Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2018 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 1721 - AT - Service TaxReverse Charge Mechanism - Supply of Tangible Goods Service or deemed sale - Department took the view that the foreign lessor has supplied tangible goods to appellants on lease; that lessor therefore rendered “Supply of Tangible Goods Service” as per section 65 (105) (zzzzj) of Finance Act, 1994; hence appellant as recipient of service are liable to pay service tax on reverse charge basis - Section 66A read with Rule 2 (1) (d) (iv) of Service Tax Rules, 1994 - non-inclusion of TDS amount in taxable value - wrong availment of Credit in respect of excise duty paid on motor vehicles - penalties. Held that:- The lease agreement between EAT and the appellant is one wherein the right of possession and control of the aircraft has been bestowed on the appellant and not retained with the lessor. This being so, the ingredients of “Supply of Tangible Goods Service” requiring exigibility to service tax by the Finance Act, 1994 are not present in this transaction. In consequence, the monetary consideration paid by the appellants to EAT cannot be considered as value of “Supply of Tangible Goods Service” and tax demanded on the same as has been done in the impugned orders. - service tax levy is not attracted. Reliance placed in the case of POWER MAK INDUSTRIES, POWER MAK PVT. LTD. VERSUS CCE, C&ST, HYDERABAD-I [2018 (2) TMI 1415 - CESTAT HYDERABAD], where it was held that the impugned transaction involving supply of DG sets on hire basis to various hirers is nothing but supply of tangible goods with transfer of both possession and control of the goods to the users of the goods. These transactions have been ruled as deemed sale of goods for the purpose of APVAT Act by the concerned Advance Ruling Authority. Appellants have also been discharging VAT on the hire charges under APVAT Act. Hence, this is the case of supply of tangible goods for use, with legal right of possession and effective control vesting with the hirer, required to be treated as deemed sale of goods, hence cannot be considered as supply of tangible goods for use of service for the purposes of Section 65(105) (zzzz) of the Finance Act, 1994 for the period upto 01-07-2012 or as taxable service for the purpose of Section 65B (44) of the Finance Act, 1994 after 01-07-2012. It was also held in the case that the terms and conditions stipulated in the agreement, lead to the conclusion that the transaction envisaged in the agreement is one of transfer of right to use which is a deemed sale under Section 2(24) of the Maharashtra Value Added Tax Act, 2002. The Finance Ministers speech and the budget instructions issued by the C.B.E. & C. also clarify that if VAT is payable on the transaction, then service tax levy is not attracted. The assessees 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. Penalties in respect of non-inclusion of TDS amount in taxable value and wrong availment of cenvat credit on motor vehicles - Held that:- There is no malafide in these inadvertencies by the appellants. Hence while not interfering with these tax demands, we hold that imposition of penalties in all these tax demands are therefore an overkill and requires to be set aside. Appeal allowed in part.
|