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2019 (3) TMI 874 - AT - Service TaxClassification of services - Supply of Tangible Goods services or rent-a-cab services - activity of providing buses to M/s Maharashtra State Road Transport Corporation (MSRTC) and to M/s Pune Mahanagar Parivahan Mandal Ltd. (PMPML) - exempt services or not - Circular No.89/7/2006-Service Tax dated 18/12/2006 - right of possession and effective control transferred or not - Held that:- On a reading of the terms of the agreement, it is seen that the fleet owner has the right of possession and effective control only for name sake. The right of possession, if any, envisaged in terms of the contract is only for the proper up keep and maintenance of the vehicle and not for using the same for any benefits to him. This is more in the nature of responsibility rather than right. In our standing, the right of possession and effective control should entail in the gainful use or deployment of buses by the fleet owner during the time, in which they are not plying for the purpose of MSRTC during the period of contract. As long as the fleet owner cannot use them for gainful deployment, by no stretch of imagination it can be said that effective control is with the fleet owner. Therefore, going through the terms of the agreement it is to be construed that effective control is transferred. Thus, it cannot be said that right of possession and effective control is retained with the fleet owner. Therefore, such supply of buses by the appellants to MSRTC & PMPML is in the nature of supply of tangible goods. Time limitation - Held that:- The appellants were arguing on different classifications of the service they have rendered. However, they have not come forward to pay service tax under any one of them. Therefore, the extended period is invocable. Penalty - Held that:- Looking in to the fact that the transaction was with public sector undertakings and there were different views on the issue, one need to take a lenient view as regards penalties by invoking the provisions of Section 80 - penalties set aside. Matter remanded back to the original authority to re-examine the classification of the service provided by the appellants - appeal allowed by way of remand.
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