Hiring of manned cranes to ONGC – Cranes at disposal of ONGC and per day hire charges paid – Service tax paid thereon – Services of staff and maintenance incidental to hiring – ONGC alone entitled to exclusive use of cranes – Transfer of right to use goods – Assam Value Added Tax, 2003.

Hiring of manned cranes to ONGC – Cranes at disposal of ONGC and per day hire charges paid – Service tax paid thereon – Services of staff and maintenance incidental to hiring – ONGC alone entitled to exclusive use of cranes – Transfer of right to use goods – Assam Value Added Tax, 2003.

ONGC entered into contracts with dealers to provide manned cranes according to technical specifications with the necessary accessories with valid permits, insurance, for performing the duties as advised by ONGC, at the appointed time and place. The agreement showed that the activity was in respect of hiring of cranes. The work was to be executed by ONGC itself. The cranes were at the disposal of ONGC and per day hire charges were paid, except maintenance days. The services of staff operating them and maintenance were incidental to hiring of the cranes. The appellant’s case was that it owned cranes and in pursuant to notice inviting tenders, they entered into the contract. The cranes were at ONGC’s disposal without transfer of possession and custody thereof. All operating costs were to be borne by the appellant and thus there was no transfer of ownership of the cranes, nor of the right to use to ONGC and they paid service tax considering this as taxable service. The Revenue contended that the relevant clauses of the agreement such as the availability of cranes on a particular day or time (including maintenance off days), its operational time, arrangements of fuel lubricants etc. remained a sole discretion of ONGC, indicating dominion and control of ONGC during the entire period of operation.

Held:

For all the practical purposes, it was evident that the use of the cranes was transferred to ONGC for the period of contract and the assessee had no right to use the same. Such a right having been transferred to ONGC for consideration. The mere fact that the responsibility of the maintenance and use was vested with the assessee, does not deviate from the nature of transaction being transfer of right to use. The taxability u/s. 65(105)(zzzzj) under the Finance Act, 1994 – supply of tangible goods services would have been applicable if the right to possession and control remained with the service provider, which is not the case here. The judgement of the Hon. Supreme Court in BSNL vs. Union of India [2006] 3 VST 95 (SC) was relied upon.