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2022 (12) TMI 1440 - AT - Service TaxClassification of services - Supply of Tangible Goods Service - leasing out Power Generating and Heat Recovery Equipments to various parties under various Lease Agreements - transaction between the Appellant and its customers would involve the transfer of right of possession and effective control or a transfer of right to use or not - HELD THAT:- The appellant supplies Power Generating Equipments / gas genset (Plant) to Customers on standby charges and variable charges basis under the agreement. We find that during the subsistence of the agreement, the lessee alone has the right to use the Plant and even the Appellant cannot trespass that right of the lessees/ customers. The Lessees fix the pattern in which the plant is to be used and the time when it will function. All the permission to be obtained from the statutory authorities to be obtained such as Electrical, Pollution, CCR have to be taken by the Customers, the lessee shall ensure the safety of the plant in a manner similar to its own plant. Customers have to provide fuel, Jacket water & feed water, the site and other facilities. On going through the clauses of agreement, it is found that the appellants had handed over the "Goods‟ possession to the lessee as also the right to use. Therefore the transaction of appellant does not satisfy the condition of “without transferring right of possession and the effective control of such machinery, equipment and appliances”. Hence the activity does not fall under the definition of “Supply of tangible goods for use”. The adjudicating authority has held that since as per contract the equipment will remain sole property of equipment provider and skilled manpower supplied by the Appellant are responsible for maintenance operations of gas genset/plant, it is clear that the legal right and effective controls rests with the appellant - There is separate service agreement entered between the Appellant and customer under which various services are provided on which service tax has been discharged by the Appellant. Once the control and possession of gas genset/equipments was transferred to the customers, mere supply of manpower for maintenance will not change the nature of the transaction. All these factors are to be taken into consideration while determining the nature of service. Therefore finding of the impugned orders in present matters legally not correct. The transfer of right to use gas genset/ plant on lease charges basis is a deemed sale in terms of Article 366(29)A of the Constitution, which is exclusive from service. Since the nature of transaction under dispute is deemed sale, no service tax can be demanded, as held in various judgments and relied upon by the Appellant in the present matter. The demand raised cannot sustain and requires to be set aside - Appeal allowed.
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