ST not leviable on supply of gensets for short period as it is amounts to deemed sales

Last updated: 14 February 2022

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Quick Summary

The CESTAT ruled that the short-term rental of mobile gensets, including fuel and operators, constitutes a 'deemed sale' under the Constitution. This means no Service Tax is payable on these transactions. The court determined that the client had the legal right to use the genset for the agreed period, regardless of actual usage, making it a sale of goods rather than a service.

Court :
CESTAT, New Delhi

Brief :
The CESTAT, New Delhi in M/S Subhash Light House v. Commissioner, Central Goods & Service [Service Tax Appeal No. 50176 of 2019 Tax, Audit-II dated February 02, 2022] held that the gensets were made available for delivery to the clients as per the agreement between the assessee and the clients that gave clients legal right to use such gensets as agreed upon between the assessee and the clients; and the assessee cannot transfer the gensets to any other client during the period of agreement. Thus, the supply of gensets is to be considered as sale of goods in terms of Article 266(29A) of the Constitution of India and no Service tax is payable on the same.

Citation :
Service Tax Appeal No. 50176 of 2019 Tax, Audit-II dated February 02, 2022

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