1998 (9) TMI 636 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the charges received for recording songs, background music, and dubbing are taxable under the Maharashtra Sales Tax on the Transfer of the Right to use any Goods for any Purpose Act, 1985.

Issue-wise Detailed Analysis:

1. Charges for Recording Songs:
The primary issue was whether the charges received for recording songs in a studio with invoice No. 87/88/618 dated March 30, 1988, constituted a sale liable to tax under the Maharashtra Sales Tax on the Transfer of the Right to use any Goods for any Purpose Act, 1985. The Tribunal held that the transaction did not amount to a sale within the meaning of section 2(10) of the Act. The court upheld this view, noting that the studio, with its permanently installed recording equipment, was an immovable property, and the hiring of such a studio did not constitute the transfer of the right to use movable property.

2. Charges for Background Music Recording:
The second issue was related to the charges received for background music recording with invoice No. 87/88/613 dated March 29, 1988. The Tribunal concluded that this transaction was not a sale liable to tax under the Act. The court agreed, emphasizing that the studio's equipment, essential for the beneficial enjoyment of the studio (an immovable property), could not be considered movable property. Therefore, the hiring of the studio for background music recording did not fall under the scope of the taxable sale.

3. Charges for Songs Dubbing:
The third issue involved the charges received for dubbing songs with invoice No. 87/88/620 dated March 31, 1988. The Tribunal determined that this transaction was not a sale liable to tax under the Act. The court concurred, reiterating that the studio's equipment was integral to the immovable property (the studio) and that hiring the studio for dubbing did not constitute a transfer of the right to use movable property.

General Observations:
The court examined the definitions of "goods," "sale," "sale price," and "turnover of sales" under the Act. It noted that the levy of tax was on the turnover of sales concerning the transfer of the right to use any goods, defined as movable property. The court highlighted that the recording studios, with their permanently installed equipment, were immovable properties, and the transactions in question did not involve the transfer of the right to use movable property.

Conclusion:
The court answered all three questions in the affirmative, in favor of the assessee and against the Revenue, concluding that the charges for recording songs, background music, and dubbing in the studios did not amount to taxable sales under the Maharashtra Sales Tax on the Transfer of the Right to use any Goods for any Purpose Act, 1985. The reference was disposed of accordingly, with no orders as to costs.