2011 (12) TMI 472 - HC - VAT and Sales Tax

Summary

Issues:
1. Impugning deduction of sales tax at source from the bills of the petitioner.
2. Allegations of rendering taxable service to the ONGC by providing vehicles.
3. Dispute over the classification of the petitioner as a "tour operator" under the Finance Act, 1994.
4. Interpretation of the Assam General Sales Tax Act, 1993 regarding the levy of tax on the transfer of the right to use goods.

Analysis:
The High Court of Gauhati heard a writ petition filed by the Assam State Transport Corporation (ASTC) challenging the deduction of sales tax at source from its bills by the Oil and Natural Gas Corporation Ltd. (ONGC) based on the Finance Department's direction. The court initially restrained tax deduction pending the case, noting the lack of a counter-affidavit from the Government of Assam. The ONGC, in its opposition affidavit, supported the petitioner's case, while the petitioner submitted additional developments during the proceedings, including a show-cause notice alleging taxable service provision without proper registration under the Finance Act, 1994.

The petitioner's appeal against the show-cause notice was rejected by the Commissioner (Appeals), Central Excise, Guwahati, disputing the petitioner's classification as a "tour operator." The petitioner argued under the Assam General Sales Tax Act, 1993 that since there was no transfer of the right to use goods, tax deduction was unjustified. The ONGC countered, stating the essence of the agreement was service provision, not the transfer of the minibus, and that effective custody remained with the ASTC, leading to the conclusion that the transaction did not involve the transfer of minibuses to ONGC.

Considering the non-transfer nature of the transaction and the previous decisions, the court accepted the writ petition, overturning the Finance Department's directive to ONGC for tax deduction at source. The court directed any tax deducted from ASTC to be refunded if applicable, thereby ruling in favor of the petitioner, the Assam State Transport Corporation.