2006 (12) TMI 459 - HC - VAT and Sales Tax

Summary

Issues involved: Assessment of lease rentals and hire charges u/s Kerala General Sales Tax Act, 1963 for the years 1989-90 to 1991-92 and from 1994-95 to 1997-98.

The High Court of Kerala heard tax revision cases concerning the assessment of lease rentals and hire charges under the Kerala General Sales Tax Act, 1963. The petitioner, a company based in Chennai with operations nationwide, including in Kerala, was engaged in leasing equipment and selling goods under a hire-purchase scheme. Despite filing appeals, the assessments were upheld by the Sales Tax Appellate Tribunal, leading to the filing of these cases. The court considered various judgments, including those of the Supreme Court and the High Court, to address the issues raised. The Tribunal noted inconsistencies in the petitioner's stance in different states regarding liability for sales tax, which raised doubts about the petitioner's claims. The court emphasized the importance of complying with tax laws following constitutional amendments and highlighted the distinction between tax evasion and tax planning. The court examined the nature of transactions carried out by the petitioner, emphasizing that lease agreements were executed before goods were acquired, and lease charges were payable only after delivery of goods to lessees. The court referred to the Supreme Court's decision on transactions involving goods not yet in existence, emphasizing that the taxable event occurs upon the delivery of goods. The petitioner's reliance on inter-State nature of transactions was rejected by the court, which affirmed the Tribunal's orders granting exemption for deemed sales in lease or hire-purchase transactions. The court upheld the Tribunal's orders and dismissed the tax revision cases.