1990 (2) TMI 280 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Propriety of seizure and retention of documents.
2. Imposition of sales tax on the business of decorators.
3. Definition and interpretation of "sale" u/s 2(g)(ii) of the Bengal Finance (Sales Tax) Act, 1941.
4. Classification of pandals, rostrums, etc., as immovable property or goods.
5. Applicability of sales tax on services rendered by decorators.

Summary:

1. Propriety of Seizure and Retention of Documents:
The issue of the seizure and retention of documents was not pursued during the hearing as the seized documents had been released per the High Court's order.

2. Imposition of Sales Tax on the Business of Decorators:
The applicant challenged the imposition of sales tax on their business of constructing and erecting pandals, rostrums, etc., arguing that these activities do not constitute a "sale" within the amended meaning of the term.

3. Definition and Interpretation of "Sale" u/s 2(g)(ii) of the Bengal Finance (Sales Tax) Act, 1941:
The main point for consideration was whether the erection of pandals, pavilions, rostrums, etc., falls within the meaning of "sale" as defined in the amended section 2(g)(ii) of the Act. The Tribunal held that the services rendered by decorators in erecting pandals do not come within the meaning of "sale of goods" as defined.

4. Classification of Pandals, Rostrums, etc., as Immovable Property or Goods:
The Tribunal rejected the contention that pandals or rostrums, being fixtures attached to the earth, become part of immovable property. It was held that the temporary fastening of such structures to the earth does not make them immovable property.

5. Applicability of Sales Tax on Services Rendered by Decorators:
The Tribunal concluded that the erection of pandals by decorators is a service of a complex nature and does not involve the transfer of materials for use by the customer. Therefore, such activities do not amount to a "sale" and are not exigible to sales tax. However, other items let out by decorators, such as tables, chairs, etc., are considered "goods" and may be taxable if the turnover exceeds the taxable limit.

Conclusion:
The writ application was partly allowed. The respondents were prohibited from charging sales tax for the erection of pandals, etc., by the applicant. However, other items let out by decorators on hire may be assessable to tax. There was no order for costs.