2017 (5) TMI 769 - HC - VAT and Sales Tax

Appellant's Dealer Status Confirmed, VAT Applies to Bus Transactions, Penalties Removed, Stay Granted

Waltor Buthello of Mumbai Versus The Commissioner of Sales Tax And Harrold Buthello Versus The Commissioner of Sales Tax

Waltor Buthello of Mumbai Versus The Commissioner of Sales Tax And Harrold Buthello Versus The Commissioner of Sales Tax - [2017] 101 VST 128 (Bom) Issues Involved:1. Whether the Appellate Tribunal was right in holding that the Appellant is a dealer within the meaning of Section 2(8) of the MVAT Act.2. Whether the transaction between the Appellant and PMPTL is a sale within the meaning of Section 2(24) of the MVAT Act.3. Whether the buses given on hire by the Appellant to PMT is a sale within the meaning of Section 2(24) of the MVAT Act and subject to payment of Value Added Tax.Issue-wise Analysis:1. Whether the Appellant is a Dealer:The Tribunal held that the Appellant is a dealer within the meaning of Section 2(8) of the MVAT Act. The Appellant argued that they are excluded from the definition of a dealer as per Exception III to Section 2(8), which excludes transporters holding permits for transport vehicles used for hire or reward. However, the court found that the Appellant's activities, including the provision of buses to PMT under a detailed contract, do not fall within this exception. The buses were registered in the name of PMT, and the Appellant did not hold the permits independently. Thus, the Appellant is considered a dealer under the MVAT Act.2. Whether the Transaction is a Sale:The Tribunal concluded that the transaction between the Appellant and PMPTL constitutes a sale under Section 2(24) of the MVAT Act. The court examined the terms of the contract between the Appellant and PMT, which indicated that the buses were provided exclusively for PMT's use, with PMT having full control and possession. The buses were to operate on routes determined by PMT, and the Appellant could not use the buses for any other purpose. This arrangement satisfied the criteria for a transfer of the right to use goods, thus constituting a sale under the MVAT Act.3. Whether the Buses Given on Hire Constitute a Sale:The Tribunal held that the buses given on hire by the Appellant to PMT are subject to Value Added Tax as a sale under Section 2(24) of the MVAT Act. The court noted that the contract terms provided PMT with exclusive control and possession of the buses, including the right to determine routes, collect fares, and maintain the buses. The Appellant's role was limited to providing the buses and drivers, with all operational control vested in PMT. This arrangement was deemed a transfer of the right to use the buses, making it a taxable sale under the MVAT Act.Conclusion:The court upheld the Tribunal's findings, affirming that the Appellant is a dealer, the transaction with PMPTL constitutes a sale, and the buses given on hire to PMT are subject to Value Added Tax. The penalties imposed on the Appellant were deleted, considering the debatable nature of the issue. The court granted a stay on recoveries for two months to allow the Appellant to consider further legal action.