TaxTMI 
TaxTMI 
2013 (5) TMI 540
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....liability to tax itself is a debatable issue? (iii) Whether in the absence of a dishonest intention to evade payment of sales tax, the penalty imposed can be upheld by the Tribunal?" The Tax Case in T.C.(R) No.38 of 2010 is admitted on the following substantial questions of law:- "1. Whether ingredients of Section 3-A of the TNGST Act, 1959, are satisfied, on the facts and circumstances of the case, to fasten liability to sales tax on deemed sales? 2. In the light of the decision of the Supreme Court of India reported in 16 STC 240, whether the Tribunal is right in holding that in the absence of written agreement, the case of the petitioner cannot be accepted? 3. Whether the conclusion of the Tribunal that only the Cameraman/ Assistant Cameraman will operate the camera and other cinematograph equipments is in the nature of a special pleading, not borne out on the basis of the materials on record? 4. Whether the Tribunal is justified in upholding the penalty, when the question of liability to tax itself is a debatable issue? 5. Whether, in the absence of a dishonest intention to evade payment of sales tax, the penalty imposed can be upheld by the Tribunal? 2.....
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.... without any inhibition from the assessee(s') side and the Assessing Officer rightly held that the transaction in question is exigible to tax under Section 3-A of TNGST Act. 5. Being aggrieved by the Order of the Appellate Authority, the petitioners/assessee(s) preferred appeals before the Tamil Nadu Sales Tax Appellate Tribunal. In separate judgments, Tribunal dismissed all the appeals holding that the assessee(s') hired cinemotgraphic equipments to film producers, who used them in the shooting spot and skilled persons were employed by the Producers and it is a clear case of "transfer of right to use the goods". The Tribunal further held that there is no basis for the contention of the assessee(s') that the cameras would be operated by hirers' own men and held that it is a clear case of "transfer of right to use goods" falling under Category of "deemed sale", assessable to tax under Section 3-A. 6. Challenging the Orders of the Tribunal, the learned counsel for the assessee(s) Mr.K.J.Chandran contended that Section 3-A contemplates "right to use" and all the hired equipments are controlled and operated by the assessee(s) and there is no transfer of right to use the equipment....
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.... lenses and parts and accessories thereof." 11. Prior to amendment of TNGST Act by Act No.25 of 1993, the Cinematographic and photographic equipments transfer of right to use cinematographic and photographic equipments were exempted G.O.(P) 366 C T & R.E. dated 17-4-1986, as per which right to use any goods is exigible to sales tax under Section 3-A. Section 3-A of TNGST Act was substituted from 12.3.1993 by Act No.25 of 1993. The phrase "transfer of right to use any goods" in Section 3-A of the Act is of great significance to impose tax on it as "deemed sales". 12. The thrust is on the transfer of right to use the goods. It is important to understand that in transfer of right to use goods all the rights except the ownership rights are transferred by the transferor to the transferee so as to enable him to use the goods at his own will to the exclusion of the transferor. The Supreme court in BSNL Vs. Union of India (2006) 145 STC 91 (SC) held as under: "To constitute a transaction for the transfer of right to use goods, the transaction must have the following attributes: a. There must be goods available for delivery; b. There must be consensus ad idem as to the identi....
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....l other surrounding and relevant aspects have to be considered to come to the conclusion whether or not under a particular contract, there is transfer of right to use any goods. Whether there is transfer of the right to use the goods or not is essentially a question of fact, which has to be determined in each case, having regard to the terms of the agreement. The transfer of effective control and possession of the goods in such cases plays a vital role in determining whether it is a deemed sale or service. 15. In the present case, the assessee(s) hired different cinematographic equipments mounted on vehicles to the customers, who were film producers and Directors along with their staff. The equipments are extensively used in film shooting. Even though the petitioners contend that the assessee(s) had effective control of leased equipments, the authorities have recorded factual finding that shooting of the film taken by the Cameraman employed by the Producers freely without any disturbance from the assessee(s') side to shoot better films and the equipments are leased out are mainly sophisticated cameras. To ensure high quality and good performance, the cameras have to be used in p....
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.... Court in STATE OF ANDHRA PRADESH AND ANOTHER VS. RASHTRIYA ISPAT NIGAM LTD., ((2002) 126 STC 114 (SC)). 18. The decision of Rashtriya Ispat Nigam Limited Vs. Commercial Tax Officer, (1990) 77 STC 182 (AP) relied upon by the learned counsel for the assessee(s) is not helpful to the assessee(s). In the said case, the Court was considering the question as to whether supply of machinery for purposes of execution of work would amount to transfer of right to use in favour of the contractor. The assessee therein has undertaken to supply machinery to the contractor for the use and for purposes of being used, in execution of the contract work and the assessee therein and received charges for the same. However, there is restriction that the machinery should not be shifted to another work and under those circumstances, it was held that the effective control of the machinery continued to be with the Rashtriya Ispat Nigam Ltd. In the said case, which has been confirmed by the Honourable Supreme court, it has been laid down that whether there is transfer of right to use or not is a question of fact which is to be determined in each case having regard to the terms of contract under which ther....
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.... by customers, wherein erection and dismantling after specified period was carried out by decorator and therefore customer has no right to use materials used in erection and as such there is no transfer of materials and no sale of goods and as such not exigible to sales tax. 23. In HLS Asia Ltd. Vs. State of Assam and others, (2007) 8 STC 314, Gauhati High Court has considered the case of appellant entering into agreement with OIL for wire-line logging and perforation activities in oil fields utilising its hightech equipment and the equipment, tools and machinery are to be operated by technically qualified personnel of appellant and realisation of rental charges is by appellant. On facts, it was held that OIL had absolute authority in use of equipment and right to use equipment stood transferred to OIL, Gauhati High Court held that transaction involved lease and hence taxable under Sales Tax. 24. Whether a transaction is a transfer of right to use goods or a service is essentially a question of fact, which has to be determined in each case, having regard to the terms of the contract. As pointed out earlier, in the present case, the assessee(s) have not produced any document/a....