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2020 (9) TMI 125 - AT - Service TaxLevy of Service tax - Rent-a-cab Service - deemed sale or not - empowerment vested in the adjudicating authority to expand the scope of the taxable service by encroaching on taxing power vested in the several states by parliamentary enactment. HELD THAT:- Impliedly, neither did the taxing powers vested in the Union extend either to ‘sale’ or ‘deemed sale’ nor did all of the several ‘deemed sales’ incorporated in the constitutional amendment include some component that was not ‘deemed sale’ outside the pale of taxation in List II in the Constitution of India. The impugned order has erred in presuming so. In ‘works contracts’, there is an aspect that is beyond the taxing powers of the states which could, under Parliamentary sanction, be taxed by the Union. In both ‘sales’ and ‘services’, the taxable event is determined by the existence of ‘buyer/recipient’ and ‘seller/provider’ with the conclusion of the contractual obligation as the definitive event to be taxed. In the absence of concurrent jurisdiction, the vivisection of such enumerations in Article 366 (29A) of the Constitution of India alone can confer the authority under List I of the Seventh Schedule in the Constitution of India. Agreements/contracts of ‘lease’ are, acknowledgedly, taxable as ‘deemed sale’; it is not the case of Revenue that any portion of the consideration for ‘lease’ is not ‘deemed sale’. As the entire rental is subject to tax as ‘deemed sale’, there is no scope for any portion thereof to be leviable to tax by the Union and, thereby, under Finance Act, 1994. The scope for subjecting ‘lease rental’ to tax, as proposed in the show cause notice, cannot sustain in the absence of a valid machinery provision recognized in the taxing statute - Appeal allowed - decided in favor of appellant.
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