Deployment of ATM machines for banks is not transfer of right to use goods

[AMIT BAJAJ ADVOCATE]

This Judgement of Punjab VAT Tribunal has been delivered in one of my cases namely Prizm Payment services Pvt. Ltd. vs State of Punjab Appeal No. 413 of 2013 decided on 15/11/2013

The penalty in this case has been levied and further upheld by the lower appellate authority on the ground that providing ATM machine to bank after bringing them from outside the State of Punjab, is a transfer of right to use goods and is covered by the definition of sale as per Section 2 (zf) (iv) of the Punjab Value Added Tax Act, 2005 and since the appellant is not registered under the Punjab Value Added Tax Act, 2005, attempt to evade tax under the Punjab VAT Act is established. The goods imported by the appellant were not meant for trade i.e. for further sale or deemed sales and hence the appellant is not liable for registration under the Punjab VAT Act, 2005. 

 

The appellant provides services of handling and deployment of ATMs for the Banks. The appellant procures ATM Machines and the related equipments in compliance of the service agreement between the appellant and the Banks, to be installed, operated and deployed at  various locations in Punjab, whereby the possession, control, management, operation and the property in goods through out remains with the appellant as is clear from the terms of agreement. The appellant is compensated for deployment of ATMs and their management by a transaction fee to be paid every time by a customer of the bank on availing the facility of ATMs successfully. This Tribunal has also ruled in Transaction Solutions International (India) Pvt. Ltd., New Delhi Vs. The State of Punjab (2013) 45 Punjab and  Haryana Taxes 390 (PVT) that the accessibility to the ATM being provided to the bank customer did not put the customer in possession of ATM or any part thereof and the element of sales is not involved.

  

BEFORE JUSTICE HARBANS LAL, CHAIRMAN, VALUE ADDED TAX TRIBUNAL, PUNJAB, CHANDIGARH.

 

Appeal No. 413 of 2013 Decided on 15.11.2013

 

M/s Prizm Payment Services Pvt. Ltd.

 

Versus

 

The State of Punjab

 

Present:- Mr. Amit Bajaj, Advocate, counsel for the appellant.

 

Mr. Rajat Barisal, Assistant Advocate General for the State.

 

ORDER

 

This appeal is directed against the order dated 19.3.2013 passed by the Deputy Excise and Taxation Comlmissioner(Appeals)-cum-Joint Director (Investigation), Patiala Division, Patiala, whereby, he dismissed the appeal preferred against the penalty order dated 28.11.2011 of the Assistant Excise and Taxation Commissioner-cum-Designated Officer, Information Collection Centre (For brevity, the ICC), Shambu (Import), imposing a penalty of Rs.1,06,047/- U/s 51 (7) (b) of the Punjab Value Added Tax Act, 2005 (For Short, the Act, 2005).

 

Shortly put, the facts are that the vehicle bearing registration No. DL1LG-9404, while transporting the goods from Delhi to Ludhiana reached the ICC, Shambu (Import) and the driver pr6duced the documents as noted down  in the penalty order. After examining the documents, the Checking Officer detained the goods U/s 51 (6) (a) of the Act, 2005 on the ground that the consignee dealer M/s Prizm Payment Services Pvt. Ltd. Ludhiana is not a registered dealer under the Act, 2005 and is importing the taxable goods from ‘CI outside Punjab for trade. The documents covering the goods seemed to be  improper and ingenuine and the same needed verification. After completing his  report, the Detaining Officer forwarded the proceedings to the Assistant Excise and Taxation Commissioner-cum-Designated Officer, ICC, Shambu (Import), who after having conducted the enquiry in the matter, imposed a penalty of Rs.1,06,047/- U/s 51 (7) (b) of the Act ibid vide order dated 28.11.201t. Being aggrieved therewith, the appellant-dealer went up in appeal, which was dismissed by the Deputy Excise and Taxation Commissioner (Appeals)-cum¬Joint Director (Investigation), Patiala Division, Patiala vide his order dated 19.3.2013, where-against, this appeal has been filed.

 

I have heard the Ld. Counsel for the parties, besides perusing the record with due care and circumspection.

 

Mr. Amit Bajaj, Advocate appearing on behalf of the appellant-dealer urged with a good deal of force that the goods were being imported in the State of Punjab alongwith proper and genuine documents and no defect in the documents accompanying the goods was pointed out by the designated officer. The goods were voluntarily reported at the Information Collection Centre, which fact also finds mention in the order of lower appellate authority. There was no violation of provisions of Section 51 of the Act, 2005. The penalty in this case has been levied and further upheld by the lower appellate authority on the ground that providing ATM machine to bank after bringing them from outside the State of Punjab, is a transfer of right to use goods and is covered by the definition of sale as per Section 2 (zf) (iv) of the Punjab Value Added Tax Act, 2005 and since the appellant is not registered under the Punjab Value Added Tax Act, 2005, attempt to evade tax under the Punjab VAT Act is established. The goods imported by the appellant were not meant for trade i.e. for further sale or deemed sales and hence the appellant is not liable for registration under the Punjab VAT Act, 2005. The appellant provides services of handling and deployment of ATMs for the Banks. The appellant procures ATM Machines and the related equipments in compliance of the service agreement between the appellant and the Banks, to be installed, operated and deployed at  various locations in Punjab, whereby the possession, control, management, operation and the property in goods through out remains with the appellant as is clear from the terms of agreement. The appellant is compensated for deployment of ATMs and their management by a transaction fee to be paid every time by a customer of the bank on availing the facility of ATMs successfully. This Tribunal has also ruled in Transaction Solutions International (India) Pvt. Ltd., New Delhi Vs. The State of Punjab (2013) 45 Punjab and  Haryana Taxes 390 (PVT) that the accessibility to the ATM being provided to the bank customer did not put the customer in possession of ATM or any part thereof and the element of sales is not involved.

 

The Id. State Counsel has argued on the lines of the penalty order.

 

Mr. Rajat Bansal, Id. Assistant Advocate General for the State could not distinguish Transactions Solutions International (India) Pvt. Ltd., New Delhi in any manner.

I have well considered the above contentions.

 

This issue involved in this matter is sequarely covered by the decisions of this Tribunal rendered in Transactions Solutions International (India) Pvt. Ltd., New Delhi (Supra). Sequelly, this appeal is accepted and the orders passed by both the authorities below being patently bad in law are set- aside.

 

Pronounced in the open Court.

 

15th November, 2013