Cst, Delhi vs M/S Itd Itd-Chem Joint Venture

No. ST/Misc./56394/2013, ST/Stay/52946/2014 and ST/52473/2014-CU(DB)

[Arising out of Order-in-Appeal No. 11/ST/DLH/2014 dated 29.1.2014 passed by the Commissioner of Central Excise (Appeals), New Delhi]

For Approval & Signature :

Honble Mr. Justice G. Raghuram, President

Honble Mr. R.K. Singh, Member (Technical)

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

CST, Delhi Appellant

Vs.

M/s ITD ITD-Chem Joint Venture Respondent

Appearance

Shri Govind Dixit, D.R. - for the Appellant

Shri B.L. Narasimhan, Advocate - for the Respondent

Coram : Honble Mr. Justice G. Raghuram, President

Honble Mr. R.K. Singh, Member (Technical)

F. Order No. 50320/2015

Per R.K. Singh :

Stay application along with appeal has been filed by Revenue against order in appeal dated 29.1.2014. The respondents filed a refund claim of Rs.11,25,05,830/- in respect of service tax paid wrongly by them inasmuch as they paid service tax under the category of supply of tangible goods service [Section 65(105)(zzzj) of Finance Act, 1994]. The respondents entered into an agreement with M/s Italian Thai Development Public Company Ltd. in terms of which the scope of lease was as under :

The ownership of the leased plant and equipment supplied by the Lessor shall remain with the Lessor before and after the lease agreement. However, during the duration of this agreement, the leased plant and equipment supplied by the lessor shall be under the custody and possession of the Lessee. The Lessor hereby agrees that it will not remove the plant and equipment without the prior written consent of the Lessee. Therefore, it is clearly mentioned in the agreement that the lessor will not have any authority to remove the plant and equipment without written permission of the lessee during the duration of the agreement. This means that the lessor has lost the right of possession or transferred the right of possession in favour of the lessee despite the fact the ownership of the leased plant and equipment remained with the Lessor. Hence I find that the Right of possession was with the lessee, the party, during the contract period.

2. The Commissioner (Appeals) in his impugned order held that in terms of the said lease agreement the said transaction did not fall within the category of supply of tangible goods service as defined under Section 65(105)(zzzj) ibid.

3. During the hearing, the respondents have contended that the issue is squarely covered in their favour by the judgement in the case of Petronet LNG Ltd. Vs. CST, New Delhi  2013-TIOL-1700-CESTAT-DEL.

4. The ld. AR did not object the assertion of the respondents that the issue is covered by the CESTAT judgement in the case of Petronet LNG Ltd. (supra).

5. We have considered the facts and heard both sides. It is seen that in similar circumstances, CESTAT in the case of Petronet LNG Ltd. (supra) held as under:

The transactions in issue amount to transfer of the right to use tangible goods, with possession and effective control of such goods, in favour of the assessee by owners of the tankers. These transactions fall within the ambit of the exclusionary clause of Section 65(105) (zzzzj) of the Act and are therefore immune to the liability to service tax.

6. In the light of the aforesaid judgement of CESTAT, we find no merit in Revenues appeal and accordingly we dismiss the appeal itself along with the stay petition. Misc. application for early hearing also stands disposed of.

(Justice G. Raghuram)

President

(R.K. Singh)

Member (Technical)

RM

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