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2024 (2) TMI 516 - AT - Service TaxDemand of service tax - Supply of tangible goods for use - transfer of right to use goods - deemed sale - HELD THAT:- The ld. Commissioner (Appeals) has observed that in the instant case the custody of the assets was given to FKOL, as they were granted Exclusive Licence to use the goods, but they had no possession and effective control of the goods and neither were free to make use of the said assets in the manner and purpose other than as specified in the said agreement. Nor FKOL were free to allow/assign or licence the goods for use by others. Further, FKOL was not free to remove these assets from the premises of the Appellant. Further observed as per Clause 2.7 of the agreement, that during the terms of the agreement the Appellant can sell its right or interest on the said assets. This agreement only allows FKOL to use the laboratory infrastructure developed by the Appellant for a specific purpose of oncological research, without transferring the possession or control. The exclusive possession with right to use the goods was given by the Appellant to M/s. FKOL, who were free to use the goods. It is further found from the Clause 2.7 of the agreement, which provides that even if the Appellant decides to sell or transfer its right, title or interest in the goods during the term or the extended term for right to use granted, the Appellant shall take prior consent from FKOL and further ensure that right to use of FKOL under the agreement are not disturbed/preserved and their interest is not prejudicially effected. Thus, evidently, the Appellant had granted exclusive right to use without disturbance or encumbrance to their clients – FKOL and accordingly, it is held that they have rightly paid the Sales Tax/VAT on transfer of right to use the goods, to their customers, which is a transaction of deemed sale. Accordingly, it is held that service tax is not attracted. The impugned order is set aside - appeal allowed.
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