19/06/2026
Decision of Shreekaviraj Infratech Pvt Ltd
Navigating the complexities of vehicle hiring — does it constitute a "Service" or a "Sale"?
Strategic planning, advisory, compliance, and litigation efforts are being expertly managed by Team FAIRLAW and Monarch Bhatt, Advocate.
📌 Background
The appellant, a government contractor, specializes in "solid waste management" and "construction and repairs of roads" for MCGM. Additionally, the appellant has provided garbage compactors as a sub-contractor to principal contractors.
A Show Cause Notice (SCN) was issued demanding service tax on all services provided. The original adjudicating authority set aside the entire demand.
📌 Department's Appeal
The Department appealed, challenging the part of the demand that was set aside — arguing that the appellant's provision of garbage compactors does not fall under exemption Entry 29(h) of Mega Exemption Notification 25/2012-ST, as the appellant is not providing works-contract services.
The Commissioner (Appeals) subsequently remanded the matter.
📌 On Remand, the Adjudicating Authority Determined:
1️⃣ The appellant meets all five criteria established by the Hon'ble Supreme Court in BSNL vs. Union of India, 2006 (2) STR 161 SC.
2️⃣ The appellant has transferred the compactors with transfer of right to use, classifying it as a "deemed sale" under Clause (29A) of Article 366 — thus not qualifying as a "service."
3️⃣ The entire service tax demand of Rs. 1.40 crore, along with interest and penalties, has been set aside.
✅ Takeaway
This serves as a timely reminder that BSNL's "control & possession" test remains a crucial factor in distinguishing taxable hiring/leasing services from deemed sales — equally relevant under GST for similar scenarios.
PN: Message to get the copy of decision
