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July 2013

2013-TIOL-734-CESTAT-MUM M/s. GMMCO Ltd. vs. CCE, Nagpur

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 2 mins
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When VAT is payable on a transaction, whether service tax is payable? Held, No. Pre-deposit stayed.

Facts:
The appellant was engaged in renting of earthmoving equipment such as caterpillar, excavators, etc. to various customers and discharged VAT liability on the same. The department contended that the effective possession and control was with the appellant as emerging from the agreement with one of their customer and thus, the transaction was one of “Supply of Tangible Goods” service liable to service tax. The appellant contended that the activity undertaken by them was one of leasing on which VAT liability was to be discharged as per the Maharashtra Value Added Tax Act, 2002. They also relied on Circular MF (DR) 224/1/2008-TRU dated 29/02/2008 and on the case of G. S. Lamba & Sons vs. State of A.P. 2012-TIOL-49-HC-AP-CT in support of their claim.

Held:
On perusal of the agreement entered into by the appellant and applying the ratio in the decision of G. S. Lamba & Sons (supra), it was held that the transaction prima facie was for “transfer of right to use” which was deemed to be ‘sale’ and not “supply of tangible goods for use service” and as such, full waiver of pre-deposit was granted.

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