2024-VIL-810-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Section 65(105)(zzzzj) of Finance Act, 1994 - Hiring of containers - Payment of lease rentals - Appellant had taken containers on lease from foreign companies to transport cargo for import as well as export - Appellant paid lease rent charges in foreign currency to service providers located abroad - Revenue issued SCN to Appellant demanding service tax under category of ‘Supply of Tangible Goods Services’ - After due process of law, Adjudicating authority confirmed demand of tax - Whether lease rentals paid by Appellant to foreign company (Lessor) for hiring the containers is subject to levy of service tax under category of Supply of Tangible Goods Services - HELD - Section 65(105)(zzzzj) of the Act defines ‘Supply of Tangible Goods Services’ as any services provided to any person by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances - It is only if supply is without transferring right to possession and effective control of machinery, equipment and appliances, activity would fall under definition of Supply of Tangible Goods Services - Containers are delivered to Appellant by lessor for transportation of cargo - Appellant has legal right to use container and has all permissions/licenses in their name for compliance with customs formalities as well as courier formalities - Appellant has full right to use containers during lease period to exclusion of lessor - On perusal of agreement, it is seen that lessor does not reserve any right to transfer right to use to others during lease period - There is transfer of possession as well as effective control of containers to Appellant by foreign supplier - Activity of leasing containers would fall under transfer of right to use goods/deemed sale and therefore is not chargeable to service tax under category of Supply of Tangible Goods Services as defined under Section 65(105)(zzzzj). Consequently, demand of service tax cannot sustain - Impugned order is set aside and appeal is allowed
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