Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2020 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (6) TMI 619 - AT - Service TaxTransfer of right to use goods - Hiring of Charter Vessel for dredging activity - Reverse Charge Mechanism - consideration paid to foreign company for hiring the vessel - declared service or not - period November 2015 to January 2016 - HELD THAT:- As per sub-clause (f) transfer of goods by way of hiring, leasing or licensing or in any similar manner would be a taxable service. However, if the transfer involves right to use the goods, it would be outside the purview of taxability - In the present case, the question is whether the transfer of goods is by way of hiring of the vessel simplicitor or whether it involves transfer of right to use the vessel. For a transaction to be transfer of right to use the goods, there should be transfer of possession as well as transfer of effective control. In the present case, the department has mainly relied upon clause (6) of the agreement, to contend that there is no transfer of possession as well as effective control. Clause 6 which relates to maintenance and operation states that, it is the responsibility of the appellant to maintain the vessel in proper condition. Undisputedly the operations are fully under the control of the appellant. The appellant has obtained necessary license to use the vessel for dredging. This license is location specific. During the charter period the vessel can be used only in this location (port). The entire crew and staff is of the appellant. All this would go to show that the appellant has entire control for operating the vessel during charter period. It goes without saying that when there right is given to operate the vessel it also casts a responsibility to maintain the vessel in proper and good condition. Similar conditions were analyzed by the Tribunal in the case of PETRONET LNG LTD VERSUS COMMISSIONER OF SERVICE TAX [2013 (11) TMI 1011 - CESTAT NEW DELHI] and also M/S. INTERNATIONAL SEAPORT DREDGING LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [2018 (3) TMI 633 - CESTAT CHENNAI]. The appellant has absolute discretion to use the vessel for dredging during the charter period. Such enjoyment of the vessel cannot be interrupted by the lessor unless there is a breach to do the repairs of the vessel. Further, this condition is subject to condition No.16 which is the clause for pretermination of the agreement. If there is breach on the side of the appellant to do periodical maintenance which may give rise to a right to the lessor to withdraw the vessel, then lessor has to abide by Clause 16 (Pre-termination notice) to put an end to agreement and then withdraw the vessel. Appellant thus enjoys full right to exclusion of others. During the period, neither the owner can use the vessel nor can the owner transfer the right to use of the vessel to another person - there exist no hesitation to hold that the appellant enjoys right to use the vessel to the exclusion of the owner. Time Limitation - Revenue Neutrality - HELD THAT:- Undisputedly, the demand has been raised on reverse charge basis and the appellant would be eligible for credit, if they paid the service tax. Thus it is a revenue-neutral situation - Moreover, the department has not been able to establish any positive act on the part of the appellant that they have suppressed facts with intention to evade payment of service tax. Taking note of these facts, we are of the considered opinion that the demand raised for the extended period cannot sustain. Appellant succeeds on the issue of limitation also. Appeal allowed - decided in favor of appellant.
|