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.

ORDER :

P.Sam Koshy, J.

1. These are two writ petitions preferred by the petitioner assailing the order of assessment under the ANDHRA PRADESH VALUE ADDED TAX ACT , 2005 (for short ‘APVAT Act’ hereinafter) passed by the Assistant Commissioner (CT)-III, Enforcement Wing i.e., respondent No.1 for the period from April, 2008 to June, 2008. The question of law involved in the instant case is whether the transactions of the petitioner would constitute “a service” or will it amount to “deemed service” within the meaning of Section 4(8) of APVAT Act read with Section 2(28) Explanation IV of the two writ petitions W.P.No.27359 of 2008 is for the assessment year 2007-08 and W.P.No.27360 of 2008 is for the period April, 2008 to June, 2008.

2. The petitioner is a public limited company incorporated under the Indian Companies Act, 1956. It is a joint venture company between the National Academy of Construction (NAC) and Government of Andhra Pradesh along with two other infrastructure companies. The Company is primarily incorporated with the object of making available the necessary resources and the related machinery for ushering the growth in infrastructure field in the State of Andhra Pradesh (Combined State) and also in the neighboring states. The Company is registered under the APVAT Act. By the Finance Act, 2008, the Government of India brought into force the provisions of the service tax as a result it is said that Commercial Tax Department particularly its Enforcement Wing inspected the petitioner’s establishment and collected certain information. Based upon the said inspection, the authorities found that the petitioner’s company is dealing with high value equipments like excavators, cranes, wheel loaders and transit mixers etc., and in turn had obtained certain information relating to amounts received by petitioner for making available these facilities to its customers.

3. Subsequently, notice in Form VAT555 dated 19.07.2008 was issued to the petitioner calling upon then to furnish the details of gross rental receipts towards the lease of infrastructure equipment/machinery to various customers during the assessment period informed in these two writ petitions i.e., April, 2007 to March, 2008 and April, 2008 to June, 2008. Petitioner, on receipt of the said notice submitted its objections on 06.08.2008. The petitioner in the objections that they had filed referred to the nature of activities that they carried on in terms of the agreement entered into with each of the customers and drew the attention of respondent No.1 that the supply of equipments made is only for a specific purpose and during the course of its operations, these equipments are operated by the technicians and operators employed by the petitioner’s themselves and maintenance of these equipments are also undertaken by the petitioner. It was also specifically pleaded that the ownership right of these equipments are never transferred and it remained with the petitioner.

4. Referring to the landmark judgment of Hon’ble Supreme Court in State of Andhra Pradesh v Rastriya Ispat Nigam Limited , (2002) 3 SCC 314 , the petitioner contended that since there is no transfer of title or ownership in terms of the aforesaid judgment of Rastriya Ispat the nature of operations carried out by the petitioner is to be considered to be one of service and not that of deemed sale. According to the petitioner, they were providing high value multi-purpose supplies and general infrastructure equipment on hourly basis for specific period. In the