2000 (7) TMI 957 - AT - VAT and Sales Tax

Summary

Issues:
1. Validity of assessment orders against M/s. Sundaram Finance Ltd. and M/s. Ashok Leyland Finance Ltd. for the assessment years 1986-87 to 1996-97 and 1993-94 to 1998-99 respectively.
2. Interpretation of section 3-A of the Tamil Nadu General Sales Tax Act, 1959 in light of conflicting decisions by the Tribunal and the apex Court.
3. Applicability of legal fiction in determining the situs of sale for transactions involving the transfer of right to use goods.
4. Dispute regarding the location of goods and the criteria for levying tax under section 3-A.

Analysis:
1. The petitions were filed to set aside the assessment orders against M/s. Sundaram Finance Ltd. and M/s. Ashok Leyland Finance Ltd. The assessing authority levied tax based on the location of the leased machineries. The Tribunal's decision in Upasana Finance Ltd. was relied upon, but the apex Court's ruling in 20th Century Finance Corporation Ltd. v. State of Maharashtra overturned this view. The apex Court held that the location of goods cannot be the basis for tax under section 3-A, emphasizing the situs of sale determined by the agreement's execution place.

2. The counsel for the petitioners argued that the Tribunal's reliance on the location of goods for tax assessment was overturned by the apex Court's judgment. The apex Court clarified that the situs of sale is where the right to use goods is transferred, not where the goods are located. As the apex Court's ruling post-dated the assessment orders, the assessing authority was directed to reconsider the orders in line with the apex Court's principles.

3. The assessment orders revealed contentions by the petitioners regarding the import status of goods, inter-State sales, and applicability of section 3-A. The assessing authority found that the goods were in possession of the lessors, leading to tax liability under the Tamil Nadu General Sales Tax Act. The authority rejected claims of import or inter-State sales, emphasizing the lessors' possession of the goods for lease transactions.

4. The assessing authority concluded that the petitioners purchased goods from outside the State, leased them to customers, and thus were taxable under section 3-A. The authority dismissed claims of agreements executed or deliveries made outside the State. The petitioners' assertions on import or inter-State sales were deemed factual issues for the appellate authority, warranting dismissal of the petitions.

In summary, the Tribunal dismissed the petitions, emphasizing the need for evidence to support claims of import or inter-State sales. The apex Court's ruling on the situs of sale based on the agreement's execution place was pivotal in directing the assessing authority to reconsider the assessment orders in light of the legal principles established.