2018 (4) TMI 1398 - AT - Service Tax

Nature of activity - Service or sale - transfer of rights and privilege of export of sugar quota - whether the transaction is service or in goods? - Held that - reliance placed in decision of Hon ble Supreme Court in the case of Vikas Sales Corporation 1996 (5) TMI 363 - SUPREME COURT OF INDIA where it was held that DEPB has an intrinsic value that makes it a market commodity. Therefore DEPB like REP licence qualifies as goods within the meaning of the sales tax laws of Delhi Kerala and Mumbai and its sale is exigible to tax. 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:
1. Determination of whether the transaction involving the transfer of "rights and privilege of export of sugar quota" constitutes a service or goods.

Analysis:
The appellate tribunal was tasked with deciding whether the transfer of "rights and privilege of export of sugar quota" by the respondent assessee, upon receiving consideration, should be classified as a service or goods. The tribunal examined the ruling of the Hon'ble Supreme Court in Vikas Sales Corporation v/s Commissioner of Commercial Taxes, which addressed a similar issue concerning the transfer of REP licence/Exim scrips. The Supreme Court emphasized that goods encompass all movable property, excluding specific items like newspapers and actionable claims. It was clarified that licenses, such as the REP license, hold intrinsic value and are considered property, thereby falling under the definition of goods. This perspective was reiterated in the case of Yasha Overseas v/s Commissioner of Sales Tax, where the Supreme Court upheld the classification of an import license as goods for sales tax purposes.

The tribunal further referenced the Supreme Court's observations, highlighting that items like DEPB (Duty Entitlement Pass Book) have inherent value and are akin to market commodities. Drawing analogies with prize-winning lottery tickets, prepaid meal tickets, and petrol coupons, the court concluded that DEPB, similar to REP licenses, qualifies as goods under sales tax laws and is subject to taxation. Consequently, the tribunal dismissed the appeals, emphasizing that DEPB, like REP licenses, is considered goods under the sales tax laws of Delhi, Kerala, and Mumbai, and its sale is taxable.

In light of the precedents set by the Supreme Court in Vikas Sales Corporation and Yasha Overseas, the tribunal determined that the transaction involving the sale of rights and privilege of export of sugar quota should be classified as the sale of goods, with no service element involved. Therefore, the tribunal upheld the decision of the Order-in-Appeal, dismissing the appeal and confirming the classification of the transaction as the sale of goods.

Overall, the tribunal's analysis centered on the interpretation of goods under the sales tax laws, drawing parallels with established legal precedents to determine the classification of the transaction in question. The decision underscored the intrinsic value of items like DEPB and REP licenses, emphasizing their status as market commodities subject to taxation as goods.