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TMI Blog2019 (2) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel for the parties. The present revision has been filed on the following substantial questions of law :- 1. Whether the learned Tribunal was justified in not considering the law laid down by the Apex Court that if the agreements have been executed outside the State of U.P. then the tax on such a transaction cannot be levied in the State of U.P. 2. Whether the learned Tribunal was justified in not considering that the sale and deemed sale are part of the same transaction and are belonging to the same category as such in view of Clause 29-A Article 366 of the Constitution it cannot be treated separately for the purpose of taxation. 3. Whether the learned Tribunal was justified in not considering that the levy of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd order dated 09.05.2000 . Relevant portion of the judgment is as under:- 45. Section 3-F is a charging section which provides tax on transfer of right to use any goods and it is extracted as under: (1) Notwithstanding anything contained in Section 3-A or section 3- AAA or Section 3-D but subject to the provisions of Sections 14 and 15 of the Central Sales Tax Act, 1956, every dealer shall, for each assessment year, pay a tax on the net turnover of- (a) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment of other valuable consideration; or (b) xxxx at such rate not exceeding fifteen percentum as the State Government may, by notification, declare and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not applicable to the transaction of transfer of right to use any goods. We find that clause (ii) of Explanation I of Section 2(h) is in excess of legislative power under Entry 54, List II of Seventh Schedule and, therefore, we direct that clause (ii) of Explanation I of Section 2 (h) of the Act shall be read down to this effect that it would not be applicable to the transaction of transfer of right to use any goods if such deemed sale is (i) an outside sale, (ii) sale in course of the import of the goods into or export of the goods out of the territory of India and (iii) an inter-State sale. 53. Following what we have stated above, we are of the opinion that the decision of the Bombay High Court in 20th Century Finance Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transaction, yet in this case there has been no inter-State deemed sale. The fact that the master lease agreement refers to hiring of the equipment and the fact that at the instance of the hirer the appellant placed the order for purchase are immaterial. There is always a difference between purchasing any goods for the reason that hirer wanted to hire it and the hirer himself ordering purchase of the goods. In the instance case, the purchase of the equipment was by the respondent, the fact that the hirer wanted to hire the equipment might have prompted the respondent to place an order for its purchase but that fact is irrelevant in arriving at the conclusion whether the lease in respect of non-existent unspecified equipment would be compl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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