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TMI Blog2015 (7) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... clear power conferred on the Legislature to impose tax on the transfer of right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. So the duty casted on the authority was to find out whether there is a transfer of right by an assessee to a third person for the use of goods and once it is found, the assessee is liable to pay tax. The goods defined under Sec.2(xx) of the K.V.A.T Act takes in not only the goods identified in common parlance but also various other kinds of products including livestock, all materials, commodities and articles and every kind of property (whether as goods or in some other form) involved in the execution of a works contract, and all growing crops, grass or things attached to, or forming part of the land which are agreed to be severed before sale or under the contract of sale. Therefore, when the facts of this case are considered, taking into account the said definition also, we are of the opinion that there was transfer of right to use goods by the revision petitioner which makes it exigible and liable to pay tax under Sec.6(1)(c) of the Act. Revision dismissed - decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . and Another v. Union of India and Others' [(2006) 14 KTR 115] = [(2006) 3 SCC 1]. 5. Aggrieved, the assessee preferred appeal before the Appellate Tribunal. The learned Tribunal, after taking into account the elaborate contentions put forth by the revision petitioner and after evaluating the various authoritative pronouncements of the Hon'ble Apex Court as well as the High Courts, came to the conclusion that the order of the First Appellate Authority holding the revision petitioner liable to tax under the Act was correct. It is thus aggrieved by the order of the Appellate Tribunal this revision is preferred by the assessee. 6. The following questions of law are raised by the revision petitioner before us: i) Whether on the facts and in the circumstances of the case since structures which are permanently attached and fastened on earth are immovable property, can such structures be considered as 'goods' within the meaning of the said term under the provisions of the KVAT Act. ii) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding the Revision Petitioner liable to pay tax on the ground that effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantiate the said contention put forth by him, learned counsel has brought to our notice the decision rendered by the Hon'ble Supreme Court in 'T.T.G. Industries Ltd., Madras v. Collector of Central Excise, Raipur ' [(2004) 4 SCC 751] and 'Mittal Engineering Works (P) Ltd. v. Collector of Central Excise, Meerut' [(1997) 1 SCC 203]. In the first case cited above, the question considered was whether the assessee therein was liable to excise duty taking into account the nature of installation of a large machinery in the factory premises and further, if it was an immovable property, whether the assessee was liable to be levied excise duty. Therein, the Hon'ble Apex Court after evaluating the facts and circumstances of the case has held in paragraph 27 as follows: 27. Keeping in view the principles laid down in the judgments noticed above, and having regard to the facts of this case, we have no doubt in our mind that the mudguns and the drilling machines erected at site by the appellant on a specially made concrete platform at a level of 25 feet above the ground on a base plate secured to the concrete platform, brought into existence not excisabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of erection of the machinery was very cumbersome and therefore the Hon'ble Apex Court has held that the same is an immovable property attached to earth and held in paragraph 10 as follows: 10. The Tribunal took an unreasonable view of the evidence. It was the case of the appellants, not disputed by the Revenue, that mono vertical crystallisers were delivered to the customers in a knocked-down condition and had to be assembled and erected at the customers factory. Such assembly and erection was done either by the appellants or by the customer. Where it was done by the appellants, fabrication materials of the customer were used and the customer sent to the appellants debit notes in regard to their value. Where the assembly and erection was done by the customer, there was no occasion for it to send to the appellants a debit note. The fact that there was no debit note in respect of one customer could not reasonably have led the Tribunal to conclude that in the case of that customer a complete mono vertical crystalliser had left the appellants factory and that, therefore, mono vertical crystallisers were marketable. The Tribunal ought to have remembered that the record show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imbed it or fix it on earth, though permanently, that is when it is in use, it should not be regarded as immovable property for that reason. That, as we understand, is the ratio of 1955-2 Mad LJ 215: (AIR 1955 Mad 620) (FB). Subramanian Firm v. Chidambaram Servai, AIR 1940 Mad 527 resembles the principles of 1955-2 Mad LJ 215: (AIR 1955 Mad 620) (FB). Certain tenants installed an oil engine as part of a cinema in a certain leasehold land, with the object of utilising the machinery for their profit. Wadsworth, J., held that a security bond pledging the oil engine could not be deemed to be a transaction relating to immovable property. The learned Judge approached the question in the following manner: If a thing is imbedded in the earth or attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached, then it is part of the immovable property. If the attachment is merely for the beneficial enjoyment of the chattel itself, then it remains a chattel, even though fixed for the time being so that it may be enjoyed. 13. We find ourselves in agreement with the second part of these observations, which is apposite to the instant case. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court in this respect is very consistent. 30. It is thus clear from above pronouncements of this Court, in order to hold structure being permanent one, it must be of such a character that cannot be removed without damaging and/or impairing substantially any portion of demised premises. Unless these conditions are satisfied, it cannot be said to be a structure of permanent nature. Mere raising a wall, adjacent to the demised premises, either mud or bricks which can be removed without any difficulty at any point of time, cannot be said to be a structure of permanent nature and character. Even if any roof is constructed either with asbestos or corrugated tin shed or even with concrete slab, cannot be said to be permanent since it can be removed easily, unless such concrete roof is cast on a brick built massionary wall, which cannot be removed easily and need to be demolished with substantially or structural damage to the building. 14. It is clear that so far as the structures involved in this case are concerned, same are constructed using tempered steel/thick steel poles by attaching the same to a concrete structure embedded on earth and erected using nuts and bolts. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to the third person involved in the transaction. He further contended that the hoardings are installed on leased premises and therefore the effective control of the revision petitioner is necessitated. Pointing out these factual circumstances, he contended that there is no transfer of any right to use at all, in order to make the revision petitioner exigible to tax under the Act. 17. But, according to us, so far as leasing out of hoardings in this case are concerned, once it is let out by entering into an agreement or work order, the owner of the goods ceases to have any control over the same for the reason that the advertisements are affixed on the hoarding by putting up and displaying necessary materials in accordance with the directions of the lessee and he has the effective control of the hoardings throughout the contract period entered into by him with the revision petitioner. The revision petitioner is unable to interfere with the nature of the advertisement carried out by the lessee in the hoardings since as per Annexure-D work order, it is his absolute right to finalise the nature of advertisement that is put up on the hoardings. Therefore, according to us, the absolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to take recourse to various theories including aspect theory , as was noticed by this Court in Federation of Hotel Restaurant Assn. of India v. Union of India. 29. If the submission of Mr. Hegde is accepted in its entirety, whereas on the one hand, the Central Government would be deprived of obtaining any tax whatsoever under the Finance Act, 1994, it is possible to arrive at a conclusion that no tax at all would be payable as the tax has been held to be an indivisible one. A distinction must be borne in mind between an indivisible contract and a composite contract. If in a ontract, an element to provide service is contained, the purport and object for which the Constitution had to be amended and Clause (29-A) had to be inserted in Article 366, must be kept in mind. 30. We have noticed herein before that a legal fiction is created by reason of the said provision. Such a legal fiction, as is well known, should be applied only to the extent for which it was enacted. It, although must be given its full effect but the same would not mean that it should be applied beyond a point which was not contemplated by the legislature or which would lead to an anomaly or absurdity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xclusive and if there is liability, both are to be paid by the concerned assessee. Viewed in that background, the contention raised by the revision petitioner that since it is paying service tax, is not liable to pay Value Added Tax can never be sustained. 21. Going through the facts of 'Imagic Creative Pvt. Ltd. case' (supra), we find that, there, the question considered was the exigibility of Karnataka VAT Act and the question was whether advertisement service component was exigible to VAT. The advertisement service rendered by the assessee in that case was noted by the Hon'ble Apex Court as follows: (i) Conceptualising and designing; (ii) producing printed advertising material on receiving party specific and issue specific orders. The authority under the Karnataka VAT Act deciphered the two items and held that the assessee therein is exigible to pay tax under the V.A.T Act for former item. According to us, the Hon'ble Supreme Court therein was considering the question of a composite contract entered into between the assessee and the client and the Hon'ble Court ultimately came to the conclusion that the element of service tax and the liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustomers for the purpose of displaying their advertisements, are movable property and therefore, goods. In my opinion, apart from making a fresh determination of liability of the applicant to pay tax on sales effected from April 1, 1984 onwards, the assessing officer (1) should also determine whether the hoarding in each transaction is goods and if it is found to be goods, (2) then he should also determine whether having regard to the terms of the contract, the transaction in question amounts to a sale within the meaning of clause (g) of section 2 of the Bengal Finance (Sales Tax) Act, 1941, the relevant portion of which is reproduced below: 'sale' means any transfer of property in goods for cash or deferred payment or other valuable consideration, and includes-- (i) ................ (ii) any transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration, or . 23. Therefore, taking cue from those decisions, learned counsel contended that there is no element of exigibility of VAT involved in the subject issue since there is no goods transferred as provided under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) for the period during which the transferee has such legal right, it has to be the exclusion to the transferor-this is the necessary concomitant of the plain language of the statute viz. a transfer of the right to use and not merely a licence to use the goods; (e) having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others. 25. Therefore, in our view, when the principles so laid down by the Hon'ble Apex Court are applied to the facts involved in this case in the light of the stipulations contained in Annexure-D agreement, it is categoric and clear that there was a clear transfer of right for the use of the goods and therefore even though the facts and circumstances of the 'B.S.N.L case ' (supra) differs from the facts involved in this case, the principles laid down in the paragraph referred supra clearly applies to the facts of this case and therefore, according to us, the said judgment will not help the revision petitioner. So also, according to us, after the introduction of sub-article 29A and clause (d) of Article 366, there is a clear power conferred o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of right to use the goods exclusively to the transferee therein and in that circumstances, the assessee was not exigible to Value Added Tax. 28. The learned counsel for the revision petitioner also brought to our notice the judgment of the High Court of Delhi in 'Indus Towers Ltd. v. Union of India and Others' [W.P. (C) No.4976 of 2011 dated 18th April, 2013]. In the said decision also, the Court was considering the question as to whether in the nature of agreement entered into between the parties there is an exclusive transfer of right to use goods. There also, the Court has appreciated the terms and conditions of the agreements and found that there is no intention on the part of the writ petitioner to transfer the right to use goods. Further it was also found that there is no exclusive transfer of right to use goods but there was only a licence to use the tower for the purpose of telecom operation and in that circumstances it was held that there is no absolute transfer of right to use to the petitioner therein and in that circumstances, the proceedings initiated were quashed. According to us, as stated earlier, here is a case where under a contract or work ..... X X X X Extracts X X X X X X X X Extracts X X X X
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