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TMI Blog2024 (1) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... s fact cannot be classified as supply of tangible goods for use service in terms of Section 65 (105) (zzzj) of Finance Act, 1994. The Hon ble Supreme Court in UFO Moviez India Limited [ 2017 (9) TMI 507 - CESTAT MUMBAI] has given the observation that where the VAT is paid no service tax can be demanded. The impugned orders are set aside - Appeals are allowed. - HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR And HON'BLE MEMBER (TECHNICAL), MR. C L MAHAR Shri R Krishnan, Advocate for the Appellant Shri P Ganesan, Superintendent (AR) for the Respondent ORDER RAMESH NAIR The brief facts of the case are that the appellants are engaged in providing the equipment namely de-humidifier on hire basis. The case of the department is that the hiring of the equipment by the appellants to their client is classifiable under the category of supply of tangible goods for use services which has been introduced with effect from 16.05.2008 under Section 65 (105) (zzzj) of Finance Act, 1994. Accordingly, the same is taxable. Therefore, the show cause notices for the different periods have been issued proposing the demand of service tax on hiring of equipment unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CST 2014 33 STR 719 G S Lamba Sons 2015 324 ELT 316 (A) Great East Shipping co. Ltd. State of Karnataka 2020 32 GSTL 3 (SC) Board Circular No. 334/1/2008-TRU, dated 29.02.2008 3. Shri P. Ganesan, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. We have carefully considered the submission made by both sides and perused the records. We find that as per the undisputed fact of the case that the appellants have given their dehumidifier equipment and also erected, installed and commissioned at the service recipient s factory. As per the module one which is under dispute in the present case the appellants have erected installed the de-humidifier and thereafter the complete possession and control of the machine was given to the customer during the entire renting period. Thus, the possession and effective control was transferred to their customers during the entire renting period. The activity can be classified under supply of tangible goods for use service under Section 65 (105) (zzzzj) of Finance Act, 1994 which reads as under:- (zzzzj) supply of tangible goods services means any services provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease by them. The appellant has leased such equipments to some of the theaters. The appellant in order to fulfil contract with the distributors are inserting smart cards to monitor the number of shows in such DCE. They are also collecting registration fee from theaters for conducting feasibility study which is reimbursement of expenses. The demand against them is on lease of DCE equipments given to the theatre owners on the ground that since the effective control and possession of such equipments has remained with the appellant, hence the services are of supply of tangible goods for use . We find that the adjudicating authority has held that since as per contract the equipment will remain sole property of equipment provider and he shall bear the cost of normal wear and tear and repairs it is clear that the legal right and effective controls rests with the appellant. We find that except the above findings the Commissioner has not dwelled upon any of the submission and facts made by the appellant. The terms and condition of the agreement are its essence and is deciding factor for determination of nature of contract/agreement. The findings of the impugned order nowhere leads to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. As far as insurance of the DCE equipment is concerned the Appellant were owners of the equipments and the nature of leasing agreement does not change for the reason that the insurance was done by the appellant. For bringing any service under the category of supply of tangible goods service in terms of Section 65(105)(zzzj) it is imperative to see that such service is in respect of services towards supply of tangible goods for use without transferring right of possession and effective control . In the present case once the DCE were transferred to theatre owner the appellant had no control over running of such equipments which are to be operated by the persons employed/deputed by the theatre owner. The theatre owner had contractual control over such equipments which was in their possession. All these factors are to be taken into consideration while determining the nature of service. It is observed that the appellant has been paying VAT on such leasing of DCE since year 2006. Further the fact remains that in 2008 they approached the authority for determination of disputed question which ruled that the services are liable for VAT. The adjudicating authority has not given any fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant s part. It is also observed that the appellant obtained DDQ (Determination of Disputed Question) dated 26-6-2008 from Commissioner of Sales Tax, who held that lease rental is liable for VAT. The appellant accordingly was discharging the VAT liability even before the taxability on Supply of Tangible goods for use . With the above undisputed facts. We are of the clear view that there is no suppression of facts with intent to evade payment of Service Tax on lease rentals on DCE, on the part of the appellant. Therefore we hold that the demand for extended period is clearly time-barred. 6.3 As regard demand of service tax on merit for the normal period, we observed in our above discussions that various vital facts and submissions of the appellant were not properly verified by the adjudicating authority, therefore we remand the case relating to lease rentals and registration fees for the normal period with direction to adjudicating authority to verify whether the contentions made by the appellants are correct with regard to the theatre owners having freedom to choose movie, number of shows, timing of shows, to determine whether to play a movie or not and have operational ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting advertisement. The appellant paid service tax on service of sale of space for advertisement which was provided through the said DCE. It therefore leaves no doubt that credit on capital goods is available even if they are removed outside from the premises of the appellant for providing output service. We are therefore of the view that there is no ground for denial of Cenvat credit on capital goods to the appellant. 6.5 We also find that while invoking extended period for demand of Cenvat credit on DCE, in Para 33 of the Order-in-Original, adjudicating authority has admitted that the appellants have disclosed Cenvat credit on capital goods in the return, despite recording this, he has given adverse finding on limitation. Considering the fact that appellants have been paying VAT from 2006 that too at higher rate than the service tax rate, even before SOTGU Services became taxable service, no mala fide can be attributed to invoke extended period for denying Cenvat credit. Placing reliance on Dalmia Cements case of the Madras High Court and in view of our above observations, we are of the view that Cenvat credit on Digital Cinema Equipment has to be allowed, independent of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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