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TMI Blog2017 (12) TMI 1847X X X X Extracts X X X X X X X X Extracts X X X X ..... he present South East Central Railway came into existence and the agreement was with the erstwhile South East Railway. It is also not in dispute that the wagons were manufactured by two different companies one locating in the State of West Bengal and other locating in the State of Rajasthan and the wagons have also been delivered by the manufacturers at the place of manufacture i.e. in West Bengal and Rajasthan. Since the time of transfer of the wagons to the Railway department by the manufacturers, the Railway department has been paying charges to the petitioner company. In the instant case an agreement was entered into by the petitioner with the erstwhile and undivided South Eastern Railway and the contract was executed at Calcutta. The supplies of wagons were made at Calcutta, West Bengal and Bharatpur, Rajasthan. The further undisputed fact is that by virtue of the said sale or purchase, the benefits from the said is being reaped by the petitioner company in the State of Chhattisgarh and for the services so provided, the Railway department is paying lease charges to the petitioner again in the State of Chhattisgarh - there is a transfer of rights to use goods which in the insta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of situs of sale being outside the state of Chhattisgarh and transfer of goods made to the railway also being at two other states and not Chhattisgarh. 4. The brief set of facts necessary for adjudication of the dispute is that the petitioner Company is a cement manufacturing company with allied activities having its manufacturing unit at village Hirmi, District Baloda Bazar, Chhattisgarh. It has its own tax identification number for manufacturing cement and a large quantity of raw materials, semi and finished goods are required to move from one place to another. One of the modes of transport for movement of these raw materials and other goods is railway. Since the requirement of the petitioner company was continuous and for such similar service, the railway department has "own your wagon scheme". Under the scheme, the wagons are purchased by the Company and handed over to the railway department which in turn, on demand, arrange the required number of wagons/rakes to the Company for transportation of its raw materials and other goods. That two contracts under "Own Your Wagon Scheme" was entered into between the Railways as lessee and the petitioner as the lessor. As per the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner the sales can only be taxed if they are intraState sales and if it is inter-State sales or sale in course of import or export, it cannot be taxed under the Chhattisgarh VAT Act. The counsel for the petitioner submits that the order of Assessing officer as well as the Revisional authority do not touch on the issue of the goods in question namely the wagons purchased by the petitioner not entering the territories of Chhattisgarh so as to empower the State of Chhattisgarh to levy tax on the lease charges so received. 10. It was further the contention of the petitioner that in respect of transfer of right to use any goods, the situs of the sale would be the place where the written agreement transferring the right to use is executed. According to the petitioner, the assessing officer as well as the Revisional authority both ought to have delved with the issue and should have given findings with specific reasons as to how the State of Chhattisgarh is empowered to levy tax on the subject matter. The petitioner refer to Section 38(1) & (2), which clearly provides that sales which take place outside Chhattisgarh or where the sale take place in the course of inter-State trade or comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the territory of Chhattisgarh. Therefore, the State of Chhattisgarh would have the powers of imposing tax and as such the provisions of Article 286 of the Constitution of India would not come in the way as a restriction on imposing of tax on sale and purchase of goods. Further contention of the counsel for the State is that the right to use is also within the definition of sale under the provisions of VAT Act as the right to use accrues by virtue of transfer of right whereby at the behest of the petitioner, the wagons were purchased by the petitioner at two different places one in West Bengal and the other being Rajasthan. That, the head quarter of South Eastern Central Railway was at Bilaspur, the cement plant of the petitioner was in Chhattisgarh, the lease charges paid by South Eastern Central Railway to the petitioner was from Bilaspur. Thus, the State has all the powers to impose tax under the VAT Act and prayed for the dismissal of the petition. 14. Article 366 of the Constitution of India provides unless the context otherwise requires the expressions of the terms use under this Article shall have the meaning as assigned respectively to this terminology. Clause 29 of the Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution of India. The learned Assessing Officer in the Commercial Tax Department of the State of Chhattisgarh has held that the VAT is leviable on the petitioner company under Section 2(s)(vi) which for ready reference is reproduced herein under:- "2(s)(vi). "Sale" with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or for other valuable consideration and includes a transfer of the right to use any goods including leasing thereof for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration;" 17. Undisputedly, in the instant case the petitioner company is receiving the lease charges from the Railway department against the wagons purchased by the petitioner and which have been handed over to the Railway department. Admittedly, the agreement was made prior to the present South East Central Railway came into existence and the agreement was with the erstwhile South East Railway. It is also not in dispute that the wagons were manufactured by two different companies one locating in the State of West Bengal and other locating in the State of Rajasthan and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation clause it clearly reflects that the law makers were clear in their mind that it would also attract a transfer, delivery or supply of any goods made pursuant to a contract, where the transfer, delivery or supply is made. Further under such circumstances the place of signing the contract is inconsequential. The explanation part make it clear that it being a non obstante clause and that it is notwithstanding anything contained in the Sales of Goods Act. 20. Keeping in mind the aforesaid legal position in the instant case an agreement was entered into by the petitioner with the erstwhile and undivided South Eastern Railway and the contract was executed at Calcutta. The supplies of wagons were made at Calcutta, West Bengal and Bharatpur, Rajasthan. The further undisputed fact is that by virtue of the said sale or purchase, the benefits from the said is being reaped by the petitioner company in the State of Chhattisgarh and for the services so provided, the Railway department is paying lease charges to the petitioner again in the State of Chhattisgarh. In other words, the petitioner company is availing the fruits of the contract/agreement from the Railways at their plant sit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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