2018 (5) TMI 1037 - HC - VAT and Sales Tax

Transfer of right to use or not? - assessee is engaged in providing specialized lights and equipments for public functions - Whether Tribunal is justified in holding that, the transaction of the Opponent does not amount to a transaction of transfer of right to use, hence is not taxable under the Gujarat Value Added Tax Act, 2003? Held that - the task of the assessee was not merely of fitting lights on special occasions and winding up the paraphernalia once the event is over. The assessee undertook the task of providing special lighting for the stage for organizers to hold programs and events. This would require special equipments, installation and operation by technically trained staff and constant supervision by such staff all throughout the program - There is no element of transferring the controlled possession and ultimately the right of the user of the equipments. If at all the assessee was engaged in providing service which may invite service tax at the prescribed rate. Tribunal concluded that the assessee never parted with that control of the apparatus in favour of the organizers or the hotel management. The transaction of the Opponent does not amount to a transaction of transfer of right to use, hence is not taxable under the Gujarat Value Added Tax Act, 2003 - appeal dismissed - decided against appellant-Revenue.

Summary

Issues Involved:
Interpretation of transaction under Gujarat Value Added Tax Act, 2003

Analysis:
The judgment pertains to an appeal by the Government against a decision of the Value Added Tax Tribunal regarding the taxability of a transaction under the Gujarat Value Added Tax Act, 2003. The primary issue was whether the transaction in question amounted to a transfer of the right to use, thereby attracting VAT. The respondent, engaged in providing specialized lights and equipment for public functions, argued that their services involved specialized stage lighting services requiring special equipment, technical know-how, and manpower. The Tribunal accepted the respondent's viewpoint, noting specific features of the service provided, such as short-term engagement, transportation, installation, operation, and dismantling of equipment by the respondent's technicians. The Tribunal emphasized that the respondent retained control and possession of the equipment throughout the process, including bearing all risks and billing for services without separate charges. The Tribunal highlighted that the hotel management only provided space for events, without control over the equipment. Consequently, the Tribunal concluded that the respondent did not transfer the right of user of the equipment to customers or hotel management.

The High Court, after considering the arguments and evidence, upheld the Tribunal's decision. The Court agreed that the respondent's services went beyond mere provision and installation of lights, involving specialized stage lighting services requiring technical expertise and continuous supervision. The Court found no element of transferring controlled possession or the right of user of the equipment to customers. The Court opined that if any tax liability existed, it would likely fall under service tax rather than VAT. Additionally, the Court referenced specific judgments cited by the respondent's counsel to support the decision. Ultimately, the Court answered the question in favor of the respondent, dismissing the Tax Appeal filed by the Government.

In conclusion, the judgment clarified the distinction between a mere transfer of goods and a specialized service involving equipment usage. It emphasized the importance of analyzing the nature of services provided, control over equipment, and the absence of a transfer of the right to use in determining tax liability under the Gujarat Value Added Tax Act, 2003. The decision underscored that the provision of specialized services, such as stage lighting, may not always attract VAT if there is no transfer of the right of user of the equipment involved.