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2018 (3) TMI 633 - AT - Service TaxSupply of tangible goods services - Liability of service tax - vessels and dredgers chartered by them from foreign owners - reverse charge mechanism - interpretation of statute - exclusion clause in Section 65(105)(zzzzj) of the finance Act, 1994 - Held that: - in the present case, vessels / dredgers were transferred to the appellant with right of possession and effective control of such vessels / dredgers. The exclusion for tax liability as provided in the tax entry for supply of tangible goods is applicable to the present case. An identical dispute with reference to the very same tax entry came up before the Tribunal in Petronet LNG Ltd. Vs. Commissioner of Service Tax, New Delhi [2013 (11) TMI 1011 - CESTAT NEW DELHI] where the Tribunal elaborately examined the terms of charter agreement and various decisions of High Courts and Apex Court before arriving at the conclusion that the charter agreement, both long term and short term, conform to all substantive ingredients as would constitute the transactions as transfer of right to use goods. Therefore, the transactions fall within the exclusionary clause of section 65(105)(zzzzj) of the Act, consequently outside the purview of taxable service. In the present case, there is a transfer of right of possession and effective control of the vessel / dredger to the appellant. This arrangement is outside the purview of service tax liability under a 'supply of tangible goods services'. Demand of the service tax on customs duty and entry tax paid on imported equipment, which were reimbursed by the recipient of service - Held that: - the appellant have discharged service tax on the considerations received for such services. These reimbursable expenses are considered as expenditure to provide such services and are accordingly sought to be included in terms of Rule 5(1). Appeal allowed - decided in favor of appellant.
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