TMI Blog2024 (3) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... The Appellant submits that for the period from July 2012 to March 2014, the impugned Order has confirmed the demand of Service Tax amounting to Rs. 33,41,267/- on the ground that the same falls within the ambit of supply of tangible goods service under Section 65 (105)(zzzzj) of the Finance Act 1994. In this regard, it is observed that post 01.07.2012, the provisions of Section 65 (105)(zzzzj) cannot be invoked to demand service tax on supply of tangible goods service - the demand confirmed by citing the non-existent legal provisions cannot be sustained CESTAT, New Delhi in the case of COMMISSIONER OF CENTRAL TAX GOODS AND SERVICE TAX, DELHI EAST VERSUS M/S SANJAY ELECTRICALS (VICE-VERSA) [ 2024 (1) TMI 891 - CESTAT NEW DELHI] held that demand confirmed by citing the non-existent legal provisions cannot be sustained. Thus, the demand for the period 01.07.2012 to March 2014 is liable to be set aside. Extended period of limitation - HELD THAT:- The Appellant was under the bona fide belief that no service tax is payable since the instant transaction in dispute constitutes a 'deemed sales' for which VAT was already paid. In the case of M/S. CARZONRENT (INDIA) PVT. LTD. VERSUS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax on the said transaction. The Department issued a Show Cause Notice dated 16.09.2014 invoking extended period of limitation, by alleging that the transactions between the Appellant and OIL falls within the ambit of supply of tangible goods service as defined under Section 65(105)(zzzzj) of the Finance Act, 1994 and the Appellant has failed to pay service tax for the same. On adjudication, the Ld. adjudicating authority has confirmed the demands of service tax along with interest and penalty. Aggrieved against the impugned order, the Appellant has filed this appeal. 3. The Appellant submits that as per the agreements entered into with OIL, both the possession and effective control over the goods have been passed over to OIL, and therefore, such a transaction constitutes a Deemed Sale and accordingly OIL has deducted VAT at source and paid to the Government. However, the impugned order has been passed confirming the demand based on the observation that as per certain clauses in the agreement, the possession and control of the bowsers/tankers lies with the Appellant and hence the same amounts to supply of tangible goods service liable to service tax under Section 65(105)(zzzzj) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 rights to others. 3.3. As per the provisions of the Agreement, the transaction undertaken by them fulfils all the five conditions stated above. Accordingly, the Appellant contended that the transaction amounts to 'Deemed Sale' and VAT has been paid by then under Assam VAT Act. Further, a perusal of the clauses in the Agreement would reveal that the Appellant is only responsible for the operation of the tankers / bowsers, and the entire effective control and right to use vests with OIL. As the effective control and possession of the goods have been transferred to OIL and the transaction being in the nature of transfer of right to use the goods and thereby being considered as a deemed sale and falling within the ambit of Assam VAT Act, no service tax is payable by them. It is a settled position of law that service tax and VAT are mutually exclusive, and in the instant case, VAT has been undisputedly discharged in the transactions. 3.4. In this regard, the Appellant placed their reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period post 01.07.2012 is not sustainable on this ground. 3.8. In this regard, the Appellant placed their reliance on the decision of the CESTAT, New Delhi in the case of Commissioner of Central Tax Goods and Service Tax, Delhi East v. M/s. Sanjay Electricals (vice-versa) 2024 (1) TMI 891 CESTAT New Delhi wherein CESTAT, New Delhi has held that demand confirmed by citing the non-existent legal provisions cannot be sustained. 4. The Appellant submits that extended period of limitation cannot be invoked in the instant case since the Appellant was under the bona fide belief that no service tax is payable since the instant transaction in dispute constitutes a 'deemed sales' for which VAT was already paid. In this regard, the Appellant placed their on the decision of the CESTAT in the case of Carzonrent (India) Pvt. Ltd. v. Commissioner of Service Tax, Delhi I 2017 (50) S.T.R. 172 (Tri. Del.) wherein it was held that when there is an element of dispute and ambiguity whether a transaction is covered by VAT law or Service Tax, and the same needs to be decided based on the facts and applicable law, then extended period of limitation cannot be invoked. 4.1. Further reliance is pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attributed to invoke extended period of limitation. 4.6. In view of the above submissions, the Appellant contended that the impugned order confirming the demands of service tax along with interest and penalty is not sustainable and prayed for setting aside the same. 5. The Ld. Authorized Representative appearing on behalf of the respondent submits that as per certain clauses in the agreement, the possession and control of the bowsers/tankers lies with the Appellant and hence the same amounts to 'supply of tangible goods service' liable to service tax under Section 65(105)(zzzzj) of the Finance Act, 1994. Further, the Appellant carries out the repair and maintenance of tankers, incurred expenditure for fuel and consumable, provides crew, and is responsible to comply with the statutory acts, therefore, the title or ownership vests with the Appellant and is not transferred to OIL. Accordingly, he supported the impugned order. 6. Heard both sides and perused the appeal documents. 7. We observe that the Appellant has supplied tankers / bowsers to M/s. OIL for the purpose of transportation of crude oil. The Appellant were responsible for the operation of the tankers / bowsers, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2. It is a fact on record that the Appellant has considered the transaction as amounts to 'Deemed Sale' and paid VAT under Assam VAT Act. As per the clarification issued by the Circular mentioned above, if VAT / sales tax is payable on the transaction as deemed sale of goods then the supply of tangible goods is not covered under the scope of the supply of tangible goods service . We observe that payment VAT is one of the conditions prescribed to ascertain whether a transaction is liable to service tax under the category of 'supply of tangible goods'. However, whether a transaction involves transfer of possession and control is the primary condition which determines the liability of service tax under the category of 'supply of tangible goods'. This is a question of fact which is to be decided based on the terms and conditions of the contract and other material facts with respect to each contract separately. 7.3. In this case, we have perused the Agreement signed by the Appellant with OIL to ascertain whether possession and control have been transferred not. From some of the clauses in the Agreement, we find that the Appellant carries out the repair and main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the demand for the period 01.07.2012 to March 2014 is liable to be set aside. 8. Regarding invocation of extended period of limitation, we observe that the Appellant was under the bona fide belief that no service tax is payable since the instant transaction in dispute constitutes a 'deemed sales' for which VAT was already paid. In the case of Carzonrent (India) Pvt. Ltd. v. Commissioner of Service Tax, Delhi I 2017 (50) S.T.R. 172 (Tri. Del.), CESTAT, New Delhi has held that when there is an element of dispute and ambiguity whether a transaction is covered by VAT law or Service Tax, and the same needs to be decided based on the facts and applicable law, then extended period of limitation cannot be invoked. The relevant part of the said decision is reproduced below: 16. We have examined this contention of the appellant with reference to the findings of the Original Authority on the question of time bar. The Original Authority held that the appellant is professionally managed company and it should have followed the provisions of Finance Act, 1994 to comply with the payment of service tax in time. He rejected the contention of the appellant with reference to their bona f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no service tax is payable under the category supply of tangible goods when the agreements clearly show such bona fide belief on the part the assessee. Further, we observe that the Appellant has disclosed all the transaction details in the balance sheet and suppression of fact with intention to evade payment of service tax has not been established in this case. Accordingly, we hold that the demand of service tax beyond the normal period of limitation is not sustainable. 8.2. We observe that in the impugned order demand has been confirmed for the period April 2009 to March 2014, by invoking extended period of limitation. The Show Cause Notice in this case was issued vide C. No. V(15)100/ADJ/ST/COMMR/DIB/ 2014/ 11154 on 16.09.2014. Under the normal period of limitation, demand can be issued only for a period of 18 months. Thus, we observe that the demand for the period prior to 2013 demanded in the Notice dated 16.09.2014, is time barred. As discussed in paragraph 7.4 (supra), the demand for the period from July 2012 to March 2014 has been raised by invoking the provisions of Section 65(105)(zzzzj) of the Finance Act, 1994 which was not in existence . We find that the provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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