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TMI Blog2024 (10) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... at the lessees shall bear all the maintenance and operating cost of the Diesel Generator Sets during the term of lease. The other clauses of the agreement also point out the fact that lessees have the right of possession and effective control on the Diesel Generator Sets which is evidenced by the agreement which have been shown to us by the learned advocate. The identical issue has been considered and settled by this Tribunal in various decisions. This Tribunal in the case of TECHNICAL DYING SERVICES P LTD VERSUS C.C.E. S.T. -VADODARA-II [ 2024 (1) TMI 452 - CESTAT AHMEDABAD] has held that ' Cenvat credit on Digital Cinema Equipment has to be allowed, independent of taxability on lease Rentals of DCE. Accordingly we set aside the demand of Cenvat credit on Digital Cinema Equipment on merit as well as on limitation.' The VAT has been paid by the appellant on the supply of Diesel Generator Sets and therefore, service tax is not liable to be paid under Supply of Tangible Goods service - there are no merit in the impugned orders-in-original and the same is set aside - appeal allowed. - HON BLE MR. RAMESH NAIR , MEMBER ( JUDICIAL ) And HON BLE MR. C. L. MAHAR , MEMBER ( TECHNI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant has no responsibility for operation and maintenance of Diesel Generator Sets from the date of handing over of Diesel Generator Sets to the lessees and it was the lessees responsibility for operation and maintenance. The learned advocate has submitted that the Hon‟ble Apex Court in the case of BSNL Ors vs. UoI Ors 2023 (8) TMI 1237 CESTAT AHMEDABAD has provided certain guidelines for interpreting the transaction same is transfer of goods/ deemed sale or purely a supply of tangible goods. The guidelines which have been provided by the Hon‟ble Apex Court are as follows:- (a) There must be goods available for delivery; (b) There must be a consensus ad idem as to the identity of the goods; (c) The transferee should have a legal right to use the goods consequently all legal consequences of such use including any permissions or licenses required therefore should be available to the transferee; (d) For the period during which the transferee has such legal right, it has to be the exclusion to the transferor -this is the necessary concomitant of the plain language of the statute viz. a transfer of the right to use and not merely a licence to use the goods; (e) Having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the following matters of the appellant : - Appeal No. Period involved Name of the Lessee Service tax Penalty under Section 78 ST/13593/ 2014 May 2008 to March 2013 Welspun India Limited 1,67,93,120/- 1,67,93,120/- ST/10908/ 2019 2013-14 Welspun Captive Power Generation Limited 19,32,205/- 1,93,220/- ST/10909/ 2019 2015-16 to 2017-18 (Upto June 2017) Welspun Steel Limited 15,77,340/- 1,57,734/- 6. Before proceeding further it will be appropriate to have a glance at the definition of Supply of Tangible Goods service provided under clause (zzzzj) of Section 65 (105) of the Finance Act, 1994 which reads as follows:- (105) taxable service means any service provided or to be provided,- (zzzzj) 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; It is apparent from the reading of above definition that for an act to fall under the Supply of Tangible Goods service‟ the element of not transferring the right of possession of the goods and effective control of the goods should have to be fulfilled. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice recipient, the right to possession and effective control is with the service recipient who possessed the equipment and operated the same with their own employee. It is also undisputed fact that the appellants have discharged the VAT considering the same as deemed sale under Article 366 (29A) of Constitution of India. Therefore, the hiring of equipment under this fact cannot be classified as supply of tangible goods for use service in terms of Section 65 (105) (zzzj) of Finance Act, 1994. This issue has been considered time and again in various cases. In the most relevant case i.e. UFO Moviez India Limited (Supra), the tribunal has passed the order as under:- 6. We find that the first demand of service tax is on lease rentals collected by the appellant from the theatre owner. The appellant is receiving film in analogue format from the distributors/producers and converting into compressed encrypted digital format for which they are charging digitalization fee from the distributors/producers and are also discharging service tax on the same. The distributors on the other hand are entering into agreements with the theatre owners for exhibition of movies. The agreement between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e equipment for the reason other than normal wear or tear; Clause 16A as per which the appellant has transferred the right to use of DCE exclusively to the theatre owner and the theatre owner shall have effective control of the DCE and shall be free to make its own use for theatrical exhibition purpose at its sole discretion. The Ld. Senior Counsel appearing on behalf of appellant has argued by citing case laws that agreement should be read as a whole and not few clauses in isolation to decide the nature of service. 6.1 Further the fact that 600 theatres had exhibited the IPL matches and none of the content was provided by appellant. None of these submissions has been taken into account while passing the impugned order. We also find that in addition the appellant had made various other submissions which do not find mention in order and are discussed in later part of this order. The appellant has contended that the DCE equipments could be operated on standalone basis by the Theatre owner for screening of any content which the theatre owner would procure. The appellant had no say in all such actions of the theatre owner. The role of smart card was limited to keeping track of shows to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter. The subject DOF was issued before the enactment and intended that the proposed service would not include the transaction on which VAT is Payable or paid . The theaters are free to choose which movie to be displayed, the number of shows, the timing of shows, weather to play a movie or not and also have operational control over equipment. From these facts, it prima facie appears that the theatre were having absolute authority to run the Cinema Equipments as per their liking with no right of the appellant to interfere or to be forced by the appellant to run the Equipments as per their directions or control. The appellant has also relied upon the order of Tripura HC in case of Bharti Telemedia Ltd. v. The State of Tripura - 2015-TIOL- 2983-HC-TRIPURA relating to identical situation and the Ld. Senior Counsel has argued that the ratio of said judgment would squarely applicable to the case. 6.2 We also find that the appellant had regularly been filing their returns and even the department from time to time had initiated enquiry with the appellant which was properly responded. The DGCEI also investigated the issue in 2008- 2009 and after response by the appellant vide their letter da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Credit Rules, 2004 specified capital goods used for providing output service would be eligible for credit. In this case the capital goods are specified capital goods and has been used for providing the output services of the appellant namely content delivery services and sale of space for advertisement service. It is not in dispute that equipments are used for providing the output services of the appellant. We also find that there was no contract or agreement between the theatre owners and the persons whose advertisements were exhibited in cinema theaters. Only the appellant had an agreement with such persons to exhibit the advertisements. Thus there is no ground to hold that the appellant were providing any business supports service to theater owner. The DCE equipment at the most can be said to have been jointly used by the appellant and the theater owner to provide the services of Sale of Space for Advertisement. The DCE Equipment being specified capital goods as defined under Rule 2(a) and having been used for providing output service are eligible for availment of credit. In terms of Rule 3(1) of Cenvat Credit Rules and proviso to Rule 3(5) it transpires that the credit is av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appeal is disposed of in the above terms. 4.1 The above decision of the Tribunal has been approved by the Hon ble Supreme Court wherein the Hon ble Apex Court has given the following observation: 2. In the facts of the present case as it is not disputed that the respondent had regularly paid amount towards VAT liability in respect of the subject goods during the relevant period, the question of claiming service tax thereon does not arise. 3. Accordingly, in the facts of the present case, the civil appeal is dismissed. 4. Pending applications stand disposed of. 4.2 From the above decision which is on the identical fact, the Hon ble Supreme Court has given the observation that where the VAT is paid no service tax can be demanded. Other decisions cited by the Learned Counsel support their case. 5. Accordingly, the impugned orders are set aside. Appeals are allowed with consequential relief, if any, in accordance with law. 7. Following the above decision wherein the facts are akin to the one which is under consideration here, we hold that the VAT has been paid by the appellant on the supply of Diesel Generator Sets and therefore, service tax is not liable to be paid under Supply o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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