9911796707
TMI Blog2003 (8) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... her by the assessing authority or by the first appellate authority. Thus, we are of the view that the question as to whether there was a transfer of the right to use the excavator in favour of M/s. Sulekha Clay Mines has to be considered afresh, in the light of the principles laid down by this Court and by the Supreme Court. It is open to the assessing authority to collect all materials regarding arrangement between the assessee and M/s. Sulekha Clay Mines before deciding the said question. It is also open to the assessee to produce all materials and evidences in support of their contention that there is no transfer of right to use the goods. We accordingly, set aside the orders of the three authorities on this aspect and remit the matter to the assessing authority for passing fresh orders in accordance with law and in the light of the observations made hereinabove. It is open to the assessee to place all evidences before the assessing authority in support of his claim. The tax revision cases are disposed of as above. A copy of this judgment under the seal of this Court with the signature of the Registrar shall be forwarded to the Income-tax Appellate Tribunal, Cochin Bench, Ernaku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcavator. The counsel submits that in the instant case, there is absolutely no material on record to show that the assessee had parted with possession of the excavator during the period of lease in favour of M/s. Sulekha Clay Mines. The counsel also submits that the only material available on record, even according to the assessee, is some entries in the accounts to the effect that certain amount is due from M/s. Sulekha Clay Mines towards the expenses incurred by the assessee in respect of the use of excavator. The counsel submitted that the entries in the record which is mentioned by the assessing authority would clearly show that the expenses were incurred by the assessee itself and that as per the understanding between the parties, only a percentage of the expenses incurred by the assessee has to be reimbursed by the customer. In short, the submission of the counsel is that during the relevant period, the effective control of the excavator was always with the assessee. The counsel in support of the aforesaid contentions had relied on the decisions of this Court in Deputy Commissioner of Sales Tax (Law) v. S. Bahulayan (1992) 1 KTR 137 and in Deputy Commissioner of Sales Tax (La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of section 5(1)(iii) are attracted to the facts of the case. The assessee's case, as already noted, is that the excavator was always in the possession and control of the assessee and that the assessee had used the excavator in the premises of M/s. Sulekha Clay Mines for excavating clay for them. 7. Before considering the rival contentions, it is necessary to bear in mind the relevant provisions of the Act and also the principles governing the matter. Section 5(1)(iii) of the Act reads as follows: "5. Levy of tax on sale or purchase of goods.-(1) Every dealer (other than a casual trader or agent of a non-resident dealer) whose total turnover for a year is not less than two lakh rupees and every casual trader or agent of a non-resident dealer, whatever be his total turnover for the year, shall pay tax on his taxable turnover for that year,- .. (iii) in the case of transfer of the right to use any goods for any purpose (whether or not for a specified period) at the rate of six per cent at all points of such transfer on an aggregate turnover of rupees two lakh and above." The aforesaid provision applies only in the case of "transfer of the right to use any goods". The Supreme Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee-firm engaged in the business of video library would come within the definition of "dealer" liable to be assessed under the Act. It was held in the said decision that leading of video cassettes is a transfer of right to use the goods within the explanation (3B) of section 2(xxi) and that the assessee is also a "dealer" within the definition. Again, this question was considered by yet another division Bench in which one of us (Sivarajan, J.) was a party in Bobby Rubber Industries' case [1998] 108 STC 410 (Ker). There, the question was as to whether the rent received for permitting the customers to use a hydraulic press belonging to the assessee is exigible to tax under the Act. The division Bench after considering the earlier decisions of this Court took the view that there is no transfer of right to use a hydraulic press while hiring of the hydraulic press to various customers on machine hour basis. The Supreme Court in Rashtriya Ispat Nigam Ltd.'s case [2002] 126 STC 114 considered the provisions of section 5-E of the Andhra Pradesh General Sales Tax Act in which also contained provisions similar to section 5(1)(iii) of the Act where also the expression transfers the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrol of the machinery". The Supreme Court in Aggarwal Brothers' case [1999] 113 STC 317, had also considered the expression "transfer of right to use" in the context of lending of shuttering or construction material. The assessee in that case hired shuttering to builders and contractors who use it in the course of construction of buildings. The authorities under the Haryana General Sales Tax Act issued notices to the assessees requiring them to pay sales tax on such hire charges and assessment orders were also made. The assessing authority took the view that the hire charges received by it were sales within the meaning of section 1(1)(iv) of the Haryana General Sales Tax Act. In a writ petition filed by the assessee challenging the constitutionality of the said section, the High Court while repelling that challenge found that possession of the shuttering material was transferred by the assessees to their customers for use during the construction of buildings and that the customers were in effective control of the shuttering during the periods it remained in their possession and therefore, the transactions fell within the amended definition of the word "sale" as there was a transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case, we find that the assessing authority and the two appellate authorities had clearly understood the scope of section 5(1)(iii) of the Act, for, we find that all of them have proceeded on the basis that in order to attract section 5(1)(iii) of the Act, the effective control of the goods must be with the customer. As already noted, the case of the assessee is that the effective control of the excavator was always with the assessee and that the customer, namely, M/s. Sulekha Clay Mines had only paid hire charges and a portion of the expenses incurred by the assessee. The respondent, however has taken the stand that since the customer had met a portion of the expenses incurred by the assessee, it must be presumed that the assessee had parted with the possession of the excavator in favour of the customer and therefore, it is a case of transfer of right to use the excavator in favour of the customer. According to us, the only material based on which the assessing authority and two appellate authorities have come to the conclusion that there is a transfer of the right to use the excavator in favour of M/s. Sulekha Clay Mines is the accounts maintained by the assessee where it is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
