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TMI Blog2014 (5) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... ipts on inter-State goods, lease receipts on agreements entered prior to 1.4.1986 as well as on the deletion of the surcharge and penalty - Therefore, this Court is unable to agree with the learned counsel for assessee that Tribunal exceeded its jurisdiction - Accordingly, such contention is rejected - Going by the terms of the agreement on the lease and proforma invoice of the foreign supplier apart from letter of credit opened and other import documents, the assessment in this case calls for a remand - Consequently, in so far as the turnover relating to agreements entered prior to 01.04.1986 on the import of machinery is concerned, There is no hesitation in upholding the order of the Appellate Assistant Commissioner, thereby, set aside the order of Tribunal. Relying upon Infrastructure Leasing and Financial Services Ltd Vs. Commissioner of Value Added Tax and Others [2010 (2) TMI 1057 - DELHI HIGH COURT] - It is not denied by the assessee that in respect of the transactions entered into post 01.04.1986, the liability on the leasing transactions arises every year - It is not the case of the assessee that merely because the first year of the leasing transactions are assessed u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided partly in favour of assessee. - Tax Case (Revision) Nos.396 to 406 of 2011 - - - Dated:- 14-11-2013 - Chitra Venkataraman And T. S. Sivagnanam,JJ. For the Petitioner : Mr. P. Rajkumar For the Respondent : Mr. Aditya Reddy Government Advocate (Taxes) ORDER (The Order of the Court was made by T. S. Sivagnanam, J.) These eleven Tax Case (Revisions) are directed against the common order passed by the Tamil Nadu Sales Tax Appellate Tribunal dated 28.2.2011 in STA Nos.398 of 2006, 434 of 2006, 435 of 2006, 441 of 2006 , 442 of 2006, 443 of 2006, 444 of 2006, 445 of 2006, 448 of 2006, 476 of 2006 and 556 of 2006 relating to the assessment years 1986-87, 1987-88, 1989-90, 1990-91, 1991-92, 1992-93, 1993-94, 1994-95, 1996-97, 1995-96 and 1988-89 respectively under the Tamil Nadu General Sales Tax Act, 1959. 2. The petitioner/assessee is a non-banking Finance Company dealing in hire purchase and leasing transactions and is a registered dealer under the provisions of the Tamil Nadu Value Added Tax, 2006 and earlier under the Tamil Nadu General Sales Tax Act. The Assessing Officer passed individual assessment orders in respect of the relevant assessment years le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action between the assessee and the lessee in Tamil Nadu on other hand are two different transactions. By placing reliance on a circular of Commissioner of Commercial Taxes in Act Cell I/8582/94 dated 30.8.1994, the Assessing Officer held that the lease rental is liable to tax under section 3A of the Tamil Nadu General Sales Tax Act. 6. Aggrieved by such Assessment Orders, the assessee preferred appeal before the First Appellate Authority contending that the Assessing Officer did not apply the decision of the Hon'ble Supreme Court in the case of 20th Century Finance Corporation Ltd and another Vs. State of Maharashtra reported in 119 STC 182 and the directions contained in the remand order. Further, it was contended that the Assessing Officer took note of the final lease agreement alone which was produced in the set of sample documents without appreciating the fact that the import and inter-State purchase of equipments were effected by the assesee pursuant to an agreement to enter into a lease agreement between the assessee as the lessor and the customer as lessee who were very much in the picture before the commencement of the transfer of the leased goods to the business place o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Value Added Tax and Others reported in (2010) 29 VST 346 (Delhi). Aggrieved by such order passed by the Sales Tax Appellate Tribunal, the assessee preferred the above Tax Case (Revisions). 10. Mr.P.Rajkumar, learned counsel appearing for the assessee, submitted that the Sales Tax Appellate Tribunal exceeded its jurisdiction in interfering with the remand portion of the order of the First Appellate Authority in respect of import-lease and inter-State lease transactions by relying upon the third proviso to Section 36(1) of the Tamil Nadu General Sales Tax Act. On merits it was contended that the finding of the Sales Tax Appellate Tribunal with regard to the import-lease and inter-State lease transactions is contrary to the law laid down in the decision of the Andhra Pradesh High Court in the case of I.T.C. Classic Finance and Services Vs. Commercial Taxes reported in 97 STC 330, which was affirmed by the Hon'ble Supreme Court in the case of 20th Century Finance Corporation Ltd and another Vs. State of Maharashtra. It is further submitted that the Sales Tax Appellate Tribunal over looked the fact that the taxable event under Section 3A of the Tamil Nadu General Sales Tax Act was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. In support of his contentions, learned Government Advocate placed reliance on the decision of the Tamil Nadu Taxation Special Tribunal in the case of Upasana Finance Vs State of Tamil Nadu reported in 113 STC 403 and the decision of the Delhi High Court in the case of Infrastructure Leasing and Financial Services Ltd., Vs. Commissioner of Value Added Tax and others reported in 29 VST 346. 12. The above Tax Case (Revisions) have been admitted on the following substantial questions of law: " 1. Whether the Appellate Tribunal is correct in interfering with the remand order of the Appellate Assistant Commissioner (CT) IV and restoring the order of assessment in respect of import-lease transactions and inter-State lease transactions, when it has no jurisdiction to interfere against a remand portion of the order of the Appellate Assistant Commissioner (CT) in view of the third proviso to Section 36(1) of the TNGST Act, 1959 ? 2. Whether the Appellate Tribunal is wrong in holding that the lease receipts received for the lease agreements entered prior to 01.04.1986 is liable for tax under Section 3A of the TNGST Act is contrary to the law laid down by the Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 16. With regard to the import-lease receipts, we have perused the copies of the agreements and import documents produced, from which it prima facie appears that the goods were specifically imported for a particular customer who eventually became the lessee. The modus operandi being the assessee and lessee entered into an agreement to enter into a lease agreement, which reflects the extent of lease finance required for acquiring/purchasing of equipment by import from countries abroad or from manufacturers in India. Pursuant thereto, the intending lessee identifies the equipments/machinery required by them and secures a proforma invoice from the foreign supplier in which the name of the assessee is shown as the lessor and the lessee as actual user. The name of the lessee also finds place in all the import documents. Therefore, in order to appreciate the nature of transactions between the parties, it is essential that the documents have to examined to consider as to whether the transactions are exempt from the levy of sales tax. 17. The Hon'ble Supreme Court in the case of 20th Century Finance Corporation Ltd and another Vs. State of Maharashtra reported in 119 STC 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate purchases were effected only in pursuance of a contract to enter into a lease agreements and both the assessee and the lessee are in the picture even before the commencement of movement of goods from other State. Finding that the order of the Assessing Officer is not based on any particular lease, the First Appellate authority remanded the matter back to the Assessing Officer for fresh consideration with a direction to the assessee to produce all original documents before the Assessing Officer with a direction to the Assessing Officer to decide the liability in the light of the decision of the Hon'b le Supreme Court in the case of 20th Century Finance Corporation Ltd and another Vs. State of Maharashtra reported in 119 STC 182. 19. In the case of Infrastructure Leasing and Financial Services Ltd Vs. Commissioner of Value Added Tax and Others reported in (2010)29 VST 346 (Delhi), the petitioner before the Delhi High Court was carrying on business of leasing of machinery and vehicles all over the country. The lease was for specified period and lease rental payable each month of the tenure of the lease. The transaction was held to be not exigible to sales tax under the Delhi Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods for any purpose, for deferred payment or any other valuable consideration. Deferred payment here would mean that the consideration for transfer of right to use goods had been be fixed, but down-payment has not been made which was allowed to be staggered. Once this restricted meaning is given to the expression 'deferred payment', it would not pose any difficulty in examining the cases of lease rentals. Here in such cases, goods are given on lease and rent is payable every month during the tenancy of the lease. Even as per the terms of the agreement, right to use accrues in favour of the lessee only when he pays the said rentals regularly, each month. Therefore, in such cases, deemed sale, i.e. transfer of right to use goods would accrue every month on payment. 22. As pointed out by the Delhi High Court in the case of Infrastructure Leasing and Financial Services Ltd reported in (2010) 29 VST 346 (Delhi), when the 46th Amendment to the Constitution made certain transaction as "sale" by deeming provision, that concept could be pressed into service for the purpose of taxation as well, viz., at what point of time "sale" was to be inferred for the purpose of taxation and it was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as the agreement entered prior to 01.04.1986 is concerned, learned counsel appearing for the assessee raised serious dispute that considering the 46th Amendment to the Tamil Nadu General Sales Tax Act, coming only from 01.04.1986, transactions entered prior to the charging provision would not be taxed under the provisions of the Act, there being no definition of sale to include the leasing transaction as a deemed sale. 26. Correspondingly, the assessment as regards the transactions entered into after 01.04.1986 would have to be considered by the Assessing Officer in terms of the decision of the Apex Court in the case of 20th Century Finance Corporation Ltd and another Vs. State of Maharashtra reported in 119 STC 182. 27. We do not agree with the said submission of learned counsel appearing for the assessee. In fact in the decision reported in (2010)29 VST 346 (Delhi) in the case of Infrastructure Leasing and Financial Services Ltd Vs. Commissioner of Value Added Tax and Others, the Delhi High Court considered the said issue and we are in respectful agreement with the reasoning in the said decision. It is not denied by the assessee that in respect of the transactions entered i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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