2019 (9) TMI 105 - HC - VAT and Sales Tax

Levy of sales tax / VAT - Lease rent - sale of boilers in running condition and embedded to earth - works contract - purchase of bricks and 'gitti' - HELD THAT - Referring to the definition of the word 'goods' under Section 2(d) of the Act, this Court had reasoned the phrase which under the contract of sale are agreed to be severed refers to lessee or the licensee, as the case may be, to severe the goods attached to, or fastened to any thing permanently attached to, the earth - the reasoning given by the Tribunal cannot be sustained. However, the issue of taxability would survive to be considered by the Tribunal in terms of the other clauses in the agreement i.e. whether the turbo alternators leased out by the assessee could be severed by the lessee. If such a clause is absent in the agreement, the assessee cannot be subjected to tax as in that case, there would be no movable goods but only immovable property that had been leased out. - Matter restored before tribunal. Levy of tax - sale of boilers in running condition and embedded to earth - HELD THAT - The Tribunal has proceeded on the reasoning that since the equipment was sold not with the land or earth to which it was attached, therefore, only movable goods had been sold - it would have to be seen whether, under the sale deed, the purchaser had right to remove the boiler equipment. If such right is found to be existing, the goods may be treated as movable subject to further objections that may arise at the instance of the assessee. However, if that right is found not existing under the sale deed, the goods would remain immovable property, irrespective of the title over the land to which such boiler may be found attached in view of the definition of goods u/s. 2(d) of the Act - The matter is thus remitted to the Tribunal to pass a fresh order in accordance with law, as expeditiously as possible, preferably within a period of six months from the date of production of a certified copy of this order. Levy of tax - turnover amounting to ₹ 22,25,388/- received for execution of works contract U/s 3AAAA of the Act - HELD THAT - It is undisputed that, in the relevant year, the commodities bricks and ballast 'gitti' were taxable at the point of sale by the manufacturer or the importer. Therefore to that extent, the liability could not arise on purchase of bricks and 'gitti'. Revision disposed off.

Summary

Issues:
1. Tax levy on lease rent.
2. Tax levy on sale of Baggase.
3. Tax levy on sale of boilers.
4. Tax levy on turnover for works contract.

Tax levy on lease rent:
The revisionist challenged the tax levy on lease rent for turbo alternators, arguing that the equipment was immovable property attached to the earth and not taxable under the Act. They cited legal precedents to support their claim. The opposite party contended that the statutory definition of 'goods' under the Act should be the deciding factor. The High Court found that the reasoning of the Tribunal, which considered the turbo alternators as detachable goods, was flawed. The issue of taxability based on the lease agreement's clauses was remitted to the Tribunal for further examination without allowing new evidence.

Tax levy on sale of Baggase:
The revisionist contested the tax imposed on the sale of 'Baggase,' claiming that the assessing officer's decision was based on a new case not supported by existing material. The first appeal authority upheld the tax based on the sale of 'Lugdi' disclosed by the assessee. The High Court ruled in favor of the revenue, stating that the revision did not challenge the first appeal authority's approach or findings, leading to the affirmation of the tax levy.

Tax levy on sale of boilers:
Tax was imposed on the sale of boilers fixed to the ground and later leased back to the assessee. The Tribunal considered the boilers as movable goods since they were not sold with the land they were attached to. The High Court deemed this test erroneous and directed a fresh examination by the Tribunal to determine if the purchaser had the right to remove the boilers, following the legal principles outlined in a previous case.

Tax levy on turnover for works contract:
The revisionist argued that the commodities in question were taxable at the point of sale by the manufacturer or importer, not at the point of sale to the consumer, during the relevant assessment year. They contended that no tax liability arose under Section 3AAAA of the Act for purchases from an unregistered dealer. The High Court agreed with the revisionist, stating that the liability could not arise on the purchase of the commodities in question. Consequently, the question regarding tax liability on turnover for works contract was answered in favor of the revisionist.

In conclusion, the High Court disposed of the revision, addressing each issue raised and providing detailed legal analysis for the tax levies on lease rent, sale of Baggase, sale of boilers, and turnover for works contract.