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2024 (2) TMI 671 - AT - Service TaxLevy of service tax - Supply of Tangible Goods Service - appellant had entered into a lease agreement with the foreign company namely M/s. Cessna Financial Corporation, Kansas, USA on 11.12.2007 to acquire CESSNA make air craft on lease, based on the conditions agreed between them - period May 2008 to January 2013 - extended period of limitation - HELD THAT:- From the agreement, it is seen that it is a dry lease agreement and the crew is not supplied along with the air craft. The aircraft is delivered to appellant and is in the lawful possession of appellant. The entire staff / crew of the air craft is employed by the appellant and the air craft is also operated as per the registrations and licenses applied and issued to the appellant. It cannot be then said that the possession and effective control is not transferred to the appellant. Thus for the period prior to 01.07.2012, the transaction does not fall within the definition of ‘Supply of Tangible Goods’. After 01.07.2012, changes have been effected in the service tax law and all services falling under ‘declared service’ (66B) is subject to levy of service tax. Section 66E of the Finance Act, 1994 deals with the concept of declared services. Clause (f) to Section 66E states that ‘transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer or right to use such goods’ is a declared service. It means a lease agreement which does not have the character of transfer of right to use goods is taxable service - In the present case, the possession of the aircraft is transferred to the appellant who has taken delivery of the same. So also, the air craft is operated by the crew employed by the appellant. Appellant has to undertake maintenance and repair of the air craft and has to take insurance for the risk of loss etc. These would go to show that the effective control over such goods is also transferred to the appellant. The demand cannot sustain and requires to be set aside - Appeal allowed.
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