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2016 (12) TMI 394 - AT - Service TaxLevy of tax - renting of earthmoving equipment, such as Caterpillar, Excavators, etc. - the activity of renting of earthmoving equipment would come under the purview of service tax under the taxable service category of “business auxiliary service” for the period prior to 16-5-2008 and under the category of “supply of tangible goods for use” with effect from 16-5-2008? - While the assessee contends that what they have transferred is right to use which is a deemed sale, the Revenue’s contention is that the right of possession and effective control remained with the assessee and hence, the transaction has to be treated as service. Held that: - A similar issue arose for consideration before the Hon’ble High Court of Andhra Pradesh in the case of G.S. Lamba & Sons v. State of A.P. [2011 (1) TMI 1196 - Andhra Pradesh High Court], where it was held that the transaction involved was a transfer of right to use Transit Mixers and not transport service and the petitioners had transferred the “right to use goods” to Grasim - If we apply the ratio of the above decision to the facts of the present case, the transaction involved herein is “transfer of right to use” which is a deemed sale and not “supply of tangible goods for use” service. The assessee’s activity of giving various equipments on hire does not fall under the category of “Supply of tangible goods for use”, hence the same is not liable to service tax w.e.f. 16.05.2008. Now coming to the Revenue’s appeal, we find that the Ld. Commissioner dropped the demand for the period prior to 16.05.2008 mainly on the ground that the service is of “Supply of tangible goods for use” which came into effect on 16.05.2008, therefore prior to that date the service was not taxable. However, we, in our above findings, held that the service in question is not the service of “Supply of tangible goods for use”. In this position the main ground of the Ld. Commissioner for dropping of demand does not exist and not relevant. Though the Ld. Commissioner in a passing reference mentioned in the impugned order that the service prior to 16.05.2008 does not fall under the “Business Auxiliary Service” but not given the detailed findings. Therefore when the main ground for dropping of demand does not exist. The issue relates to demand prior to the period 16.05.2008 needs reconsideration. Appeal allowed by way of remand.
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