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2009 (3) TMI 932 - HC - VAT and Sales TaxWhether in the facts and circumstances of the case the learned Sales Tax Tribunal is justified in holding that there was no transfer of right to use of the dredgers within the meaning of section 2(g)(iv) of the Orissa Sales Tax Act, 1947? Whether in the facts and circumstances of the case the learned Sales Tax Tribunal was justified in deciding the second appeals on merit without remitting back the matter to the Sales Tax Officer for adjudication? Held that - No infirmity in the order of the learned Tribunal holding that there is no transfer of right to use the dredgers by the Corporation to the PPT in terms of the provisions of section 2(g)(iv) of the OST Act and the consideration money received by the Corporation is not exigible to sales tax warranting interference by this court. In the result, we answer both the questions in affirmative, i.e., in favour of the dealer and against the Department.
Issues Involved:
1. Whether there was a transfer of the right to use the dredgers under section 2(g)(iv) of the Orissa Sales Tax Act, 1947. 2. Whether the Sales Tax Tribunal was justified in deciding the second appeals on merit without remitting the matter back to the Sales Tax Officer for adjudication. Detailed Analysis: Issue 1: Transfer of Right to Use the Dredgers The central question was whether the Corporation transferred the right to use its dredgers to the Paradeep Port Trust (PPT) under section 2(g)(iv) of the Orissa Sales Tax Act, 1947, which defines "sale" to include "transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration." Arguments by the Revenue: - The Revenue argued that the Corporation transferred the right to use the dredgers to PPT, evidenced by the daily and idle charges fixed for the dredgers. - It was contended that the dredgers were under the control of PPT, as they could not be moved without PPT's permission, indicating possession and control by PPT. - The Revenue relied on the decision in Krushna Chandra Behera v. State of Orissa [1991] 83 STC 325, asserting that the transaction constituted a transfer of the right to use the dredgers. Arguments by the Corporation: - The Corporation argued that the dredgers were engaged along with its personnel as a unit for dredging work, and the right of possession and effective control remained with the Corporation. - The Corporation contended that the charges received were for services rendered, not for the transfer of the right to use the dredgers. - The Corporation cited Supreme Court judgments, including State of Andhra Pradesh v. Rashtriya Ispat Nigam Ltd. [2002] 126 STC 114 and Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST 95, to support its position that there was no transfer of the right to use the dredgers. Tribunal's Findings: - The Tribunal concluded that there was no transfer of the right to use the dredgers, as the agreement indicated a works contract rather than a transfer of possession or control. - The Tribunal emphasized that the essential requirement of section 2(g)(iv) was not met, as there was no transfer of the right to use the dredgers. Court's Conclusion: - The court upheld the Tribunal's findings, agreeing that the transaction did not constitute a transfer of the right to use the dredgers under section 2(g)(iv) of the OST Act. - The court noted that the assessments for previous years had been similarly resolved in favor of the Corporation, with no tax revision filed by the State against those orders. Issue 2: Tribunal's Decision on Merits Without Remitting Back The second issue was whether the Tribunal was justified in deciding the appeals on merit without remitting the matter back to the Sales Tax Officer for fresh adjudication. Arguments by the Revenue: - The Revenue argued that the Tribunal should have remitted the matter back to the assessing officer for fresh adjudication, as had been done in previous years. Tribunal's Approach: - The Tribunal decided the appeals on merit, finding no need to remit the matter back to the Sales Tax Officer. Court's Conclusion: - The court found no infirmity in the Tribunal's approach, noting that the Tribunal had adequately addressed the issues based on the facts and the agreement between the parties. Final Judgment: The court answered both questions in the affirmative, favoring the Corporation and against the Department. The sales tax revision petition was disposed of, confirming that there was no transfer of the right to use the dredgers and the consideration received by the Corporation was not exigible to sales tax. No costs were awarded.
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