ATM deployment under service arrangement not a sale where possession and ownership remain with the supplier, defeating penalty for alleged tax evasion.

Retention of possession, control and ownership under an ATM deployment service arrangement means the recipient does not obtain the machines as goods, so the transaction falls outside the sale or deemed sale concept for VAT purposes. On that basis, the text says the alleged foundation for tax registration liability and for a penalty based on attempted tax evasion could not stand. It further notes that mere customer access to an ATM does not amount to possession of the machine or any part of it, and therefore does not create a transfer of right to use goods.

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Issues: Whether penalty imposed under Section 51(7)(b) of the Punjab Value Added Tax Act, 2005 was sustainable when the goods imported through the Information Collection Centre were accompanied by documents and the transaction of supplying ATMs to banks did not amount to a sale or deemed sale.

Analysis: The imported ATMs were brought for deployment and management under service arrangements, while possession, control, management and ownership remained with the appellant. The issue was held to be covered by the Tribunal's earlier decision that mere accessibility of an ATM to a bank customer does not amount to the customer obtaining possession of the machine or any part of it, and therefore the element of sale is absent. Once the transaction was not a sale or a transfer of right to use goods in the statutory sense, the foundation for treating the appellant as liable to tax registration and for sustaining penalty on the alleged attempt to evade tax could not stand.

Conclusion: The penalty and the orders of both authorities below were unsustainable and were set aside. The appeal was allowed in favour of the assessee.

Final Conclusion: The Tribunal held that supply and deployment of ATMs under the stated service arrangement did not attract the sale concept under the Act, and the consequential penalty based on alleged tax evasion could not be sustained.

Ratio Decidendi: Where the dealer retains possession, control and ownership of goods deployed under a service arrangement, and the recipient does not obtain possession of the goods as goods, the transaction is not a sale or deemed sale for VAT purposes and penalty premised on such characterization cannot be upheld.

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