9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (4) TMI 578 - HC - VAT and Sales TaxValidity of assessment order - lack of jurisdiction of the 3rd respondent to levy tax - violation of principles of natural justice - transfer of the right to use the rigs or not - contracts entered into within the State of Andhra Pradesh. Appellant claim that that the offshore drilling contracts were neither entered into nor executed within the State of Andhra Pradesh and hence the authorities under the A.P. VAT Act have no jurisdiction to assess such a contract to value added tax under the provisions of the A.P. VAT Act - also, it is their claim that the finding that there was a transfer of the right to use the rigs in terms of Section 4(8) of the Act was completely perverse. Whether the contracts entered into by the petitioner with the contractor of ONGC, could be taken to have been either entered into or executed/performed within the State of Andhra Pradesh, so as to confer jurisdiction upon the authorities under the A.P. VAT Act, 2005, to proceed against the petitioner? - Held that - A dealer entrusted with the task of carrying out drilling operations in the west-coast on the Arabian Sea, when subjected to service tax liability by the concerned authorities, cannot be said to have wrongfully deprived the State of its revenue under the A.P. VAT Act, 2005. Therefore, all the reasons contained in the impugned order, assuming jurisdiction on the ground that the agreements should be presumed to have been entered into in the State of Andhra Pradesh, are wholly unsustainable in law and are completely perverse - issue of jurisdiction answered in favor of the writ petitioner. Whether in the facts and circumstances of the case, it could be deemed that there was a transfer of the right to use the rigs? - Held that - the equipment and technical personnel provided by the petitioner to the main contractor are on charter hire, where the complete control was retained by the petitioner. All responsibilities were placed only upon the petitioner by the main contractor himself - transfer of the right to use not taking place. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Jurisdiction of the tax authority under the A.P. VAT Act, 2005. 2. Transfer of the right to use the drilling rigs under Section 4(8) of the A.P. VAT Act, 2005. Issue-wise Detailed Analysis: 1. Jurisdiction of the Tax Authority: The petitioner challenged the jurisdiction of the 3rd respondent to levy tax under the A.P. VAT Act, 2005, arguing that the offshore drilling contracts were neither entered into nor executed within the State of Andhra Pradesh. The petitioner claimed that the contracts were executed in Mumbai, and the equipment was used exclusively on the western coast. The court examined the agreement dated 16-4-2010, which indicated that the contract was for the charter hire of jack-up rigs, with the contractor being Transocean Drilling Services (India) Pvt. Ltd., and the petitioner being a sub-contractor. The agreement specified that both parties had their correspondence addresses in Mumbai, the non-judicial stamp paper was purchased in Mumbai, and the agreement was subject to the exclusive jurisdiction of the courts at Mumbai. The court found that the 3rd respondent's reasoning for assuming jurisdiction was flawed. The Assessing Officer's conclusions, such as the purchase of non-judicial stamp paper in Mumbai not being sufficient evidence of the execution of the agreement in Mumbai, and the petitioner's registration as a dealer in Andhra Pradesh conferring jurisdiction, were deemed perverse. The court concluded that the entire cause of action arose in Mumbai, and none of the agreement's articles had anything to do with Andhra Pradesh. Thus, the issue of jurisdiction was resolved in favor of the petitioner. 2. Transfer of the Right to Use: The second issue was whether there was a transfer of the right to use the rigs under Section 4(8) of the A.P. VAT Act, 2005. The court examined the nature of the contract and the mutual rights and obligations of the parties. The agreement required the petitioner to provide the drilling rig and operating personnel on a charter hire basis and to take responsibility for carrying out the operations. The court noted that the petitioner retained control over the equipment and personnel, and there was no transfer of the right to use the rigs to the contractor or the operator (ONGC). The court referred to the Supreme Court's decisions in State of A.P. v. Rashtriya Ispat Nigam Ltd. and BSNL v. Union of India, which established that hire charges are taxable only when full possession and control are given to the hirer. Since the petitioner retained effective control over the drilling rigs, there was no transfer of the right to use. The court concluded that the petitioner was entitled to succeed on both counts: lack of jurisdiction and the absence of a transfer of the right to use. Conclusion: The writ petition was allowed, and the impugned order was set aside. The court found that the 3rd respondent lacked jurisdiction and there was no transfer of the right to use the rigs under the A.P. VAT Act, 2005. The miscellaneous petitions, if any, were closed, and no costs were awarded.
|
