CESTAT Quashes Service Tax Demand, Holding Diesel Generator Set Lease Was Deemed Sale Not Taxable as Service

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has quashed a service tax demand that was previously raised on the activity of leasing diesel generator (DG) sets. The tribunal ruled that the leasing of DG sets should be considered a 'deemed sale' of goods rather than a provision of service. By categorizing it as a deemed sale, CESTAT concluded that the transaction falls outside the scope of service tax liability. This decision provides significant relief to businesses engaged in leasing DG sets, clarifying the tax treatment of such arrangements under indirect tax laws and exempting them from service tax.