted in the appellant's case. In the service tax provisions effective from July 2012, service has been defined in Section 65B (44) and as per the said definition, service does not include an activity which constitutes transfer, delivery or supply of any goods which is deemed to be sale within the meaning of clause (29A) of articles 266 of the Constitution. (c) In the leasing transaction undertaken by the appellant, the legal right of possession or effective control remains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rented machinery to their client and the legal possession of the equipment remained with the appellant. (vi) The CBEC in the circular dated 29-2-2008 had clarified that "transaction of allowing another person to use the goods, without giving legal right of possession and effective control, not being treated as sale of goods, is treated as service'. Since the present case, effective control, possession and custody of the equipment remained with the appellant, the contract is a service contract and does not involve the transfer of right to use and hence liable to service tax under the category of "supply of tangible goods for use". Accordingly he pleads for putting the appellant to terms. 5. We have carefully considered the submissions made by both the sides. 5.1 Section 65(105) (zzzzj) defines the taxable service in respect of supply of tangible goods for use as follows:- "Taxable service" means any service provided or to be provided to any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transaction, then service tax levy is not attracted. 5.3 A similar issue arose for consideration before the hon'ble High Court of Andhra Pradesh in the G.S. Lamba case cited supra. The petitioners therein entered into a contract with M/s Grasim, manufacturers of ready mix concrete (RMC) for providing transportation service for shipping RMC by hiring specially designed Transit Mixers. Under the contracts, the transit mixers are never transferred and effective control over running and using of these vehicles, as well as disciplinary control over the drivers, always remained with petitioners. It was petitioner's responsibility to obtain route permits, to take the risk or loss of transportation, to decide the shifts for the drivers and vehicles, to maintain and upkeep the vehicles in good condition. The petitioners contention was that the contract was for transport service and not the transfer of the right to use the goods. 5.4 The hon'ble High Court observed that the essential requirement of a transactionfor transfer of the right to use goods are: (1) It is not the transfer of the property in goods, but it is right to use property in goods. (2) Article 366 (29A)(d) rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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