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TMI Blog2023 (5) TMI 654X X X X Extracts X X X X X X X X Extracts X X X X ..... ed service and the sole factor in immunising themselves from the tax is evidence of right to use having been transferred to the charterer - HELD THAT:- Ever since the broadening of the tax net under Finance Act, 1994, controversy over composite transactions involving sale/deemed sale, which are liable to tax only under the laws of the states comprising the Union, as well as service, taxable only under Finance Act, 1994, have been the subject of judicial determination. The plea of exclusion from sales tax imposed by states or of exclusion from service tax stemming from the consideration of the transaction being already subject to the other tax was elaborated at length in the decision of the Hon ble Supreme Court in re Bharat Sanchar Nigam Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Vashi, Navi Mumbai Commissioner of Central Tax, Vashi, Navi Mumbai Versus Shelf Drilling F G Mcclintock Ltd Commissioner of Central Tax , Vashi, Navi Mumbai Versus Shelf Drilling C E Thornton Ltd HON'BLE MR S. K. MOHANTY, MEMBER (JUDICIAL) And HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) Shri Prasad Paranjape, Advocate and Shri Sanjeev Nair, Advocate for applicant appellant-assessee Shri Nitin M Tagade, Joint Commissioner (AR) for the Revenue ORDER PER : C J MATHEW These four appeals - two of Shelf Drilling group of companies and two of Revenue - requiring resolution of identical issue of demand confirmed, under section 73 of Finance Act, 1994, on consideration towards 'bare-boat charter' of 'offshore drilling unit' to M/s Tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile the dropping of demands of ₹ 7,33,51,312 and ₹ 9,15,22,239 in order [order-in-original no. 50-CGST-NM-Commr-KV-2020-21 dated 31st March 2021] of Commissioner of Central Tax (CGST & C.EX), Navi Mumbai, sought to be recovered from M/s Shelf Drilling FG McClintock Ltd [ST/86316/2021] and M/s Shelf Drilling CE Thornton Ltd [ST/86319/2021] for the period from December 2012 to April 2014, is under challenge by Revenue. 3. It is also on record that the four appellants/respondents, incorporated outside India, operate project offices domestically for entering into these charters and which hold registrations under Finance Act, 1994. The 'drilling units (rigs)', for which 'bareboat charter' agreements have been entered into, are deplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om enumeration in Article 366 (29A) (d) of the Constitution and, thereby, barred from taxability under Finance Act, 1994 even if no tax is paid to, or levied by, any state of the Union. It is further contended that the scheme of taxation prior to introduction of the 'negative list' on 1st July 2007 also, confronted with a similar delineation insofar as 'supply of tangible goods' service, subject to levy under section 65 (105) (zzzzj) of Finance Act, 1994, was concerned, the test of distinction was elaborated upon in circular no. 198/2016-ST dated 17th August 2016 of Central Board of Excise & Customs (CBEC) to conform to the decision of the Hon'ble Supreme Court in Bharat Sanchar Ltd v. Union of India [2006 (2) STR 161 (SC)]. Reliance was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Finance Act, 1994, controversy over composite transactions involving sale/deemed sale, which are liable to tax only under the laws of the states comprising the Union, as well as service, taxable only under Finance Act, 1994, have been the subject of judicial determination. The plea of exclusion from 'sales tax' imposed by states or of exclusion from 'service tax' stemming from the consideration of the transaction being already subject to the other tax was elaborated at length in the decision of the Hon'ble Supreme Court in re Bharat Sanchar Nigam Ltd, in Tata Consultancy Services v. State of Andhra Pradesh [(2005) 1 SCC 308] and in several others thereafter. The 'five point' attribute comprising of 'a. There must be goods available for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'right to use' ab initio is an incorrect appreciation of the manner in which the law of contract may apply to a transaction without impacting leviability under a taxing statute. The test of 'right to use', as laid down by the Hon'ble Supreme Court, has not been applied to the transaction by the adjudicating authority while deciding on upholding the demand in the show cause notices. Insofar as the orders impugned in appeal of Revenue are concerned, there is no ground for interference. 9. For these reasons, the impugned order confirming the demand is not consistent with law and merits setting aside. Accordingly, we allow the appeals of the assessees while those of Revenue are dismissed. Cross-objections stand disposed off. ( Order pronounce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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