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TMI Blog2023 (8) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... efor should be available to the transferee and for the period during which the transferee has such legal right, it has to be to the exclusion of the transferor. The Apex Court held that 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. Another condition was that 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. Thus, it could be seen that unless all these ingredients are available, the transaction will not come within the meaning of transfer of the rights to use any goods . The Gauhati High Court in the case of INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF TAXES, ASSAM AND OTHERS [ 2009 (2) TMI 749 - GAUHATI HIGH COURT] considered a similar provision under the Assam General Sales Tax Act. In the said case, petitioner IOCL, which was engaged in the business of sale and supply of petroleum products inside as well as outside the State of Assam, had hired trucks for delivery of petroleum to its dealers and in the course of its business entered into agreement with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RIYA ISPAT NIGAM LTD. [ 2002 (3) TMI 705 - SUPREME COURT] the effective control was with AHS. In BRAHMAPUTRA VALLEY CONSTRUCTION AND SUPPLIERS VERSUS OIL AND NATURAL GAS CORPN. LTD. AND OTHERS [ 2014 (9) TMI 371 - GAUHATI HIGH COURT] also the Gauhati High Court has held that it is the features of the contract which are material and to be looked into - As regards WALTOR BUTHELLO OF MUMBAI VERSUS THE COMMISSIONER OF SALES TAX AND HARROLD BUTHELLO VERSUS THE COMMISSIONER OF SALES TAX [ 2017 (5) TMI 769 - BOMBAY HIGH COURT] , the facts were entirely different in as much as in that case the buses were handed over by the contractor to PMT and the buses, which were handed over to PMT, were registered with the RTO, Pune in the name of PMT as a lessee. In that case, even the conductor of the bus was provided by PMT and not the owner of the bus. It was the conductor of PMT who was to collect the fare from the passengers. The contractor was also permitted to employ other surplus drivers employed with PMT where the post of drivers has become surplus on PMT s establishment. Those were the factors which weighed in the mind of the Court which is not the case in the appeal at hand. Thus, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petroleum products (white oil) by road Ex Pakni Depot Tender No. WZ/IND/MH/POL/BULK/2005-08. AHS had submitted a bid and by a work order dated 5th May 2006, AHS was awarded the contract for transportation of bulk petroleum products by road Ex Pakni Depot from the point at Pakni. The contract was from 1st September 2005 for a period of two years with a provision to extend by one more year as per the terms and conditions of the agreement at the sole discretion of HPCL. The rates applicable were (a) local delivery within 39 kms Return to Depot (hereinafter referred to as RTD ) Rs. 90.77 per KL per KM, (b) outstation delivery beyond 39 kms RTD within State Rs. 116.98 paise per KL per KM, (c) delivery to adjoining States Rs. 116.98 paise per KL per KM and (d) delivery to other than adjoining States Rs. 118.98 paise per KL per KM. Escalation on account of increase in retail price of high speed diesel (hereinafter referred to as HSD ) was also provided for. AHS was to provide and allot three tankers and also furnish security deposit of Rs. 1 lakh per tanker subject to a maximum of Rs.5 lakhs. This was furnished. AHS was told to sign a contract on accepting the work order. AHS accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been filed. All other appeals were also dismissed based on this impugned order dated 9th February 2015. 7. On 25th August 2015 the following appeals were admitted and substantial questions of law were framed : MAHARASHTRA VALUE ADDED TAX APPEAL NO. 8 OF 2015 IN VAT SECOND APPEAL NO. 165 OF 2013 M/s Aurobindo Highway Services Appellant v/s The State of Maharashtra Respondent WITH MAHARASHTRA VALUE ADDED TAX APPEAL NO. 9 OF 2015 IN VAT SECOND APPEAL NO. 152 OF 2013 Vaishnavi Highway Services Appellant v/s The State of Maharashtra Respondent WITH MAHARASHTRA VALUE ADDED TAX APPEAL NO. 11 OF 2015 IN VAT SECOND APPEAL NO. 228 OF 2013 S.N. Bavi Highway Services Appellant v/s The State of Maharashtra Respondent WITH MAHARASHTRA VALUE ADDED TAX APPEAL NO. 12 OF 2015 IN VAT SECOND APPEAL NO. 167 OF 2013 Aurobindo Highway Services Appellant v/s The State of Maharashtra Respondent WITH MAHARASHTRA VALUE ADDED TAX APPEAL NO. 13 OF 2015 IN VAT SECOND APPEAL NO. 652 OF 2013 Bhagwat and Brothers Appellant v/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e place during the period commencing on the 1st day of April of the said respective year upto the time when his [turnover of sales or turnover of purchases], as computed from the 1st day of April of the said respective year, does not exceed the relevant limit applicable to him under sub-section (4). (3) Every dealer who has become liable to pay tax under this Act, shall continue to be so liable until his registration is duly cancelled; and upon such cancellation his liability to pay tax, other than tax already levied or leviable, shall remain ceased until his [turnover of sales or turnover of purchases] again first exceeds the relevant limit specified in sub-section (4) or, as the case may be, until he becomes liable to pay tax under [subsection] (8) or (9). (4) For the purposes of this section, the limits of [turnover] shall be as follows : (a) Limit of [turnover] Rs. 1,00,000. - in the case of a dealer, who is an importer, and the value of taxable goods sold or purchased by him during the year is not less than Rs. 10,000. (b) [Limit of turnover Rs.[10,00,000] - in any other case, where the valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any year. (9) Any person who is not liable to pay tax under the foregoing provisions of this section but has been voluntarily registered under the provisions of this Act shall be liable to pay tax from the date of effect of the certificate of registration duly granted to him and accordingly nothing contained in the proviso to sub-section (2) shall apply to him in any year. Section 6 of the MVAT Act provides for levy of sales tax on the goods specified in the schedules and it reads as under : 6. Levy of sales tax on the goods specified in the Schedules (1) There shall be levied a sales tax on the turnover of sales of goods specified in column (2) in Schedule B, C, D or, as the case may be, E, at the rates set out against each of them in column (3) of the respective Schedule. (2) Notwithstanding anything contained in sub-section (1), there shall be levied a sales tax, in addition to the sales tax leviable under sub-section (1), on the sales of any motor spirits specified in Schedule D at such rate per litre, if any, as may be set out from time to time against each of the motor spirits, in column (3) of the said Schedule. We were informed by the counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t; (iii) Local authorities; (iv) Port Trusts; (iv-a) Public Charitable Trust; (v) Railway Administration as defined under the Indian Railways Act, 1989 (24 of 1989) and Konkan Railway Corporation Limited, (vi) Incorporated or unincorporated societies, clubs or other associations of persons; (vii) Insurance and Financial Corporations, institutions or companies Banks included in the Second Schedule to the Reserve Bank of India Act, 1934 (II of 1934); (viii) Maharashtra State Road Transport Corporation constituted under the Road Transport Corporation Act, 1950 (LXIV of 1950); (ix) Shipping and construction companies, Air Transport Companies, Airlines and advertising agencies; (x) any other corporation, company, body or authority owned or constituted by, or subject to administrative control, of the Central Government, any State Government or any local authority : Exception I. - An agriculturist who sells exclusively agricultural produce grown on land cultivated by him personally, shall not be deemed to be a dealer within the meaning of this clause. Exception II.- An educational institution carrying on the activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred payment or other valuable consideration; (v) the supply of goods by any association or body of persons incorporated or not, to a member thereof for cash, deferred payment or other valuable consideration; (vi) the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service is made or given for cash, deferred payment or other valuable consideration; (vii) xxxxxxxxxxxx 9. It is respondent s case that there has been a sale within the meaning of Section 2(24) of the MVAT Act because there has been a sale of goods within the State and the Explanation (iv) below sub-section 24 of Section 2 provides 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. It is respondent s case that there has been a deemed sale by transfer of right to use the tankers by appellant to HPCL and, therefore, there was a sale of goods and the sales tax on the turnover of sale as per the Schedule E is attracted. 10. It is set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. Therefore, the Apex Court held that to constitute a transaction for the transfer of the right to use the goods, it is necessary that there must be a consensus ad idem as to the identity of the goods, the transferee should have a legal right to use the goods and consequently all legal consequences of such use including any permissions or licences required therefor should be available to the transferee and for the period during which the transferee has such legal right, it has to be to the exclusion of the transferor. The Apex Court held that 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. Another condition was that 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. Thus, it could be seen that unless all these ingredients are available, the transaction will not come within the meaning of transfer of the rights to use any goods . 14. The Gauhati High Court in the case of Indian Oil Corporation Ltd. V/s. Commissioner of Taxes, Assam Ors. (2009) 22 VST 70 (Gauh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PL for hiring of Maruti Omni cabs amounted to transfer of right to use any goods so as to come within the definition of Sale as provided under the Delhi Value Added Tax Act, 2004. After considering the terms and conditions of contract and considering the judgment of the Apex Court in the case of Bharat Sanchar Nigam Ltd. (Supra) the Hon ble Court has observed thus : 12. That takes us to the question that whether the contract in question is at all a contract of sale of goods as envisaged in Article 366(29-A)(d) inasmuch as there is transfer of the right to use for whatever period by the respondent to NDPL. In order to determine whether there is a transfer of the right to use goods so as to make contracts one of sale under Article 366(29-A)(d) on the point of law both the parties are unanimous that the test is of effective control and possession with respect to the goods. In this behalf, both the parties have relied upon the tests of sale as specified by Dr. A.R. Lakshmanan, J. Appearing in paragraph 97 of the BSNL s case which reads as under : 97. To constitute a transaction for the transfer of the right to use the goods, the transaction must have the following attribute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Aggarwal Bros. it was found that there was an intention to transfer the right to use. In the present case, the judgment of Aggarwal Bros. does not help the appellant inasmuch as there is no intention to transfer the right to use the goods because the licences and permissions with respect to the goods, namely, the Maruti Omni Cabs remained always in the effective control and possession of the respondent and not NDPL. It can thus be seen that in the said judgment, the Court took a view that since the permissions and licences with respect to the cabs are not available to the transferee and the cabs remained in control and possession of respondent/assessee, there was no element of transfer of right to use the goods. The Bombay High Court also considered this issue in The Commissioner of Sales Tax V/s. M/s. General Cranes Judgment dated 21.4.2015 in STR No. 5 of 2009 in RA No. 72 of 2005 (unreported). 16. Mr. Thakar submitted that the effective control and possession of the tankers was with AHS. The tankers were registered with RTO in the name of AHS, the permits and licenses including license to carry hazardous goods were in the name of AHS, the cost of runni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in of any other business and the lessor has to ply on the routes exclusively determined by the PMT. Still the Court held that the buses were deemed to be in effective control of PMT and hence, there was a deemed sale; (g) Twentieth Century Finance Corporation Limited and Anr. V/s. State of Maharashtra (2000) 6 SCC 12 says handing over of physical possession is not required to decide transfer of right to use; (h) In the case of Deepak Nath V/s. ONGC (2010) 31 VST 337 (Gauhati), the Court concluded that the mere fact that after the operation of the crane is over on any given day the crane may come back to the owner/contractor will hardly be material to decide as to who has dominion over the crane. Temporary physical possession of the contractor, the Court held, would be hardly relevant; (i) G.S. Lamba and Sons V/s. State of Andhra Pradesh (2011) 43 VST (AP) says to determine the nature of the transaction one has to consider the agreement and having considered the agreement between appellant and HPCL, there can be no doubt that there was a transfer of right to use; (j) The following facts emerge from the agreement between appellant and HPCL : (i) The tanker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Crude oil and storing, distributing and selling of the petroleum products and for this purpose require Tank Trucks for Road transportation of bulk petroleum products from their various storage points to customers / other storage points. WHEREAS the Carrier is engaged in the business of operating Tank Trucks and is interested in above transportation job of the Company. Now therefore, it is agreed between the parties as follows :- 1. The Carrier will provide the Company with 3 no. of Tank Trucks for transporting petroleum products as per LOI/Work Order issued by the Oil Company. Carrier has certified that it is the owner and/or sufficiently entitled to operate these Tank Trucks throughout the Agreement period and these Tank Trucks are not under Agreement with any other party. Further, these Tank Trucks shall remain under exclusive use with the Company throughout the Contract period. 2(a). Each of the Tank Truck would be attached to a particular loading location / storage point of the Company as per LOI/ Work Order issued by the Oil Company. The Tank Truck would be required to carry bulk petroleum products from the particular loading location (Pakani) to Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation at Company's premises at the cost of Carrier. (e) Have adequately trained Crew (driver and cleaner) for efficient operations. The driving licence of the drivers should be endorsed for transportation of hazardous goods. (f)Have the Crew wearing uniforms, safety shoes and safety helmets. (g) Be equipped with sufficient number of rubber hoses having suitable couplings at both ends, bonding / earthing with heavyduty crocodile clips and dip-rods duly certified by Weights Measures Department. (h) Covered by Insurance Policy. The officials of the Company would be entitled to inspect at any time, the Tank Trucks and / or the documents of the Carrier / its crew is liable to carry under any statute / regulation or this Agreement. Further, Carrier shall submit to the Company certified true copies of calibration certificate and Explosive Licence and their renewals for every Tank Truck. 4(a) The Tank Trucks listed in the LOI / Work Order will be made available to the Company at all times during the Agreement period at the loading location. (b) In case any of the Tank Trucks is not made available by the Carrier on any day, Company would be free to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile transporting petroleum products under this Contract would be reimbursed by the Company on round-trip basis subject to production of original receipts for payment. Company's decision whether any charge is reimbursable or not would be final and binding on the Carrier. (d) The transport charges payable under this Agreement are based on shortest route approved by the Company on the round trip basis (called RTKM). A list of current RTKMS applicable to storage points where subject Tank Trucks are based are available with concerned storage point. Company would, however, be entitled to revise these RTKMS from time to time, including retrospectively, which would be binding on the Carrier. Difference in transportation charges arising out of this revision will be recoverable / payable from the date of Agreement or effective date of such revision, whichever is later. (e) .. (f) .. (g) The Company has not guaranteed any minimum billings / mileage or loads for any period whatsoever. Hence, Company will not be responsible for their inability in offering any load on any day or during any particular period and no idle charges etc. would be payable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (f) . (g) . (h) . (i) . (j) . (k) Wherever required by Company, collect cheques / draft / bank-slips etc. from the recipient after ensuring that remittances are correctly drawn. (l) . (m) . 11. In case any of the Tank trucks meets with an accident while it is loaded with Company s product, the Carrier shall : (a) Arrange conveying of information to dispatch storage points as also nearest police station; (b) Guard the Tank Truck and product till arrival of rescue agencies; (c) Arrange another fit Tank Truck to salvage the product from Accident Tank Truck; (d) Bring such transshipped / salvaged product to Dispatch Storage Point or other location as directed by the Company at Carrier s cost; (e) Be responsible and liable for loss / claims as determined by the Company; 12(a) Carrier shall be responsible for any damage or loss caused to the Company s product or property by negligence or default of it s crew, authorized representative or Tank Truck. This will also include confiscation of Company s product delivered to the Carriers by any statutory authorities. (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icence, Calibration Certificate etc. and get original documents verified at Pune Retail Region for tank trucks offered by you. xxxxxxxxxxxxxx SECURITY DEPOSIT As per the terms and conditions of the contract you are required to furnish the security deposit as under :- 1. @Rs. 100000/- per tank lorry subject to a maximum of Rs.5 lakhs. 2. Minimum Rs. 50,000/- shall be paid in the form of Demand Draft drawn on any nationalised bank in favour of M/s. Hindustan Petroleum Corporation Limited and payable at Pune. Balance may be tendered in the form of Bank Guarantee strictly in specified proforma, valid upto 31-3-2009. 3. For existing dealers/distributors of the Corporation, the Security Deposit will be Rs. 50000/- per contract irrespective of number of tank trucks offered. xxxxxxxxxxxxxxxxxxxxx 19. The agreement read with the work order therefore, indicates, inter alia, that : (i) HPCL was interested in hiring the tankers for transportation of its petroleum products; (ii) the cost of running the tankers like taxes, salary of staff, fuel and repair was responsibility of AHS; (iii) the risk of the carrier and transportation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and any other fees like permit, route fee etc. levied by statutory authorities, cost of fuel, lubricants, tyres, repair etc., calibration fees and other fees payable to weights and measures department, compensation or any other benefit payable to tanker crew and its other staff or third party under any statute or regulation both under regular working and arising from accident etc. and for this, AHS shall keep HPCL indemnified and if HPCL is made liable to pay the same to be recovered from AHS; (xxiii) the tankers shall operate at the sole risk of AHS and in no case, HPCL will be responsible for any loss or damage done to/by the tankers while on HPCL s work or parked in their premises or anywhere else; (xxiv) AHS was to make its own arrangement for parking of its vehicles overnight and/or during holidays; (xxv) AHS was to comply with all statutory provisions relating to his trade/business/profession including his own employees or employees engaged by AHS and HPCL shall not be responsible for AHS s omission or commission; (xxvi) octroi charges levied on the product would be reimbursed by HPCL against production of original receipts. So also entry/transit/bridg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of the right to use the vehicles. Further AHS has to bear the entire operational cost of the vehicle which included salary and other emoluments of the driver and cleaner, cost of fuel and lubricating oil, maintenance of vehicles, payment of road tax, insurance etc. It was also the responsibility of AHS to pay such fines as might be imposed for non compliance of any of the rules, which might be applicable to the carriage of petroleum and petroleum products by the tankers. The requirement that the tankers must conform to the design and fittings as might be specified by HPCL or that HPCL had right to change the loading station or tankers cannot be used for carrying other products than oil of HPCL could not be stretched to mean that the right to use the tankers would stand vested in HPCL and/or the effective custody and control of tankers would stand transferred to HPCL because of the fact that petroleum and petroleum products, being highly inflammable substances could be carried safely and securely only in vehicles with specified designs and fittings. AHS was also liable for contamination of the goods due to negligence of its staff and also if there was short delivery of substan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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