Subhash Light House Vs Commissioner, Central Goods & Service Tax (CESTAT Delhi)
ST not leviable on supply of gensets for short period as it is amounts to deemed sales
The CESTAT, New Delhi in M/S Subhash Light House v. Commissioner, Central Goods & Service [Service Tax Appeal No. 50176 of 2019 Tax, Audit-II dated February 02, 2022] held that the gensets were made available for delivery to the clients as per the agreement between the assessee and the clients that gave clients legal right to use such gensets as agreed upon between the assessee and the clients; and the assessee cannot transfer the gensets to any other client during the period of agreement. Thus, the supply of gensets is to be considered as sale of goods in terms of Article 266(29A) of the Constitution of India and no Service tax is payable on the same.
Facts:
M/s Subhash Light House (“the Appellant”) is engaged in the business of supply of generator sets on rental basis to their clients in two manners i.e., supplying fixed gensets to the clients and installing the same in the premises of the clients and the second where the clients require transportable mobile gensets for a shorter period such gensets were fixed in vehicles and which was under the provisions of VAT or Sales Tax considering the same as ‘deemed sales’ in terms of Article 366(29A) of the Constitution of India and VAT/Sales Tax was paid on the consideration received by the Appellant.
Further, the Commissioner of Central Goods and Services Tax (“the Respondent”) issued a Show Cause Notice dated August 31, 2016 (“the SCN”) demanding service tax on the entire consideration received by the Appellant during the Financial Year (“F.Y.”) 2011-12 to 2015-16 invoking extended period of limitation.
The Respondents vide Order-in-Original dated October 23, 2018 (“the Impugned Order”) held that the Appellant had installed generators at the place of clients, and no diesel etc. was provided by him, which cannot be the supply of mobile/ transportable gensets as deemed sale, and confirmed the Service tax liability against transactions on the ground that in most of the cases the Appellant had provided gensets in most of the cases the Appellant had provided gensets along with operator, who operated and carried out the repair/maintenances and under such supply, the effective possession and control of the machine was with the Appellant. The entire activity falls under the definition of ‘Supply of Tangible Goods Service’ as defined under Section 65(105)(zzzzj) of the Finance Act, 1994 (“the Finance Act”), and was liable to Service tax and such activity was out of the purview of Article 366(29A) of the Constitution of India.
Issue:
Whether the supply of mobile gensets by the Appellant to his clients was a service / declared service as held by the Respondent or the same is a sale or deemed sale in terms of the Article 366(29A)(d) of the Constitution of India?
Held:
The CESTAT, New Delhi in Service Tax Appeal No. 50176 Of 2019 Tax, Audit-II dated February 02, 2022 held as under:
