The main legal point established in the judgment is the distinction between service tax and VAT/sales tax, emphasizing the necessity to examine the transfer of the right to use goods and the dominant object of the transaction to determine its nature.

VIBHU BAKHRU, J.

1. The Petitioner, a company incorporated under the Companies Act, 1956, has filed the present petition under Articles 226 and 227 of the Constitution of India, inter alia, impugning separate notices of default assessment dated 5 August, 2013 whereby the Petitioner's entire turnover for the period 2010-11 and 2011-12 has been assessed to Value Added Tax (VAT) and penalty and interest has also been levied in addition to the tax assessed. The Petitioner also impugns an order dated 7 February, 2014 as rectified by an order dated 13 February, 2014 passed by the Special Commissioner (VAT) directing a deposit of Rs.3,14,00,000/--being 20% of the disputed demand of VAT and interest for the period 2011-12 -as a pre-condition for hearing the objections filed by the Petitioner in respect of demand raised for the financial year 2011-12. In addition, the Petitioner also impugns a ruling dated 6 April, 2011 made by the Commissioner (VAT) under Section 85 of the Delhi Value Added Tax Act, 2004 (hereafter 'the DVAT Act') whereby the Commissioner has held that advertisement hoardings, panels, display boards, kiosks etc. are ‘goods’ as defined under Section 2(m) of the Act and the advertisers are liable to pay VAT on the revenue received on account of deemed sale resulting from transfer of the right to use the said hoardings, panels, display boards, kiosks etc. A further challenge is also laid to the notices under Section 59 of the DVAT Act dated 8 May 2013 and 21st October 2013 requiring the Petitioner to produce the documents stated therein for the period of 2012-13.

2. The principal controversy involved in this petition is whether the Petitioner, who is a licensee in respect of certain advertisement display sites (hereafter 'the Sites'), would be liable to pay VAT on the revenue earned from display of advertisement at the Sites. According to the Petitioner, the Sites are being used by the Petitioner itself for rendering services and there is no transfer of any right to use those sites as alleged by the Revenue. The Revenue, on the other hand, contends that the Sites for display of advertisements are ‘goods’ and the Petitioner has transferred the right to use those goods to various advertising agencies/advertisers, who use the Sites for display of their advertisement and/or advertisements of their clients.

Factual background

3. The Delhi International Airport Ltd. (hereafter 'DIAL') had entered into Operations, Management and Development Agreement dated 4 April, 2006 (hereafter 'OMDA') with the Airport Authority of India (hereafter 'AAI') whereby AAI has granted DIAL, the exclusive right and authority to operate, maintain, develop, design, construct, upgrade, modernize, finance and manage the Indira Gandhi International Airport. With the view to develop, setup, operate, maintain and manage various sites for display of advertisement, DIAL issued a Request For Proposal (‘RFP’) on 11 March, 2010 requesting interested parties to bid for participating in a joint venture company which would be: (i) licensed for establishing, setting up, developing, operating, maintaining and managing the Sites for display of advertisements; and (ii) granted rights to procure install and maintain Master Antenna Television Screens (MATV) and wall clocks at certain locations and display of brand logos in terms of the Sponsorship Agreement. The Petitioner successfully participated in the bidding process and was granted the licence for designing, setting up, developing, operating and maintaining the Sites for display of advertisements in terms of a licence agreement dated 17 August, 2010 (hereafter ‘the Licence Agreement').

4. The Sites are located within or in the vicinity of the Indira Gandhi International Airport, which is a secured area, and as such, access to the Sites is highly restricted. The Petitioner asserts that its business model is that it enters into agreements with various persons including advertisement agencies in terms of which t