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Service tax liability in case of hiring of goods without the transfer of the right to use goods

Service Tax - 198/08/2016 - Dated:- 17-8-2016 - Circular No 198/08/2016-Service Tax F.No.137/54/2016-Service Tax-Part-II Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs Service Tax Wing New Delhi, the 17th August, 2016 Subject: . In terms of sub-clause (d) of clause (29 A) of Article 366 of the Constitution of India, the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or ot .....

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; and hence liable to service tax. In this regard some representations have been received. 2. The matter has been examined. I am directed to draw your attention to the fact that in any given case involving hiring, leasing or licensing of goods, it is essential to determine whether, in terms of the contract, there is a transfer of the right to use the goods. Further, the Supreme Court in the case of Bharat Sanchar Nigam Limited vs Union of India, reported in 2006 (2) STR 161 SC, had laid down the .....

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it has to be to the exclusion to the transferor this is the necessary concomitant of the plain language of the statute - viz. a "transfer of the right" to use and not merely a licence to use the goods; e. Having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same right to others. 3.1 This criteria must invariably be followed and applied to cases involving hiring, leasing or licensing of goods. The terms o .....

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These should not be applied mechanically but their applicability to the facts of a given case, the terms of the contract in the given case and the criteria laid down by the Supreme Court should be examined carefully. 3.2.1 Commissioner VAT vs International Travel House Ltd - Delhi High Court judgement dated 8-9-2009 in ST Appeal 10/2009 3.2.2 Rashtriya Ispat Nigam Limited vs Commercial Tax Officer reported in 1990 (77) STC 182 and State of Andhra Pradesh vs Rashtriya Ispat Nigam Limited reporte .....

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