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2015 (5) TMI 32 - HC - VAT and Sales TaxTransfer of the rights to use any goods - Leasing transaction - Dealer - Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the respondent is not a dealer within the meaning of the term as defined under section 2(4) of the Maharashtra Sales on transfer of right to use any goods for any purpose Act, 1985 - Held that - for a person to come within the definition of dealer , he is required to transfer the right to use any goods for any purpose. It could, thus, be seen that the right to use any goods for any purpose is essential so as to bring the person within the ambit of dealer as defined in the said Act. Consequently, for the transaction to be a sale within the meaning of the said Act, what is essential is transfer of right to use any goods for any purpose. - to constitute a transaction for the transfer of the right to use the goods, it is necessary that there must be a consensus ad idem as to the identity of the goods. It is further necessary that the transferee should have a legal right to use the goods, all legal consequences of such use including any permissions or licences required therefor should be available to the transferee and for the period during which the transferee has such legal right, it has to be and to the exclusion of the transferor. Having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others. It would thus be seen that unless all the requirements are transferred, the transaction will not come within the meaning of Transfer of the rights to use any goods . - Tribunal has extensively reproduced the terms of contract which are also been reproduced by us hereinabove. Perusal of the terms of contract would reveal that as per the contract, the driver, cleaner, diesel and oil was to be provided by the respondent. So also, transportation of accessories was to be done by the respondent. It can further be seen that there is no provision in the contract that the legal consequences such as permissions or licences were to be transferred to the transferee. The ultimate control over the crane retained with the respondent. We find that the learned Tribunal, applying the judgment of Apex Court 2006 (3) TMI 1 - Supreme court , has rightly construed that the transaction which were entered into by the respondent with Offshore Hook Up & Construction Services (I) Pvt. Ltd. would not fall within the meaning of Lease Act and the respondent was not a dealer within the meaning of definition of Section 2(4) of the Lease Act. - Decided against Revenue.
Issues Involved:
1. Whether the respondent is a "dealer" under Section 2(4) of the Maharashtra Sales on Transfer of Right to Use Any Goods for Any Purpose Act, 1985 (Lease Act). 2. Whether the transaction dated 27/7/90 for an amount of Rs. 1,62,500/- is a "sale" under Section 2(10) of the Lease Act and thereby liable to tax. Detailed Analysis: Issue 1: Definition of "Dealer" The primary question is whether the respondent qualifies as a "dealer" under Section 2(4) of the Lease Act. The Tribunal ruled that the respondent is not a dealer, reversing the Additional Commissioner's decision. The definition of "dealer" under Section 2(4) of the Lease Act specifies that a dealer is any person who transfers the right to use any goods for any purpose, whether for commission, remuneration, or otherwise. The Court analyzed the terms of the contract between the respondent and M/s. Offshore Hook-Up & Construction Services (I) Pvt. Ltd., noting that the respondent retained significant control over the crane, including providing the driver, cleaner, diesel, and oil. The permissions and licenses required for the crane's operation were not transferred to the contractor, indicating that the effective control remained with the respondent. The Court referred to precedents, including the Supreme Court's decisions in State of Andhra Pradesh vs. Rashtriya Ispat Nigam Ltd. and Bharat Sanchar Nigam Ltd. & Anr. vs. Union of India & Others, which clarified that for a transaction to constitute a transfer of the right to use goods, the transferee must have exclusive control and legal rights over the goods during the period of transfer. Since the respondent retained control and did not transfer the necessary permissions and licenses, the Court concluded that the respondent is not a dealer under the Lease Act. Issue 2: Definition of "Sale" The second issue is whether the transaction dated 27/7/90 for Rs. 1,62,500/- constitutes a "sale" under Section 2(10) of the Lease Act. The definition of "sale" under Section 2(10) involves the transfer of the right to use any goods for any purpose for cash, deferred payment, or other valuable consideration. Given the conclusion on the first issue, the Court noted that if the respondent is not a dealer, the transaction cannot be considered a sale under the Lease Act. The Court reiterated that for a transaction to be deemed a sale, there must be a transfer of the right to use the goods, which was not the case here as the respondent retained effective control over the crane. Conclusion: The Court upheld the Tribunal's decision, concluding that: 1. The respondent is not a dealer within the meaning of Section 2(4) of the Lease Act. 2. Consequently, the transaction dated 27/7/90 for Rs. 1,62,500/- is not a sale under Section 2(10) of the Lease Act and is not liable to tax. The judgment comprehensively analyzed the contractual terms and relevant legal precedents to determine the nature of the transaction and the status of the respondent under the Lease Act.
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