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2017 (5) TMI 769 - HC - VAT and Sales TaxDeemed Sale - Transfer of right to use - buses given on hire - MVAT Act - dealer within the meaning of Section 2(8) of the MVAT Act - transaction between Appellant and PMPTL amounts to sale or not? - whether amounts to sale or provision of service? - Held that - it is the PMT alone which can use the hired buses. They cannot be put to use by the appellant privately nor he can divert the user in contravention of the directions of the PMT. The exclusive possession is with the PMT. All the licences, permissions and the benefit thereof is transferred to the PMT. Nothing insofar as the hired bus is concerned remains within the control of the appellant. Thus, the PMT has effective and complete control of the vehicles and the earmarked buses are in exclusive possession of the PMT. The appellant stands totally excluded from the use, possession and control thereof. The hired buses in complying with the specifications enumerated in Annexures A and B for a period of five years will ply on PMT permit granted by the Regional Transport Office, Pune. The hired buses will be registered with the RTO, Pune in the name of the PMT as lessees and will be operated as stage carriages within the operational area of the PMT. This is not a case of a sale of transport vehicle or purchase thereof nor a case of sale of parts, components or accessories of such transport vehicles or purchase thereof. This is a case where the legislature has made the transfer of the right to use any goods for any purpose a deemed sale. The question is whether there is a transfer of right to use any goods and within the meaning of subclause (iv) of the Explanation to clause (24) of section 2 of the MVAT Act. It is in these circumstances that we do not think that given the factual backdrop the appellant can take assistance of the third exception to clause (8) of section 2 of the MVAT Act, 2002. When the burden of the tax has to be borne actually by the PMT and the appellant can pass on the same by including it in the sale price, then, all the more we do not think that any relief should be granted based on this alternate plea. We have also noticed that the appellant has obtained a registration under the MVAT Act and so long as that registration is in force, he cannot escape the incidence of tax qua the subject transaction. It is not just a dealer, but every person who is liable to pay tax under this Act, shall pay the same. That is how taxes are payable within the meaning of section 4. The tax or taxes thus are leviable on every person who is liable to pay tax under the MVAT Act. It is only those transactions which are covered by section 8 of the Act on which the MVAT is not payable. Appeal dismissed - decided against appellant-assessee.
Issues Involved:
1. Whether the Appellate Tribunal was right in holding that the Appellant is a dealer within the meaning of Section 2(8) of the MVAT Act. 2. Whether the transaction between the Appellant and PMPTL is a sale within the meaning of Section 2(24) of the MVAT Act. 3. Whether the buses given on hire by the Appellant to PMT is a sale within the meaning of Section 2(24) of the MVAT Act and subject to payment of Value Added Tax. Issue-wise Analysis: 1. Whether the Appellant is a Dealer: The Tribunal held that the Appellant is a dealer within the meaning of Section 2(8) of the MVAT Act. The Appellant argued that they are excluded from the definition of a dealer as per Exception III to Section 2(8), which excludes transporters holding permits for transport vehicles used for hire or reward. However, the court found that the Appellant's activities, including the provision of buses to PMT under a detailed contract, do not fall within this exception. The buses were registered in the name of PMT, and the Appellant did not hold the permits independently. Thus, the Appellant is considered a dealer under the MVAT Act. 2. Whether the Transaction is a Sale: The Tribunal concluded that the transaction between the Appellant and PMPTL constitutes a sale under Section 2(24) of the MVAT Act. The court examined the terms of the contract between the Appellant and PMT, which indicated that the buses were provided exclusively for PMT's use, with PMT having full control and possession. The buses were to operate on routes determined by PMT, and the Appellant could not use the buses for any other purpose. This arrangement satisfied the criteria for a transfer of the right to use goods, thus constituting a sale under the MVAT Act. 3. Whether the Buses Given on Hire Constitute a Sale: The Tribunal held that the buses given on hire by the Appellant to PMT are subject to Value Added Tax as a sale under Section 2(24) of the MVAT Act. The court noted that the contract terms provided PMT with exclusive control and possession of the buses, including the right to determine routes, collect fares, and maintain the buses. The Appellant's role was limited to providing the buses and drivers, with all operational control vested in PMT. This arrangement was deemed a transfer of the right to use the buses, making it a taxable sale under the MVAT Act. Conclusion: The court upheld the Tribunal's findings, affirming that the Appellant is a dealer, the transaction with PMPTL constitutes a sale, and the buses given on hire to PMT are subject to Value Added Tax. The penalties imposed on the Appellant were deleted, considering the debatable nature of the issue. The court granted a stay on recoveries for two months to allow the Appellant to consider further legal action.
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