Activity of providing pandal and shamiana along with erection thereof and other incidental activities do not amount to transfer of right to use goods. Such activity is not a 'deemed sale', and hence will be liable to Service Tax.
Clarification issued by the Central Board of Excise and Customs (CBEC) in this regard notes various decisions of High Courts to the effect that for a transaction to be regarded as “transfer of right to use goods”, transfer has to be coupled with possession and that if the pandal is given to the customers for use only after having been erected, then it is not transfer of right to use goods.
Circular No. 168/3/2013-ST, dated 15-4-2013 clarifying the above also notes Apex Court’s landmark judgment in the case of BSNL in which specified various attributes required for a transaction to constitute ‘transfer of right to use goods’, were specified. The circular notes that the service of preparation of a place to hold a function or event, is a reasonably specialized job carried out by the supplier with the help of his own labour, where 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 is handed over to the customer.