2017 (10) TMI 1055 - AT - Service Tax

Service tax or VAT? - whether the transaction being transfer of rights and privilege of export of Sugar quota by the respondent assessee on receipt of consideration, whether the same is a service or goods? - Held that - in view of the ruling of Hon ble Supreme Court in the case of Vikas Sales Corporation, 2008 (5) TMI 43 - SUPREME COURT , where it was held that DEPB, like REP licence qualifies as goods and its sale is eligible to tax, we hold that the transaction in question regarding sale of rights and privilege of export of sugar quota is sale of goods and no service is involved - appeal dismissed - decided against Revenue.

Summary

Issues involved:
Determining whether the transaction involving the transfer of rights and privilege of export of 'Sugar quota' constitutes a service or goods.

Analysis:
The judgment delves into the core issue of whether the transfer of rights and privilege of export of 'Sugar quota' by the respondent assessee, on receipt of consideration, should be classified as a service or goods. The tribunal examined the ruling of the Hon'ble Supreme Court in previous cases to establish a legal precedent. The tribunal referenced the definition of goods under the Central Sales-Tax Act, 1956, which encompasses movable property excluding specific items like newspapers and actionable claims. The court emphasized that licenses, such as the one in question, possess inherent value and are freely traded in the market, thus qualifying as goods. This analysis was supported by the Supreme Court's observations in various cases, confirming that certain licenses like the one in question are indeed goods due to their intrinsic value and tradability.

The judgment further highlighted a full Bench decision of the Supreme Court, which reiterated the classification of certain licenses as goods subject to sales tax. The court differentiated between licenses like DEPB and REP licenses from items like lottery tickets, emphasizing the inherent value and tradability of such licenses. Drawing analogies with prepaid meal tickets or petrol coupons, the court concluded that licenses like DEPB and REP licenses are market commodities and should be considered goods under sales tax laws. The court dismissed the appeals based on these established legal principles, affirming that the transaction involving the sale of rights and privilege of export of sugar quota qualifies as a sale of goods, not a service. The judgment relied on the consistent legal interpretations provided by the Supreme Court in similar cases to reach this conclusion.

In conclusion, the tribunal, following the legal precedents set by the Hon'ble Supreme Court, determined that the transaction involving the transfer of rights and privilege of export of 'Sugar quota' by the respondent assessee constitutes a sale of goods, not a service. The judgment dismissed the appeal and confirmed the Order-in-Appeal based on the established legal position regarding the classification of licenses like DEPB and REP licenses as goods under sales tax laws.