The main legal point established in the judgment is that the amount collected for transfer of right to use goods, such as cylinder holding charges, is taxable under Section 3-A of the TNGST Act.

K. Raviraja Pandian, J.

1. Not satisfied with the common order of the Sales Tax Appellate Tribunal (Main Bench), Chennai dated 28. 2002 made in S.T.A.Nos.759 of 2000, 534 of 2000, 1027 of 1999, 1011 of 1999, 757 of 2000, 1010 of 1999, 1243 of 1999, 1012 of 1999 and 1083 of 2000 relating to the assessment years 1993-94, 1994-95, 1991-92, 1989-90, 1995-96, 198889, 1996-97, 1990-91 and 1996-97 respectively bringing the so called demurrage charges or cylinder holding charges for taxation under Section 3-A of the Tamil Nadu General Sales Tax Act (hereinafter referred to as "TNGST Act"), the present revisions in T.C.Nos.432, 433, 435, 436, 464, 519, 530, 537 and 587 of 2006 have been filed under Section 38 of the TNGST Act.

2. The only question for consideration before us in these cases is,

"Whether the amount received by the assessee, which is termed as "demurrage or cylinder holding charges" is exigible to tax under Section 3-A of the TNGST Act?"

3. As the point to be resolved in these cases is one and the same and the argument advanced is common by the parties, for the purpose of narration of facts, T.C.No.519 of 2006 is taken up as a typical case. The assessees are manufacturers and dealers of industrial gas and medical oxygen by filling in cylinders. After use of the gas, the empty cylinders were to be returned to the assessee. A period is specified for return of the empty cylinder. If the cylinder were not returned within the specified period, for the extra period of retention of the cylinders, additional charges were levied, which were termed as "cylinder holding charges or demurrage charges" by the assessee. The assessing officer has taken the view that the container i.e., cylinder is part of the sale of gas and the extra amount paid by the purchaser of gas for retention of the cylinder beyond the specified period has to be regarded as the price paid for the gas purchased. Thus the extra amount charged was taken as increase in the sale price of gas by the assessing officer and the turnover of demurrage charges was brought to tax. On appeal, the first appellate authority modified the turnover relating to demurrage charges among other turnovers. The assessee carried the matter on further appeal to the Sales Tax Appellate Tribunal and contended that the Orissa High Court in its sister concerns case i.e., Asiatic Gases Limited Vs. State of Orissa and another reported in 121 STC 405 considered an identical issue with reference to the identical terms of the agreement and held that "possession and custody of the cylinders by the customers for 14 days was permissible but beyond 14 days was without authority for which the assessee was charging certain amount. In other words, after 14 days, there was no permission for keeping in possession and custody of the cylinder. Therefore, the consideration received was by way of penalty. The term "transfer of the right to use" denotes an agreement between two parties. Here, there was an agreement of transfer of right to use the cylinders for the first 14 days only. Beyond 14 days, the detention was without authority or in total disregard of the terms of the contract and inasmuch as there was no transfer of right to use the cylinders beyond the free loan period of 14 days. The amount received by the assessee on account of the delay in return of cylinders by the purchaser could not be held to be taxable." However, the Tribunal found that the cylinder holding charges collected by the assessee was nothing but hire charges and the hire charges are liable to tax under Section 3-A of the TNGST Act and held the issue against the assessee. Hence, the revision is filed by the assessee.

4. Mr. V. Ramachandran, learned Senior Counsel appearing for the assessee reiterates the argument, which was focused before the Tribunal.

5. On the other hand, the learned Government Pleader argued to sustain the order passed by the Tribunal.

6. Of course, it is true that the Orissa High Court in respect of the as