2019 (2) TMI 134 - HC - VAT and Sales Tax

Levy of tax on sale - transfer of right to use the goods - lease rentals - revision is been filed on various substantial questions of law - Held that - Appeal is admitted - Issue notice on the aforesaid substantial questions of law. The revisionist has made out a prima facie case for grant of interim order. List this revision along with the service report of notice upon the opposite party.

Issues Involved:
1. Consideration of law laid down by the Apex Court regarding taxation on agreements executed outside the State of U.P.
2. Treatment of sale and deemed sale as part of the same transaction for taxation purposes.
3. Tax levy on transfer of right to use goods and applicability of the definition of "goods" under Section 2-(d) of the Act.
4. Claiming interest on a transaction not liable to tax in the State of U.P. due to tax already paid at the time of sale.
5. Adequacy of consideration of previous court decisions and remand order in the second appeal.
6. Examination of grounds of second appeal and reasons for non-acceptance of pleas by the Applicant.
7. Adherence to legal precedents by the Tribunal in passing the impugned order.

Analysis:
1. The revisionist questioned the Tribunal's failure to consider the law set by the Apex Court regarding the taxation of transactions executed outside U.P. The revisionist cited the judgment in the case of 20th Century Finance Corporation Ltd. vs. State of Maharashtra, highlighting Section 3-F as a charging section for tax on the transfer of the right to use goods. The judgment emphasized that inter-State sales are not taxable unless specified otherwise, and directed that certain provisions be read down to exclude certain transactions from taxation.

2. The issue of sale and deemed sale being part of the same transaction was raised, arguing that they belong to the same category for taxation purposes. The judgment discussed the completion of a deemed sale transaction, emphasizing that it is contingent upon the completion of the actual sale of goods. The Andhra Pradesh High Court's view was contrasted with that of the Bombay High Court, highlighting the differences in interpreting the completion of a deemed sale.

3. The Tribunal's decision on the levy of tax on the transfer of the right to use goods and the definition of "goods" under Section 2-(d) of the Act was challenged. The judgment delved into the specifics of the transaction involving unspecified goods and the completion of a sale, emphasizing that the transaction of deemed sale is consequential and follows the completion of the actual sale.

4. The issue of claiming interest on a transaction not subject to tax in U.P. due to tax already paid at the time of sale was raised. The revisionist sought a stay on the recovery of interest as directed in the impugned order until further proceedings.

5. The revisionist questioned the adequacy of the Tribunal's consideration of previous court decisions and the directions in the remand order in the second appeal. The Tribunal was urged to thoroughly assess the decisions of the Hon'ble Court in reaching its judgment.

6. The Tribunal's failure to consider the grounds of the second appeal and provide reasons for rejecting the Applicant's pleas was highlighted. The revisionist sought a detailed examination of the grounds raised before the Tribunal.

7. Lastly, the revisionist contested the Tribunal's adherence to legal precedents set by the Apex Court and the Hon'ble Court, arguing that the impugned order was vitiated by ignoring established legal principles. The revisionist sought a review of the Tribunal's decision in light of the legal precedents provided.

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