1999 (1) TMI 510 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of Section 3-A of the TNGST Act.
2. Exigibility to tax on various transactions under Section 3-A.

Summary:

Validity of Section 3-A:
The Tribunal addressed the challenge to the validity of Section 3-A of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act). The petitioners argued that Section 3-A was unconstitutional or beyond the powers of the State Legislature. The Tribunal relied on the Supreme Court's decisions in Builders Association of India v. Union of India and Gannon Dunkerley & Co. v. State of Rajasthan, which upheld the validity of sales tax laws under clause (29A) of Article 366 of the Constitution of India. The Tribunal concluded that Section 3-A is valid and within the legislative competence of the State Legislature.

Lease or Transfer of Right to Use Goods:
The Tribunal considered various categories of transactions involving the lease or transfer of the right to use goods, including goods purchased from other States, goods in the course of import, hire purchase transactions, and goods that have already suffered tax in Tamil Nadu. The Tribunal emphasized that the assessing authorities should follow the guidelines laid down by the Supreme Court in Builders Association of India and Gannon Dunkerley & Co. while determining the exigibility to tax. The Tribunal also noted that the circular dated August 30, 1994, issued by the Special Commissioner, cannot override the statutory provisions and should only serve as a guidance.

Specific Categories of Transactions:
1. Hoardings: The Tribunal held that the hire-charges for the use of hoardings for advertisements are taxable under Section 3-A. The facts of each case should be examined to determine whether there is a transfer of the right to use the hoardings.

2. Lorry Hire Charges: The Tribunal found that lorry hire charges are exigible to tax under Section 3-A, even if the lorries are operated by the owner's employees.

3. Cylinder Retention Charges: The Tribunal held that cylinder retention charges are taxable under Section 3-A, subject to the limitations already discussed.

4. Transfer of Rights in Cinematography Films: The Tribunal noted that the transfer of rights in cinematography films, such as copyright or negative rights, could be taxable under Section 3-A, depending on the facts of each case.

5. Right to Use Software: The Tribunal dismissed the petitions challenging the taxability of software, leaving it to the assessing authorities to determine the issue based on the facts.

6. Video Cassettes: The Tribunal held that the hire-charges for the use of video cassettes are taxable under Section 3-A, following the principles laid down in various judicial decisions.

7. Ships: The Tribunal held that the hire-charges for the use of ships are taxable under Section 3-A, subject to proof that the taxable events occurred within Tamil Nadu.

8. Rigs: The Tribunal dismissed the petitions challenging the taxability of rigs hired to ONGC, leaving it to the assessing authorities to determine the issue based on the facts.

Conclusion:
The Tribunal dismissed all the petitions and directed the assessing authorities to follow the statutory provisions and judicial guidelines while determining the exigibility to tax under Section 3-A. The petitioners were given time to file objections to the notices issued, and the assessing authorities were directed to pass orders in accordance with law. The Tribunal also clarified that there is no prohibition against taking action under Section 3-A wherever applicable.