TaxTMI 
TaxTMI 
2013 (1) TMI 25
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.... services including 'Well Logging Perforating and other Wire Line Services', on contract basis, in the entire country including the State of Tripura. Since the petitioner a service provider, it applied, to the Govt. of India, Ministry of Finance, department of Revenue, which is the appropriate authority, for issuance of Service Tax Registration Certificate in favour of the petitioner, as required under Section 69 of the Finance Act, 1994 (in short, the 'Finance Act'). Pursuant to a notice inviting tender, issued by the Oil and Natural Gas Corporation Ltd. (for short, ONGC), for executing the work of Well Logging, Perforating and other Wire Line Services for its oil and natural gas exploration and exploitation, to be carried out in the State including other States. The petitioner submitted tender for the said work and the petitioner's tender was accepted by the ONGC and a contract agreement (No. MR/MAP/LOG/MM/SCON/L/08/2007-08/9010011215) was executed between ONGC and the petitioner. The agreement contained provisions for payment of rentals for equipments deployed and used in rendering services and also for operating and other charges in accordance with the pricing structure for su....
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....dering of services, such as, Well Logging, Perforating and other Wire Line Services, by the petitioner, by using its own equipments, did not amount to transfer of right to use of equipments and, hence, the agreement, in question, could not make the petitioner liable to pay tax on account of transfer of right to use goods for any purpose. The Court further held that the agreement involved 'services' and, therefore, the said composite agreement cannot be bifurcated and taxable liability could not have been imposed on the petitioner on the basis of the said agreement. It is contended by the petitioner that respondent No.3 served a notice, dated 20.07.2011, on the petitioner alleging that the petitioner, without having been registered as a 'dealer', as required under the TVAT Act, had been importing, from outside Tripura, various taxable equipments required in connection with oil exploration activities and further alleging that Rule 47 of the TVAT Rules prohibits any person, other than a 'registered dealer', in taking delivery, or transport from, any railway station, post office, etc., in the State of Tripura and, accordingly, the petitioner was required to get registered under TVAT Ru....
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....y transfer of goods or transfer of rights to use goods, i.e. sale or deemed sale, nor was the petitioner a dealer and, therefore, the impugned notice, dated 20.07.2011, served on the petitioner, is liable to be set aside and quashed. Accordingly, the petitioner has prayed for setting aside and quashing the notice, dated 20.07.2011, aforementioned and also for a direction on the respondents restraining/prohibiting them from acting in any manner in furtherance of the said letter dated 20.07.2011. 3. The respondents filed a joint counter-affidavit stating to the effect, inter alia, that the records of Superintendent of Taxes, Charge-V (respondent No.3) makes it clear that the petitioner-company entered into a contract with ONGC for providing services, on hiring basis, for executing the works of Well Logging, Perforating and other Wire Line Services for its oil and natural gas exploration and exploration activities involve use of equipments and tools belonging to the petitioner and though the contract, in question, provides that the equipments and tools to be provided by the contractor, i.e., the petitioner, shall remain in the possession of the petitioner, as contractor, the petition....
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....reement. Therefore, the petitioner, by way of providing services to ONGC Ltd., had been selling taxable goods. Hence, the petitioner company, having engaged itself in the services of the ONGC in oil and natural gas exploration activities, was a 'dealer' within the meaning of Section 2(8) of the Act, and was, therefore, liable to be registered under the provisions of TVAT Act, 2004, and the Rules framed thereunder. Without such registration, the petitioner company was not entitled to get statutory permit to import taxable goods into the State of Tripura for carrying out the said contract agreement. It is, therefore, contended that the petitioner company was bound/is bound to register itself as a 'dealer' as prescribed under Rule 47 of TVAT Rules. 4. Heard learned counsel, Mr. Somik Deb, for the petitioner, and learned Government Advocate, Mr. N. C. Paul, for the respondents. 5. While considering the present writ petition, it is pertinent to take note of the fact that the petitioner, indisputably, entered into an agreement with the ONGC to provide, in due course, the services of Well Logging, Perforating and other Wire Line Services. The petitioner is a service provider having Serv....
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....d thereunder in order to take delivery or transport taxable goods. Please note that no further permit(s) may be considered unless you company gets registered under the said Act and Rules. (M. Debbarma) Superintendent of Taxes Charge-V, Agartala" By the letter, quoted above, respondent No.3 had asked the petitioner to get itself registered as a 'dealer', under the TVAT Act, and the Rules, framed thereunder, for taking delivery of taxable goods transported, or likely to be transported, into the State of Tripura. 7. For fair appreciation and ready reference, let us reproduce hereinbelow the relevant provisions of the TVAT Act, which is relevant for a fair decision on the point, in question. The word, "dealer", as defined in Section 2(8) of the TVAT Act reads thus:- 'Dealer' means any person who carries on the business of buying, selling, supplying for commission, remuneration or other valuable consideration, and includes- (a) An industrial, commercial, banking, or trading undertaking whether or not of the Central Government or any of the State Governments or a local authority; (b) an advertising concern or agency; (c) a causal trader; (d) a company, firm, club, association,....
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....been defined in Section 2(26) of the Act thus: "Sale with all its grammatical variations and cognate expressions means every transfer of the property in goods (other than by way of a mortgage, hypothecation, charge or pledge) by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, and includes- (a) transfer otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration; (b) transfer of property in goods(whether as goods or in some other form) involved in execution of a works contract; (c) delivery of any goods on hire purchase or any other system of payment by installments; (d) 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; and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and purchase of those goods by the person to whom such transfer, delivery or supply is made, but does not include a mortgage, hypothecation, charge or pledge. (ii) '....
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.... cheque or draft or any other mode, deduct such amount towards sales tax(not being more than the total tax payable by the dealer) as may be prescribed. Rule 47 of TVAT Rules prescribed thus:- "No person, other than a registered dealer, shall take delivery or transport from any railway station, post-office, airport, business place of any transporter, carrier or transporting agent or any other place whether of similar nature or otherwise in Tripura any consignment of taxable goods dispatched from outside Tripura: Provided that this restriction shall not apply to any consignment which does not exceed: (a) In case of goods sold by quintal and kilograme-5 kilograms in weight. (b) In case of goods sold by litre- 1 litre in volume. (c) In case of goods sold by meter- 1 meters in length. (d) In case of goods sold by piece- 1 number. (e) In case of goods sold by pair- 1 pair. (f) In case of precious stones, namely diamonds, emeralds, rubies, real pearl, and sapphires synthetic or artificial precious stones,, pearls artificial or cultured-1 gram in weight." 8. Indisputably, the petitioner company is a service provider and, accordingly, the petitioner company was registered by the co....
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.... exclusively for the performance of the services under the contract. The special charges and special operating charges payable to the contractor, as defined in clause 1.25 and 1.26 , are charges for performing operations pursuant to the provisions of the contract based on service order/job order issued by the ONGC. 60. The mobilization charges and demobilization charges payable to the contractor, under clause 4.1.1, are also not for the transfer of right to use any goods. From a reading of clause 5.2, it would further emerge that the contract is for execution of the works in accordance with the specification, drawing and others terms and conditions of the contract and the duty of the contractor's representative is to act, on behalf of the corporation, for overall coordination and the project management at the site. Similarly, the duty of the engineer is to ensure that works of 'Well-Logging, Perforating and other Wireline services' are in accordance with the specification, drawing and other terms & conditions of the contract. Clause 7.0 clearly provides that the contractor has to maintain its equipment in sound, safe and efficient condition throughout the duration of the contract.....
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....es' by using its own equipments and thereby no transfer of right to use equipments can be said to have taken place in the present case. Situated thus, it becomes clear, and we do hold, that the petitioner is not liable to pay tax, under the TST Act, 1976, in respect of the consideration received for the execution of contract, in question; hence, the action of the revenue authority, in raising the demand for deduction of sales tax at source treating the contract, in question, as transfer of the rights to use goods is wholly without jurisdiction and liable to be set aside and quashed, which we hereby accordingly do. The impugned communications, dated 18/20th December, 2004, and 11/12/01/2005, aforementioned, shall stand set aside and quashed." 9. By taking a cue from the decision of the Division Bench of this Court, in WP(C) 127 of 2005, dealing with the issue of exigibility of tax on the petitioner, the petitioner company, now, contends that the respondents' action in asking the petitioner company, by way of the impugned notice, dated 20.07.2011, to get it registered as a 'dealer', as required under the provisions of the TVAT Act, is bad in law and, therefore, not sustainable. 10.....