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2023 (1) TMI 585 - HC - VAT and Sales TaxLevy of tax - transfer of right to use the bus - Whether the Commercial Tax Tribunal was justified in imposing the tax upon the applicant under Section 3- F of the U.P. Trade Tax Act, for plying the vehicle on behalf of UPSRTC, when there is no transfer of right to use the bus? - HELD THAT - It transpires that the question of law framed in the revisions has already been dealt with by co-ordinate Bench in case of Ashok Kumar Gupta 2009 (7) TMI 1381 - HIGH COURT OF ALLAHABAD , wherein this Court after taking into consideration the agreement entered between the assessee and UPSRTC had held that it was a case of transfer of right to use the bus by the bus owner to UPSRTC through which the UPSRTC had effective control over the bus. Thus, the provisions of Section 3-F was attracted. Once the matter has been settled by co-ordinate Bench in Ashok Kumar Gupta , the controversy stands no more resintegra and the Tribunal had rightly held that by the agreement reached between the bus owner and the UPSRTC, it is clear that transfer of right to use the buses by the bus owners to UPSRTC through which the UPSRTC has effective control over the buses, and thus, provisions of Section 3-F is attracted. Hence, no interference is required in the order passed by the Tribunal. The revisions fail and are hereby dismissed.
Issues:
1. Interpretation of Section 3-F of the U.P. Valued Added Tax Act, 2008 regarding the tax imposition on the transfer of right to use goods. 2. Determination of whether the agreement between the bus owner and the U.P. State Road Transport Corporation (UPSRTC) constitutes a transfer of right to use the bus. Analysis: The High Court addressed two revisions arising from an order by the Commercial Tax Tribunal, Meerut Bench-II, allowing the Department's appeal against two assessees. The primary issue revolved around the imposition of tax under Section 3-F of the U.P. Trade Tax Act for plying the vehicle on behalf of UPSRTC without a clear 'transfer' of the right to use the bus. Both revisions were heard together due to the identical legal question. The assessees, as owners of the bus, had a contract with UPSRTC for operating the bus on a specified route. The assessing authority taxed the rent received by the assessees from UPSRTC under Section 3-F, citing it as a transfer of the right to use the vehicle. The first appellate authority initially allowed the appeal against this assessment, but the Tribunal later reversed this decision, leading to the current revisions. The assessees argued that there was no effective transfer of control of the bus to UPSRTC as per the agreement, citing previous court decisions to support their position. In contrast, the Standing Counsel contended that previous judgments had settled the matter, establishing that the agreement indeed constituted a transfer of the right to use the bus to UPSRTC, giving them effective control. After considering the arguments and examining the agreement, the Court concluded that the transfer of the right to use the buses to UPSRTC, granting them effective control, fell under the purview of Section 3-F. The Court highlighted that a relevant notification from the year 2000, cited by the assessees, did not apply retrospectively to benefit them for the assessment year 1998-99. Relying on previous decisions, the Court upheld the Tribunal's decision, dismissing both revisions in favor of the revenue. In the final ruling, the Court declared that the questions of law favored the revenue and ruled against the assessees, affirming the Tribunal's order. The judgment emphasized that the agreement between the bus owner and UPSRTC constituted a transfer of the right to use the buses, justifying the application of Section 3-F for tax purposes.
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