2024-VIL-816-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax – Transfer of right to use goods – Payment of sales tax – Demand of service tax – Sustainability – During course of audit of records of Appellant, audit party observed that Appellant had received payments against supply of tangible goods under agreement entered into with Fresenius Kabi Oncology Ltd (FKOL) – Revenue issued show cause notice proposing demand of Service Tax under category of supply of tangible goods service – Joint Commissioner confirmed demand as proposed in show cause notice – Commissioner (Appeals) upheld Order-in-Original – Whether Appellant is liable to pay Service Tax under category of supply of tangible goods service – HELD – Exclusive possession with right to use goods was given by Appellant to FKOL, who were free to use goods – Clause 2.7 of agreement provides that even if Appellant decides to sell or transfer its right, title or interest in goods during term or extended term for right to use granted, Appellant shall take prior consent from FKOL and further ensure that right to use of FKOL under agreement are not disturbed and their interest is not prejudicially effected – Appellant had granted exclusive right to use goods without disturbance or encumbrance to their client – Appellant had rightly paid Sales Tax/VAT on transfer of right to use goods to their customer, which is a transaction of deemed sale and accordingly, service tax is not attracted – Impugned order passed by Commissioner (Appeals) set aside – Appeal allowed
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