2018 (4) TMI 1081 - AT - Central Excise

Service tax or VAT - transfer of rights/privileges - whether the transaction being transfer of rights and privilege of export of sugar quota by the respondent assessee on receipt of consideration, whether the same is a service or goods? - Held that - in view of the ruling of Hon ble Supreme Court in the case of Vikas Sales Corporation 1996 (5) TMI 363 - SUPREME COURT OF INDIA , which have been reaffirmed by the Hon'ble Supreme Court in Yasha Overseas and others 2008 (5) TMI 43 - SUPREME COURT , the transaction in question regarding sale of rights and privilege of export of sugar quota is sale of goods and no service is involved - appeal dismissed - decided against Revenue.

Summary

Issues involved:
1. Whether the transaction involving the transfer of rights and privilege of export of 'sugar quota' constitutes a service or goods.

Analysis:
The appellate tribunal examined the issue of whether the transfer of rights and privilege of export of 'sugar quota' by the respondent assessee, upon receiving consideration, should be classified as a service or goods. The tribunal referred to a ruling by the Hon'ble Supreme Court in the case of Vikas Sales Corporation, where the definition of goods under the Central Sales-Tax Act, 1956 was crucial. The definition included movable property but excluded certain items like newspapers and actionable claims. The court held that licenses, such as the one in question, have intrinsic value and are freely bought and sold in the market, thus qualifying as goods. This decision was further supported by another ruling in Yasha Overseas, emphasizing that such licenses are market commodities and should be treated as goods for sales tax purposes.

The Hon'ble Supreme Court made significant observations, comparing the DEPB (Duty Entitlement Pass Book) to a prize-winning lottery ticket to illustrate its inherent value. The court emphasized that DEPB, like REP licenses, has its own intrinsic value and is considered goods under sales tax laws, subject to taxation upon sale. The court dismissed the argument that DEPB should not be considered goods, highlighting its market value and comparability to items like prepaid meal tickets or petrol coupons. The court clarified that the Constitution Bench decision in Sunrise did not alter the tax levy position on the sale of REP licenses, affirming the applicability of the Vikas Sales Corporation ruling.

In conclusion, the tribunal, guided by the Supreme Court decisions in Vikas Sales Corporation and Yasha Overseas, held that the transaction involving the sale of rights and privilege of export of sugar quota qualifies as a sale of goods and does not involve any service component. Therefore, the appeal was dismissed, and the Order-in-Appeal was confirmed, with no costs imposed on either party.