9911796707
TMI Blog2025 (4) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... ies in terms of a lease agreement dated 25.03.2001 to M/s. ABI Showatech India Ltd. The Department being of the view that the activity of lease-renting of the machineries amounted to providing taxable service of 'Supply of Tangible Goods' classified under sub-clause (zzzzj) of clause (105) of Section 65 of the Finance Act, 1994 (Act) with effect from 16-05-2008 vide Notification No.18/2008-ST dated 10.05.2008, issued a show cause notice No.LTUC/153/2012-(DC) dated 27.04.2012 invoking extended period of limitation and calling upon the appellant to pay the service tax demand along with appropriate interest thereon and proposing imposition of penalties. The show cause notice came to be adjudicated vide OIO No. LTUC/149/2013-AC dated 29-04-2013 confirming the demand along with appropriate interest and imposing equivalent penalty. Aggrieved by the OIO, the appellant preferred an appeal before the Commissioner Appeals, who vide the impugned OIA stated that no infirmity was found in the impugned OIO and rejected the Appeal. Aggrieved by the impugned OIA, the appellant has preferred this appeal and is before the Tribunal. 3. Shri. S. Murugappan, Advocate, appeared and argued for the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' service during the period April 2008 to March 2010 and calling upon the appellant to pay the service tax thereon, is tenable or not. 7. It is seen that as per Section 65(105)(zzzzj), 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. 8. Thus, given that in this instance the appellant is leasing out certain machinery, it is only when the right to use the machinery is provided to the service recipient, without giving right of possession and right of effective control, the service would come within the ambit of the aforementioned service of supply of tangible goods. 9. What would constitute a transaction of the transfer of right to use goods was stated in the decision of Bharat Sanchar Nigam Ltd v. Union of India, 2006 (2) STR 161 (SC) by the Honourable Supreme Court, in the course of deciding the question of the nature of the transaction by which mobile phone connections are enjoyed, whether is it a sale or is it a service or is it bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dule hereto annexed and shall not remove it without obtaining the Lessor's prior written consent. 4) The lessee acknowledges, confirms and declares that it holds the Machineries as a mere bailee of the Lessor and that it shall not have any proprietary right, title, or interest in the machineries or any part thereof and shall, at all times, protect and defend as bailee/licensee of the machineries the Lessor's absolute and paramount ownership right and title thereto and that he shall not at any time, advance or make any claim adverse to or in derogation of the Lessor's absolute and permanent ownership right and title. The Lessee further agrees and covenants that he shall not claim any benefits under the Tax Laws associated with the ownership of the equipment such as depreciation, investment, allowance etc. 5) The Lessee shall install, keep operate, maintain and store the machineries with utmost care and in the correct and appropriate manner and method in which and strictly in accordance with the manuals, instructions advices of Manufacturer/Suppliers and the Lessor, the Lessee agrees that Machineries shall be installed/kept/operated/used/maintained/stored and shall cause it to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsolute and permanent ownership right and title with the appellant as effective control. The adjudicating authority failed to appreciate that it is only because the title of the goods remains with the service provider that such a transfer of right to use of goods is deemed as a sale under Article 366(29A)(d) of the Constitution of India, as has also been elucidated by the Honourable Apex Court in its decision in Bharat Sanchar Nigam Ltd v. Union of India, 2006 (2) STR 161 (SC),wherein, while explaining the said clause (d) of Article 366(29A), the Apex Court in para 39 has stated :... "Similarly the title to the goods under Clause (d) remains with the transferor who only transfers the right to use the goods to the purchaser....." 12. It is evident from a plain reading of the above terms which are self-explanatory, that the appellant as Lessor has not only let out the machineries, but also have provided the Lessee along with the right to use the machinery, the right to hold and retain possession and custody at all times during the subsistence of the lease along with right of effective control. Thus, to our mind, the very terms of the lease agreement, clearly indicates that the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply of tangible goods and that this is ascertainable from the fact whether or not VAT is paid, the lower authorities grossly erred in failing to controvert the said contention of the appellant, which too renders the demand of service tax made on the appellant untenable. 15. We also find that the appellant has consistently taken a plea before the lower authorities that the issue was that of interpretation and that the appellant was of the view that since they have paid VAT the transaction itself was not within the scope of service tax law. Therefore, in such circumstances, coupled with the fact that there has been no evidence let in of any positive act of willful suppression or misstatement of facts with intent to evade payment of duty that has been made by the appellant, the SCN dated 27-04-2012 for the period from April 2008 to March 2010 is also barred by limitation having been issued beyond the normal period. 16. We note that the decisions on which the appellant has placed reliance, listed supra, also adopt a similar line of reasoning on merits, and thus bolster our findings on merits rendered above. 17. In view of the discussions and findings above and in light of the aforem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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