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TMI Blog2022 (12) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... contravention to the provisions of law and also contrary to the Judgments of the Hon'ble Supreme Court, the same thus would not be sustainable and therefore both the Orders deserve to be set-aside/quashed. - WRIT PETITION (T) NO. 128 OF 2015 - - - Dated:- 7-12-2022 - HON BLE SHRI JUSTICE P. SAM KOSHY For Petitioner : Mrs. Smiti Sharma, Advocate. For Respondents : Mr. Rahul Jha, Govt. Advocate. CAV Order 1. Challenge in the present Writ Petition is to the Order dated 30.5.2015 (Annexure P-6) whereby the Revisional Authority i.e. the Additional Commissioner, Commercial Tax, Raipur in Revision Case No.29/R/2015-Regional under Section 49(1) of the Chhattisgarh Value Added Tax Act, 2005 (for short, the VAT Act ) has affirmed the Order dated 22.12.2014 (Annexure P-5) passed in Case No.104/2010-Regional by the Assessing Officer i.e. the Divisional Deputy Commissioner, Commercial Tax, Division-I, Raipur. 2. The issue involved in the instant case is the levy of Value Added Tax (for short, VAT ) on the lease charges paid by the Railways Department to the Petitioner Company. The levy of tax was under Section 2(s)(vi) of the VAT Act for the assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n) and Belgharia (West Bengal), the Petitioner Company started getting lease rent from the Railways. It is the tax i.e. VAT on the said lease rent for the assessment year 2009-10 for which the lease rent on Rs.29,20,347/- at the rate of 18% which came to Rs.4,08,849/- which was assessed by the Assessing Officer treating it to be the lease rent obtained for transfer of right to use under Section 2(s)(vi) of the VAT Act. 7. Learned Counsel for Petitioner submits that the said assessment of tax by the State Authorities is per se bad, for the reason that firstly the Agreement was executed at a place outside the territories of the State of Chhattisgarh, secondly, the Wagons purchased by the Petitioner Company also were not delivered or stationed within the territories of the State of Chhattisgarh. Thus, it was the contention of learned Counsel for Petitioner that once when as per the Agreement, the goods i.e. the Wagons stood transferred immediately on being manufactured to the Railway Authorities and the transfer being made at Bharatpur (Rajasthan) and Belgharia (West Bengal) both being outside the State of Chhattisgarh and even thereafter the Wagons not being stationed within the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder this Article shall have the meanings as assigned respectively to this terminology. Clause 29 of the Article 366 deals with tax on income which includes a tax in the nature of an excess profits tax. Likewise, clause 29A of Article 366 deals with tax on the sale or purchase of goods . For ready reference Clause 29A of Article 366 is reproduced herein under:- 29A. tax on the sale or purchase of goods includes- (a) a tax on the transfer, otherwise than in pursuance of a contact, of property in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in some other form) invoked in the execution of a works contract; (c) a tax on the delivery of goods on hire-purchase or any system of payment by installments; (d) a tax on the 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; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) a tax on the supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained goods, at the time the contract of sale or purchase is made; and (ii) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale or purchase by the seller or by the purchaser, where the assent of the other party is prior or subsequent to such appropriation; and (b) where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of clause (a) shall apply as if there were separate contracts in respect of the goods at each of such places; 16. The Definition of tax on the sale or purchase of goods is provided under sub-clause (d) of clause 29A of Article 366 of the Constitution of India, which reads as under:- (d) a tax on the 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; 17. The VAT Act has an enactment by the State Legislature in Entry 54 under List II State List of the Seventh Schedule of the Constitution of India, which for ready reference is also being reproduced herein below:- 54. Taxes on the sale or purchase of goods other than newspapers, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods and a term of the contract is that the goods contracted to be sold will be actually delivered from the sellers godown to the buyers retail shop, both in the State of Delhi, for consumption in the State of Delhi. Pursuant to this contract made in Gurgaon in the State of Punjab, the buyer pays the full price of the goods at Gurgaon and the seller hands over to the buyer also at Gurgaon a delivery order addressed to the seller's godown-keeper in Delhi to deliver the goods to the buyers retail shop. As a direct result of this sale the sellers godown-keeper, on the presentation of this delivery order, actually delivers the goods to the buyers retail shop at Connaught Circus for consumption in the State of Delhi. On one view of the law, the situs of such a sale would be Gurgaon. We need not decide that it is, because that type of case is not before us and there may be other views to consider, but it is certainly a possible view. It is also possible to hold that this is not inter-State trade or commerce, because there is no movement of goods across a State boundary. Again, we need not decide that because that also may be controversial. But given these two postulates the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. The various sub-clauses of clause (29A) of Article 366 permit the imposition of tax thus: sub-clause (a) on transfer of property in goods; sub-clause (b) on transfer of property in goods; sub-clause (c) on delivery of goods; sub-clause (d) on transfer of the right to use goods; sub-clause (e) on supply of goods; and sub-clause (f) on supply of services. The words and such transfer, delivery or supply. In the latter portion of clause (29A), therefore, refer to the words transfer, delivery and supply, as applicable, used in the various sub-clauses. Thus, the transfer of goods will be a deemed sale in the cases of subclauses (a) and (b), the delivery of goods will be a deemed sale in case of sub-clause (c), the supply of goods and services respectively will be deemed sales in the cases of sub- clauses (e) and (f) and the transfer of the right to use any goods will be a deemed sale in the case of sub-clause (d). Clause (29A) cannot, in our view, be read as implying that the tax under subclause (d) is to be imposed not on the transfer of the right to use goods but on the delivery of the goods for use. Nor, in our view, can a transfer of the right to use goods in sub-clause (d) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the delivery of the goods. 35. As a result of the aforesaid discussion our conclusions are these: (a) The States in exercise of power under Entry 54 of List II read with Article 366 (29A) (d) are not competent to levy sales tax on the transfer of right to use goods, which is a deemed sale, if such sale takes place outside the State or is a sale in the course of inter-State trade or commerce or is a sale in the course of import or export. (b) The appropriate legislature by creating legal fiction can fix situs of sale. In the absence of any such legal fiction the situs of sale in case of the transaction of transfer of right to use any goods would be the place where the property in goods passes, i.e. where the written agreement transferring the right to use is executed. (c) Where the goods are available for the transfer of right to use the taxable event on the transfer of right to use any goods is on the transfer which results in right to use and the situs of sale would be the place where the contract is executed and not where the goods are located for use. (d) In cases where goods are not in existence or where there is an oral or implied transfer of the right to use go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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