Circular
No. 168/3
/2013 - ST
F. No.
356/2/2013-TRU
Government of
India
Ministry of
Finance
Department of
Revenue
Central Board of
Excise and Customs
Tax Research
Unit
*****
North
Block,
New Delhi, 15th April,
2013
To,
Chief
Commissioners of Central Excise and Customs (All),
Director
General (Service Tax), Director General(Systems),
Director General (Central Excise Intelligence), Director General
(Audit),
Commissioners
of Service Tax (All), Commissioners of Central Excise (All), Commissioners of
Central Excise and Customs (All)
Madam/Sir,
Subject:
Tax on service provided by way of
erection of pandal or shamiana - regarding.
Several representations have been
received seeking clarification on the levy of service tax on the activity of
preparation of place for organizing event or function by way of erection/laying of pandal and shamiana. The doubt that has been raised is that this
may be a transaction involving “transfer of right to use goods” and hence deemed
sale.
2. The issue has been examined. “Service”
defined in section 65B (44) of the Finance Act, 1994, includes a ‘declared
service’. Activity by way of erection of
pandal or shamiana is a declared service, under section 66E
8(f). The process of erection of Pandal or
shamiana is a reasonably specialized job and is
carried out by the supplier with the help of his own labour. In addition to the
erection of pandal or shamiana the service is generally coupled with other
services like supply of crockery, furniture, sound system, lighting
arrangements, etc.
3. For a transaction to be regarded as
“transfer of right to use goods”, the transfer has to be coupled with
possession. Andhra Pradesh High Court in the case of Rashtriya Ispat Nigam Ltd. Vs. CTO [1990 77 STC 182] held that since the effective
control and possession was with the supplier, there is no transfer of right to
use. This decision of the Andhra Pradesh High Court was upheld by the Supreme
Court subsequently [2002] 126 STC 0114. In the matter of Harbans Lal vs. State of Haryana –
[1993] 088 STC 0357 [Punjab and Haryana High Court], a view was taken that if
pandal, is given to the customers for
use only after having been erected, then
it is not transfer of right to use goods.
4. In the case of BSNL Vs. UOI [2006] 3
STT 245 Hon’ble Supreme Court held that to constitute the transaction for the transfer
of the right to use the goods, the transaction must have the following
attributes:-
a.
There must be goods
available for delivery;
b.
There must be a
consensus ad idem as to the identity of the goods;
c.
The transferee should
have a legal right to use the goods and, consequently, all legal consequences of
such use including any permissions or licenses required therefor should be
available to the transferee;
d.
For the period during
which the transferee has such legal right, it has to be the exclusion of the
transferor : this is the necessary
concomitant or the plain language of the statute, viz., a “transfer of the right to use” and not merely
a license to use the goods:
e.
Having transferred
the right to use the goods during the period for which it is to be transferred,
the owner cannot again transfer the same right to others.
5. Applying the ratio of above judgments
and the test formulated by Hon’ble Supreme Court, the activity of providing
pandal and shamiana along with erection thereof and other
incidental activities do not amount to transfer of right to use goods. It is a
service of preparation of a place to hold a function or event. Effective
possession and control over the pandal or shamiana remains with the service provider, even
after the erection is complete and the specially
made–up space for temporary use handed over to the customer.
6. Accordingly services provided by way of
erection of pandal or shamiana would attract the levy of service
tax.
7. Trade Notice/Public Notice may be issued
to the field formations and tax payers. Please acknowledge receipt of this
Circular. Hindi version follows.
(S.
Jayaprahasam)
Technical
Officer, TRU
Tel:
011-2309 2037
No comments:
Post a Comment