By TIOL News Service

NEW DELHI, JULY 06, 2018: THE appellant is engaged in renting-out heavy duty cranes to various parties engaged in construction of Delhi Metro. The department took a view that consideration received by appellant is liable to be charged to Service Tax under category of "Supply of Tangible Goods Service".

Accordingly, a Service Tax demand of Rs.1,87,88,664/- for the period 2008-09 to 2012-13 was raised and confirmed along with interest as well as penalty.

In appeal before the CESTAT, the Appellant submitted that they had supplied cranes along with experienced operators for operating such equipments; that appropriate Sales Tax/VAT also stands paid for transaction as "deemed sale of goods" and, therefore, is not taxable under the FA, 1994. Reliance is also placed on the decisions in Chhattisgarh Earth Movers - 2017-TIOL-2963-CESTAT-DEL, M/s Gimmco - 2017-TIOL-485-CESTAT-MUMand M/s Petronet LNG Ltd - 2013-TIOL-1700-CESTAT-DEL.

The AR relied on the decision in Greatship (India) Ltd. - 2014-TIOL-2122-CESTAT-MUM in support of the impugned order.

The Bench considered the submissions and after adverting to the TRU letter dated 29.02.2008 explaining the scope of levy of service observed thus -

"The facts of the present case reveal that the appellant has supplied machinery on hire along with the operators. The customer is free to make use of the equipment along with the operator for activities as per necessity. It is further evident from the record of the case that the appellant has also paid VAT/Sales Tax on the consideration received, considering the same as "deemed sale of goods." The above circular of the payment has clarified that the levy of Service Tax on the transaction as well as levy of VAT, considering the transaction as deemed sale, will be mutually exclusive."

Noting that similar facts were involved in the Tribunal decision in Chattisgarh Earthmovers (supra), following the same, the impugned order was set aside and the appeal was allowed with consequential relief.

(See 2018-TIOL-2067-CESTAT-DEL)