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1997 (5) TMI 398 - HC - VAT and Sales Tax
Issues Involved:
The issue involves determining whether transportation charges received by a transporter from a distillery for transporting liquor to various warehouses are liable to tax under section 3-F of the U.P. Trade Tax Act, 1948. Judgment Details: Issue 1: Constitutional Amendment and Definition of Sale - The constitutional amendment introduced clause (29A) in Article 366, expanding the definition of "sale or purchase of goods." - Section 3-F was inserted in the U.P. Trade Tax Act, making turnover related to the transfer of the right to use goods taxable. - The petitioner transported liquor for the distillery and received transportation charges, leading to tax assessment under section 3-F. - The petitioner argued that no transfer of the right to use vehicles occurred, as it arranged vehicles from the market for the distillery's use. Issue 2: Transfer of Right to Use Goods - The department claimed that the vehicles remained under the control of the distillery during transportation, constituting a transfer of the right to use goods. - The petitioner contended that without specific vehicle transfer, the right to use goods was not transferred. - The agreements specified that vehicles were to be used only for the distillery's goods, with the transporter retaining custody and responsibility for the vehicles. Issue 3: Interpretation of Transfer of Right to Use - The department argued that the constitutional amendment aimed to include transporters under taxable transactions. - The court referenced a similar case where the control, custody, and possession of goods determined the transfer of the right to use. - Emphasizing the need for exclusive control by the transferee, the court found no evidence of such transfer in the present case. Conclusion: - The court concluded that the contract between the parties was for service, not a transfer of the right to use vehicles. - As no specific vehicle transfer occurred, the transportation charges were not taxable under section 3-F. - The assessment proceedings against the petitioner for consecutive years were quashed, ruling in favor of the petitioner.
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