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TMI Blog2023 (4) TMI 866X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the instant matter, the crane services provided by the respondent-assessee do not constitute sale as provided under Section 2(35)(iv) of the Act of 2003. In the case at hand, it is clear that the contract dated 13.10.2008 was a contract of service and not sale, as the consumer i.e. Transport Department had demanded the specific services of loading, unloading, lifting and shifting, by way of the said contract. It cannot be said that consumer had the exclusive right to use the crane or that the said crane was under the control and possession of the consumer, as is illustrated by the fact that the conditions in the contract provided for the respondent-assessee to undertake the care and maintenance of the cranes during the sustenance of the contract and also supply the services of a driver and helper alongside the crane. Therefore, inadvertently, keeping the control and possession within the realms of the respondent-assessee - this Court is of the view that the crane services provided by the respondent-assessee do not constitute sale as provided under Section 2(35)(iv) of the Act of 2003 and hence, the order of the learned Tax Board does not call for any interference of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spectively , are being taken up as the lead cases/files. 4. Learned counsel for the petitioners has submitted that the matter pertains to the assessment years, 2006/2007 to 2010/2011. A survey was conducted at the premises of the respondent on 22.11.2011. The Assessing Officer found that the respondent-assessee indulged in providing crane services to various customers, inadvertently giving them the right to use and therefore, transferring goods from one person to another i.e. a transfer of right to use goods for any purpose for valuable consideration and assessment. Therefore, the same ought to have been deemed a sale in terms of Article 366(29A) of the Constitution of India and the definition of sale under Section 2(35)(iv) of The Rajasthan Value Added Tax Act, 2003. The relevant provision is reproduced hereinunder:- Section 2(35): sale with all its grammatical variations and cognate expressions means every transfer of property in goods by one person to another for cash, deferred payment or other valuable consideration and includes, (iv) a transfer of the right to use goods for anypurpose (whether or not for a specified period) for cash, deferred payment or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd submitted that tax has to be charged in all circumstances encapsulating the transfer of right to use goods, as the definition of sale as provided under Section 2(35)(iv) is in consonance with Article 366(29A) of the Constitution of India. Furthermore, learned counsel also submitted that as per the established facts and circumstances of the case, it is demonstrated that the assessee was involved in giving the cranes for the purpose of using the same, for monetary consideration, as contemplated under Section 2(35)(iv) of the Act of 2003 and accordingly, in this regard, the Assessing Officer has given detailed findings both the times i.e. in the first round as well as in the remand order. Lastly, it was also submitted that for a fix period of time, the crane services were absolutely under the control and disposal of the Transport Department and other private institutions/bodies, as given to by the respondent-assessee. Therefore, the learned Tax Board s holding is without any cogent and legally sustainable justification. 8. In this regard, learned counsel for the Revenue placed reliance upon the Apex Court judgment in (2020) 3 SCC 354 titled as Great Eastern Shipping Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommitted a great error in not constituting the said transfer of the right to use the goods as a sale as provided under Section 2(35)(iv) of the Act of 2003 read with Article 366(29A) of the Constitution of India. 11. Per contra, learned counsel for the respondent-assessee has vehemently opposed the contentions as raised by the Revenue and has submitted that the contract as entered between the respondent-assessee and the Transport Department does not constitute a sale as provided under the law and therefore, the order of the learned Tax Board does not call for any interference of this Court. In support of his contentions, learned counsel for the respondent-assessee has relied upon a plethora of judgments, including those reported in Rasthriya Ispat Nigam Ltd. Vs. Commerical Taxes Officer, Company Circle, Visakhapatnam: (1990) 77 STC 182 (A.P.), State of Andra Pradesh Anr. Vs. Rasthriya Ispat Nigam Ltd.:(2002) 126 STC 114 (S.C.), Tripura Bus Syndicate Vs. State of Tripura Ors.:(1997) 105 STC 409 (Gauhati), Ahuja Goods Agency and Anr. Vs. State of Uttar Pradesh Ors.:(1997) 106 STC 540 (All.), Rungta Projects Limited Ors. Vs. State of Bihar Ors.:(1998) 108 STC 234 (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he desired services of loading, unloading, lifting and shifting with the help of the cranes. There was no reference in the contract, either direct or otherwise, to deal with the cranes in a specified manner by the consumer-Transport Department. Rather, the contract only included specific stipulations qua the performance of certain specific services with regards to the cranes. Therefore, it cannot be held that the control and possession of the crane was specified with the consumer-Transport Department, as the main instrumentalities, including the driver and helper were provided by the respondent-assessee. Additionally, the duties of re-fueling petrol, maintenance of log book, reparation and maintenance of the cranes etc. lay on the respondent-assessee as well. 14. In light of the submissions made herein-above, it was argued that the judgments, as cited by the learned counsel for the Revenue, are not applicable to the facts and circumstances of the present case. At the risk of repetition, it was conclusively submitted that there was no exclusive control and possession on part of the consumer-Transport Department. The contract between the parties was in the nature of a service cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be said that the consumer-Transport Department did not enjoy the exclusive control and possession of the crane, for the reasons mentioned herein-above. Accordingly, the contract dated 13.10.2008, did not give rise to a transfer of the right to use goods as stipulated under Section 2(35)(iv) of the Act of 2003 read with Article 366(29A) of the Constitution of India. It is also noteworthy that as the contract dated 13.10.2008 was essentially a contract of service, the respondent-assessee had duly paid the amount of service tax leviable upon them. Therefore, in the facts and circumstances of the instant matter, the crane services provided by the respondent-assessee do not constitute sale as provided under Section 2(35)(iv) of the Act of 2003. 17. The reliance placed by the learned counsel for the respondent-assessee on the judgment of the Apex Court in Bharat Sanchar Nigam Ltd. (Supra) is noteworthy for the efficacious adjudication of the instant petition. The relevant extract(s) from the said judgment are reproduced herein-under: 45. Of all the different kinds of composite transactions the drafters of the 46th Amendment chose three specific situations, a works contract, a h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. The transferee should have a legal right to use the goods-consequently all legal consequences of such use including any permissions or licenses required therefore should be available to the transferee; 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. 18. It is observed that the test to decide whether a contract falls into one category or the other is to ascertain what is the substance of the contract . By applying the said test, one can discern the dominant nature of the contract and thereafter, analyze the tax leviable upon the transactions arising from the same. Hence, before levying tax on a transaction, one must look at the predominant nature of the contract. Accordingly, in terms of the said test, if we were to scrutinize a transaction/contract to deem the same to be a contract for sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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