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TMI Blog2024 (1) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... r factory to M/s Wexford Trading Company Private Limited (WTCPL) under an agreement dated 01.01.2008. Revenue sought to demand service tax under the category of "Supply of Tangible Goods Service" as defined under Section 65 (105) (zzzzj) of Finance Act, 1994. The demand was confirmed by the original adjudicating authority. Learned counsel pointed out that legal right of possession and effective control has been transferred by the appellant to WTCPL. He argued that in these circumstances no tax under the category of supply of tangible goods service could be cleared. He argued that the said contention of the appellant has not been accepted only on the ground that the appellant has not paid VAT/Sales Tax on the said transaction. In para 9 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of Tribunal in the case of GPL Polyfils 2019 (27) GSTL 395 to assert that merely because VAT has not been paid does not imply that right of possession and effective control has not been transferred. 4. Learned Authorized Representative relies on the impugned order. 5. We have considered the rival submissions. We find from para 9.1 to 9.4 of the impugned order that the Commissioner has primarily come to the conclusion that the right of possession and effective control has not been transferred on the basis of the fact that the appellant have not discharged VAT/ Sales tax on the transaction of lease. He has also relied on the Circular of CBEC Dof. No. 334/1/2008-Tru dated 29.02.2008 wherein following has been stated. "4.4 SUPPLY O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be said that the nature of transaction has changed. Payment of VAT or otherwise can only be an indicator, however the conclusion regarding transfer of right of possession and effective control can only be derive from the terms of agreement. 6. The commissioner has also examine the terms of the agreement in para 9.6 of the order. The following are the terms and conditions examined by the Commissioner: ".......................... USE AND OPERATION OF MANUFACTURING FACILITY 5. The Lessee agrees and undertakes that it will: i Obtain all necessary licenses, permits and permission for use of the Factory Building and Plant & machinery and not to use the facility or permit to be used contrary to law or any regulation or by law for the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any law for the time being in force. iii) Not sell, assign, sub-let, pledge, mortgage, charge, encumber, or part with possession of the manufacturing facility in part of in full or otherwise deal with the manufacturing facility or any interest therein nor create or allow to be created any lien on the manufacturing facility whether for repairs or otherwise and in the event of the Lessee failing to do so within a reasonable time, the Lesser shall be entitled to (but shall not be bound) to pay any third party such sum as is necessary to procure the release of the, charge or encumbrance and shall be entitled to recover from the Lessee forthwith all such expenses as might have been incurred for such release; iv) Punctually pay all registrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns or bankers of the Lessee. [Emphasis supplied] It is seen that these terms and conditions are in the nature of the owner protecting his property and legal rights to ownership. These terms and condition by no stretch of imagination can be understood to mean that the appellant did not transfer the possession and effective control of the plant and machinery. The clause 5 of the agreement cited above relates to the proper use of machinery and clause 6 is intended to protect the title of the appellant in the leased property. None of the clauses cited by the Commissioner indicate retaining of possession or effective control of the plant and machinery. Without any evidence to hold that effective control and possession has not been transferred, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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