VALMIKI J.MEHTA, J

1. This Sales Tax Appeal has been filed by the Commissioner, Value Added Tax, New Delhi against the order dated 16.10.2008 passed by the Appellate Tribunal, Value Added Tax whereby the Tribunal has held that the respondent is providing services only and there is no transfer of the right to use the goods for levy of tax under the Delhi Value Added Tax Act, 2004 (hereinafter referred to as “DVAT Act”). The issue in the case pertains to the claim of the appellant to the applicability of the DVAT Act to the transaction in question which was of hiring of Maruti Omni Cabs by the respondent to a company M/s. New Delhi Power Limited (hereafter “the NDPL”).

2. Two issues arise for determination by this Court:-

a) Whether the transaction in question is sale within the meaning of the expression in Article 366(29-A)(d)?

b) Whether the contracts in question are contracts for services and hence not assessable to tax under the DVAT Act? Putting it differently, is the appellant entitled to impose tax on the transaction in question because it contains an aspect/element of sale of goods and it makes no difference if services also are included in the transaction?

3. Both the parties have extensively relied upon the decision of the Supreme Court in the case of Bharat Sanchar Nigam Ltd. v. Union of India, (2006) 3 SCC 1. They have also relied upon certain other judgments as discussed hereinafter.

4. Before we proceed to answer the issues arising, it will be necessary to give a gist of the contract between the respondent and M/s. NDPL for hiring of Maruti Omni Cabs by the former to the latter. The appellant has referred to the said contract and its terms in para 11 of the appeal and which para reads as under:-

“11. That the Respondent had enclosed a copy of the agreement with NDPL for hiring of Omni Vans. As per the copy of the said agreement the respondent was to provide to NDPL 9(Nine) non-ac Maruti Omni Vans on 24 hours/2500 Km per month per vehicle on a monthly cumulative basis @ Rs.23,000/- per vehicle per month and 16(sixteen) non-ac Omni Vans on 12 hour/3000 Km basis @ Rs.16,000/- car/per month. Extra Km above the cumulative 48000 Km per month was to be paid @ Rs.4/Km and extra hours of duty in excess of 12 hours/day of duty @ Rs.15/hr. NDPL also required the respondent to, inter alia, ensure the following:

1. All chauffeurs will be uniformed and are Hindi and English speaking.

2. All chauffeurs have mobiles.

3. ESI and PF are paid for the chauffeurs.

4. The car exterior and interior are kept clean.

5. Rates above are inclusive of fuel, maintenance and driving charges.

6. Parking, Toll and other road taxes shall be paid extra at actuals. Individual Bills/receipts shall be submitted.

7. Kilometre reading for the purpose of billing shall be from point to point to Base Station.

8. Vehicles hired under monthly services shall be available for 24 hours a day and all 7 days of the week. Change drivers will be arranged by you to continue provision of the service.

9. Drivers shall have valid professional driving license and adequate experience of driving in and around Delhi. They should be thoroughly familiar with the various roads/locations in Delhi especially in North and North-West Delhi.

10. Vehicle with requisite permit shall be provided without any extra charge as and when required.

11. Please submit for records, copies of vehicle documents viz. Registration Certificate, Insurance certificate and tax permit. Also submit copies of Driving License and Badge No. of the drivers engaged on monthly services.

12. Log book specifying trips done, date, time, Kms at the beginning of the trip and at the end of the trip are to be maintained. These are to be signed off by the user of the vehicle. His name is to be appended under the signature.

13. Replacement vehicles are to be provided in case the vehicle has to go for maintenance for over 4 hours.

14. The provision of the vehicle is an important activity in the process of our Co