9911796707
TMI Blog2023 (12) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... y clause in contract and in particular the emphasized portion as quoted above, unmistakably lead to the conclusion that the cranes were under effective control and possession of Respondent herein and during the contract period, the same were in the custody of SISL. It indicates there was no transfer at all, let alone transfer of the right to use. It was a clear case of giving on hire of cranes. The corresponding provision under the Act is the definition of sale in Section 2(24) of the Act. Comparing the two corresponding provisions, the Tribunal has found full support in the contention of Respondent that the same are in pari materia . Hence the Tribunal has held that the decision in General Cranes is totally applicable to the present case and thus, the ultimate control over the cranes being retained by Respondent, there is no question of transfer of right to use. Thus, the Tribunal allowed the Appeal of Respondent. All the clauses indicate that the effective control and possession have always remained with Respondent and what was being provided to SISL was only the deployment of the cranes on hire. The work order/contract clearly indicates the intention of parties that the custody ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r formed an opinion that the business activity of Respondent of giving cranes on hire was covered within the definition of 'sale' under the Act and thus Respondent was liable to pay Value Added Tax ("VAT"). Respondent failed to file the revised return leading to issuance of a notice in F-302 and initiation of proceedings under Section 23(6) of the Act. Respondent filed its reply dated 23rd February 2015 and the Investigating Officer proceeded to issue an order of assessment under the Act. Aggrieved by the assessment order dated 31st March 2015 and consequent notice of demand, Respondent preferred an Appeal before the First Appellate Authority-Deputy Commissioner of Sales Tax, Appeals-2, Pune Division, Pune. The Appeal came to be dismissed by order dated 31st January 2017. Aggrieved, Respondent preferred the VAT Appeals bearing Nos. 376 and 377 of 2017 before the Tribunal raising a main ground, amongst others, that under the works contract only services were rendered and hence the order impugned was unsustainable. By a judgment and order dated 25th September 2020, the Tribunal allowed the Appeals holding that the cranes were merely hired by Respondent to SISL under the work order an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r storing of diesel at site to SML. 5. SML shall submit the fitness certificate and load chart of all the cranes, which is certified by any government approved agency, and this is the prime requirement of this contract. The crane & its operating crew should comply with all statutory requirements like PUC, RTO licences, etc. and a copy of all such documents should be maintained with the crane, at all times. 6. If SML is using any Indian parts or carrying out any rectification on boom etc. locally then, SML shall guarantee for its strength as per the load chart. SISL in no case shall be responsible for any liability arising because of failure of cranes/any Indian parts. 7. For Inter-site movement of cranes, beyond 100 kms in a single stretch clause no. 1 of Contract riders (clauses) shall be applicable. 8. The site can be more than one and SISL to mobilise the complete set of cranes as per their requirement and charges shall be paid to SML accordingly as per clause 1 of Contract riders (clauses). The mobilisation period shall be considered as hiring period and in normal circumstances crane movement shall be considered as 125 kms per day. In emergency situations, SML shall ens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is is a prime requirement and is to be followed strictly to avoid any misunderstanding/dispute at a later date. 20. SML shall submit their invoice on calender month basis with detailed certified log book to SISL-Pune for the attention of DGM-Purchase and SISL shall make the payment within 15 days after necessary verification. However commitment is for 30 days. 21. The total holidays per month to be observed shall be no. of Sundays of particular month and not necessarily Sundays/National holidays/Festivals in view of uncertainty prevailing in the site work/schedule of materials. In short, crane shall be used for minimum 26 days a month (10 hours a day) from the date of readiness of crane. 22. The crane shall be required to move from one tower to another as per requirement of SISL. 23. The complete set of the cranes would be operated within the load chart limits and in case of any different jobs SISL and SML shall study the feasibilities and decided accordingly. 24. If the subject crane hired under this contract breaks down during the hiring period, then SML will put the crane back into operation within 24 hours after doing all necessary repairing work. However, if cranes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lessor pays for fuel for operating equipment or the lessor pays for getting the maintenance work done and it is immaterial if the lessor assumes physical possession of goods during the period of contract; (d) there can be no issue on the legal proposition as laid down by the three judgments mentioned above but the key to the matter is effective control as held in Rashtriya Ispat Nigam Limited (Supra). The effective control of the tankers was with HPCL and the owner was not free to make use of the tankers for the works other than the project work of respondent or for his own use. That would mean there was a deemed sale; (e) Bramhaputra Vally Construction and Suppliers V/s. ONGC (2012) 53 VST 401., is clear on the proposition that where a party has effective control and dominion over the goods during the subsistence of the contract, though the physical possession may be with the owner, there will be a deemed transfer of right; (f) In Waltor Buthello of Mumbai V/s. The Commissioner of Sales Tax (2017) 101 VST 128 Bombay, where the facts were similar, the Bombay High Court had held that there was an effective transfer. Even in the case of Waltor Buthello of Mumbai (Supra), t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roleum products. (vii) Crew is under control of oil company as they have to follow the route approved by oil company and obey the instructions of delivery and collect cheques and return the documents to Company. (k) The clauses in the agreement reveal that oil company is in exclusive possession and use of the tankers to transport its petroleum products and have full control over the tankers and crew for transportation and delivery of petroleum products to customers/other locations. The agreement in clear terms provides for transfer of right to use the trucks for transportation of petroleum products of oil company." 8. Referring to the decision in Waltor Buthello of Mumbai (supra) 2017 SCC OnLine Bom. 10325., Mr. Sonpal contends that the transaction herein shall be liable to be treated as 'deemed sale' despite the crew members operating goods or maintenance work or possession are of Respondent. He thus submits that in view of the settled legal position, Respondent's case fulfills the criteria of a transaction transferring 'the right to use' and hence the Appeal is liable to be allowed. 9. Per contra, Mr. Darius Shroff, Senior Advocate appearing for Respondent defends the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t although the ownership of cranes remained with Respondent, Respondent was not permitted to use any crane for any other party's job during the contract period without the written approval of SISL does not in any manner indicate 'deemed sale'. (viii) The rider regarding Respondent being responsible for its own arrangements towards watch and ward towards the security of the cranes also indicate that possession was always with Respondent. 10. Mr. Shroff also relied upon the following decisions to buttress his contention that the hiring of cranes to SISL cannot be construed as a transaction of transfer of the right to use inviting liability to pay VAT: (i) Aurobindo Highway Services v. The State of Maharashtra Internal Citration - 2023 BHC-OS:7690-DB. (ii) Nayana Premji Savala v. Union of India & Ors. 2022 SCC OnLine Bom. 3978. (iii) M/s. Rashtriya Ispat Nigam Ltd. v. The Commercial Tax Officer, & Anr. 1989 SCC OnLine AP 413. (iv) State of A.P. & Ors. v. Rashtriya Ispat Nigam Ltd. (2002) 3 SCC 314. (v) Bharat Sanchar Nigam Ltd. & Anr. v. Union of India & Ors. (2006) 3 SCC 1. (vi) The Commissioner of Sales Tax Maharasthra State v. M/s. General Cranes 2015 SCC OnLine Bom. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not for a specified period) for cash, deferred payment or any valuable consideration and the word "sell" with all its grammatical variations and cognate expressions shall be construed accordingly." 13. The corresponding provision under the Act is the definition of 'sale' in Section 2(24) of the Act. Comparing the two corresponding provisions, the Tribunal has found full support in the contention of Respondent that the same are in 'pari materia'. Hence the Tribunal has held that the decision in General Cranes (supra) is totally applicable to the present case and thus, the ultimate control over the cranes being retained by Respondent, there is no question of transfer of right to use. Thus, the Tribunal allowed the Appeal of Respondent. 14. We do not find any infirmity in the discussion and finding of the Tribunal. When would there be a transfer of right to use any goods has been extensively discussed by this Court in Aurobindo (supra). In Aurobindo (supra), this Court has discussed various decisions of other High Court and the Apex Court. The ratio in all the decisions settles the law that answers to the substantial questions framed depends essentially on the facts and circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
