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TMI Blog2024 (8) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... 366 (29A)(d) of the Constitution of India, is excluded from the definition of service. In the facts of the present case, since the transaction is deemed sale and appellant have paid VAT, the same is clearly covered under sub-clause (ii) of clause (a) of Section 65B(44) which is excluded from the definition of service itself. The activity of the appellant does not fall under any taxable service. Thus, it is clear that transaction of renting of Earth Moving Equipment to various clients firstly, does not fall under supply of tangible goods and secondly, the service prior to 01.07.2012 and subsequent thereto it does not fall under the definition of input service as mentioned above. Therefore, the activity of renting of Earth Moving Equipment to various clients is not a taxable service. The impugned order is not sustainable, the same is set-aside - Appeal allowed. - HON BLE MR. RAMESH NAIR , MEMBER ( JUDICIAL ) And HON BLE MR. C. L. MAHAR , MEMBER ( TECHNICAL ) Shri Sachin Chitnis Shri Viraj Reshamwala , Advocates for the Appellant Shri Sanjay Kumar , Superintendent ( AR ) for the Respondent ORDER RAMESH NAIR : This appeal is filed against Order-in-Appeal No. AHM-EXCUS-001-APP-314-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished on the basis of invoice raised by the appellant whereby the appellant have paid State VAT therefore, the transaction is clearly a deemed sale. The relevant definition of service in terms of Section 65B(44) of the Finance Act, 1994 reads as under:- Section 65B (44) of the Finance Act defines 'Service' to mean: 65B (44) Service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include (a) an which constitutes merely, - (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (294) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim As per the above definition of service in the post 01.07.2012, in the negative list regime with effect from 01.07.2012 it is clear that activity which constitute transfer, delivery or supply of any goods which is deemed sale within the meaning of Article 366 (29A)(d) of the Constitution of India, is excluded from the definition of service. In the facts of the present case, since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5)(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 appliances. While the assessee contends that what they have transferred is right to use which is a deemed sale, the Revenue s contention is that the right of possession and effective control remained with the assessee and hence, the transaction has to be treated as service. 5.2 Revenue s contention is based on the clauses in the agreement relating to restrictions of use by the lessee, provision of skilled operator by the lessor and maintenance and repairs of the equipment by the lessor. Merely because restrictions are placed on the lessee, it can not be said that there is no right to use by the lessee. Such a view of the revenue does not appear to be tenable when we read carefully the provisions of the agreement. Cl. 13 of the agreement provides for Hirer s Covenants. As per Cl. 13.1, the hirer will use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 transaction for 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) read with the latter part of the Clause (29A) which uses the words, and such transfer, delivery or supply would show that the tax is not on the delivery of the goods used, but on the transfer of the right to use goods regardless of when or whether the goods are delivered for use subject to the condition that the goods should be in existence for use; (3) in the transaction for the transfer of the right to use goods, delivery of goods is not condition precedent, but the delivery may be one of the elements of the transaction; (4) the effective or general control does not mean always physical control and even if the manner, method, modalities and the time of the use of goods is decided by the lessee or the customer, it would be under the effective or general control over the goods; (5) the approvals, concessions, li ..... 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