In the case of Hindustan Coca Cola Beverages (P.) Ltd. v. Commissioner of Service Tax, Delhi (2016) 66 taxmann.com 56 (New Delhi – CESTAT), The New Delhi CESTAT has held that such crate rentals would be liable to VAT/sales tax on the ground that it amounted to deemed sale of crates in as much as there was transfer of right to use with effective control and possession of crates. It is trite that the transactions which are deemed sales cannot be liable to service tax. Thus, the service tax demand pertaining to crate rentals is not sustainable.

Though the present case pertains to period 2005-06 to 2011-12, the chargeability of service tax still remains the same, i.e. in the post negative list regime also the said activity will remain outside the ambit of service tax, being deemed sale