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2019 (2) TMI 1034 - AT - Service TaxCENVAT Credit - input services - appellant have leased their wagons to Indian Railways on rental basis - supply of tangible goods service - February, 2013 to December, 2013 - Held that:- The bare perusal makes it clear that for being taxable under the alleged category of supply of tangible goods, two conditions have necessarily to be fulfilled at the time when goods are supplied: (1) Right of possession being delivered should not have been transferred; and (2) The effective control should not have been handed over. Also that the transfer of right to use the goods, delivery or supply of any goods, which is deemed to be sale within the meaning of clause 29 A of Article 366 of the Constitution of India shall not amount to be a service. Since appellant was using railways for most of the clearances of its final product i.e. cement and clinker, the appellant opted for the said scheme introduced by Railway in the year 1992 i.e. “Own Your Wagon Scheme”. In accordance of the scheme, irrespective the ownership of wagons could vest in the producers, but wagons were to be placed at the disposal of Railways. Not only this, those were to be merged in general pool of Railways. Also responsibility of day-to-day operation and maintenance would be that of Railways - not only the right of possession but the effective control upon railway wagons was meant to be transferred from the appellant to the Railways. Resultantly, the transaction herein comes out of the ambit of the supply of tangible goods service. The order under challenge has absolutely been silent qua this aspect. Commissioner has jumped-over upon clause 29 A of Article 366 of the Constitution denying the impugned transaction to be a deemed sale and has confirmed the liability under the supply of tangible goods service. The observation of Commissioner is held to have been restricted to the definition of service only without applying the definition of specific service under which the demand has been confirmed. Appeal allowed - decided in favor of appellant.
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