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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
Sameer Jain, J.
Assistant Commercial Taxes Officer, Anti- Evasion-III, Ward -I, Jaipur - Petitioner
Versus
M/s Agarwal Carriers And Lifters - Respondent
S.B. Sales Tax Revision/Reference No. 132, 36, 37, 39, 40, 41, 44, 45, 46, 47, 48, 49, 50, 68, 78, 93, 131, 133, 134, 135, 136, 137, 138, 139, 141 of 2020
Decided On : 13-04-2023
Constitution of India, 1950 – Article 366(29A) - Rajasthan Value Added Tax Act, 2003 - Section 2(35)(iv) - Assessment - Value Added Tax Petitioner that aforementioned sale had not been disclosed/shown by respondent-assessee and therefore, in such circumstances, Assessing Officer imposed tax, interest and penalty upon respondent-assessee vide Assessment Order dated - Thereafter, aggrieved by the said order, assessee preferred an appeal - Appellate Authority, vide order dated, upheld levy of tax with regard to Transport Department - Whereas, for other stakeholders/parties, matter was remanded back to Assessing Authority for certain verification(s) subject to directions contained in order dated - Whether a contract falls into one category or other is to as what is 'the substance of contract - After relying upon terms and conditions of contract, particularly Condition Nos. 17 and 28, learned Tax Board had rightly adjudicated questions of fact in favour of respondent-assessee. Para 16
Finding of Court :
Upon a consideration of nature of tasks outlined by contract dated qua the services to be performed/undertaken during operation of agreement and upon further considering fact that that learned Tax Board vide impugned order dated has furnished a categoric and unequivocal finding that said contract was a contract of service and not of sale and fact that respondent-assessee has duly paid service tax as leviable upon said transaction it is imperative to note that effective control of crane, even while same was in use of consumer for tasks so contracted for, was that of respondent-assessee - Consumer-Transport Department was not free to make use of the crane for works other than those contracted for with the respondent-assessee or even take the said crane out from a specific area during period of contract when crane was in his use - Control and possession of crane, as evidenced by requirements imposed under Condition Nos. 17 and 28, lay with respondent-assessee only.
Result : Sales Tax Revisions are dismissed.
ORDER :
1. With the consent of the parties, the revision petitions were admitted on the following question of law:-
2. At the outset, it is pertinent to note that notice(s) in the instant matter were issued vide order dated 30.06.2020. Thereafter, as per order-sheet dated 29.07.2020, service upon the respondent was reflected to be complete. Accordingly, the matter is being taken up for final disposal.
3. Considering the fact that the revision petitions involve common facts as well as questions of law, STR Nos. 36/2020 and 132/2020 titled as Assistant Commercial Taxes Officer vs. M/s Aditya Break Down Service and Assistant Commercial Taxes Officer vs. M/s Agarwal Carriers and Lifters respectively, are being taken up as the lead cases/files.
4. Learned counsel for the petitioners has submitted that the matter pertains to the assessment years, 2006/2007 to 2010/2011. A survey was conducted at the premises of the respondent on 22.11.2011. The Assessing Officer found that the respondent-assessee indulged in providing crane services to various customers, inadvertently giving them the right to use and therefore, transferring goods from one person to another i.e. a transfer of right to use goods for any purpose for valuable consideration and assessment. Therefore, the same ought to have been deemed a ‘sale’ in terms of Article 366(29A) of the Constitution of India and the definition of ‘sale’ under Section 2(35)(iv) of The Rajasthan Value Added Tax Act, 2003. The relevant provision is reproduced hereinunder:-
(iv) a transfer of the right to use goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration.”
5. In this regard, it was submitted by the learned counsel for the petitioner that the aforementioned sale had not been disclosed/shown by the respondent-assessee and therefore, in such circumstances, the Assessing Officer imposed tax, interest and penalty upon the respondent-assessee vide Assessment Order dated 16.12.2011. Thereafter, aggrieved by the said order, the assessee preferred an appeal. The Appellate Authority, vide order dated 06.07.2012, upheld the levy of tax with regard to the Transport Department. Whereas, for the other stakeholders/parties, the matter was remanded back to the Assessing Authority for certain verification(s) subject to the directions contained in the order dated 06.07.2012. Subsequently, in compliance of the order(s) of the Appellate Authority qua the remand and the direction(s) contained therein, the Assessment Officer passed an order dated 24.06.2014, in favour of the Revenue. Further aggrieved, the respondent-assessee preferred an appeal before the Appellate Authority, whereby vide order dated 27.08.2015, the same was decided in favour of the respondent-assessee.
6. Against the order dated 27.08.2015, the Revenue preferred appeal before the Rajasthan Tax Board. However, vide impugned order dated 30.09.2019, the aforementioned appeal preferred by the Revenue was dismissed and the issue was adjudicated in favour of the respondent-assessee. As a result, the Revenue has approached this Court by way of the present Sales Tax Revision, on the following question of law:-
Point of Law : Crane services provided by respondent-assessee do not constitute sale as provided under Section 2(35)(iv) of the Act of 2003 and hence, order of learned Tax Board does not call for any....
Effective control over services rendered is the key factor in determining tax classification under VAT, reaffirming that possession retention by the service provider precludes deemed service status.
Sale of goods – A necessary ingredient of sale of goods is transfer of property in goods subject matter of sale from seller to buyer – Only because a person is allowed to use certain goods of owner, ....
The central legal point established in the judgment is that the determination of a 'sale' under the Maharashtra Value Added Tax Act, 2002 depends on the effective control and possession of the goods,....
The transactions of leasing infrastructure equipment constitute services, not deemed sales, as effective control remains with the provider rather than transferring rights to the user.
The main legal point established is that contracts for hiring launch vehicles may be deemed service contracts rather than transfers of the right to use goods, based on the specific terms and conditio....
The court established that a transaction must involve effective control for it to be classified as a transfer of right to use goods, impacting tax liability.
Hiring of equipment with transfer of use is deemed a sale, exempting the transaction from service tax under the Finance Act.
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