TaxTMI 
TaxTMI 
2009 (11) TMI 834
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....ings in question. 3. The primary contention raised in the writ petitions filed is that under the contract agreements in question there was no transfer of the right to use the vehicles, covered by the contracts, in favour of the hirer so as to make the payments received under the transactions in question exigible to tax under either of the statutes on the basis of the fiction of a deemed sale within the meaning of the relevant provisions of the two Acts read with article 366(29A)(d) of the Constitution. The learned single judge having answered the question raised against the contractors the appeals in question have been filed. 4. Before proceeding any further it will be necessary for the court to notice the provisions contained in section 2(19), 2(25), 2(33) of the Assam General Sales Tax Act, 1993 which defines "lease", "operating lease" and "sale", respectively. "2. (19) 'lease' means any agreement or arrangement whereby the right to use any goods for any purpose is transferred by one person to another whether or not for a specified purpose for cash or deferred payment or other valuable consideration without the transfer of ownership and includes a sub-lease....
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....le or purchase of goods that would be exigible to tax by introducing the fiction of a deemed sale to the transactions covered specifically by sub-clauses (a) to (f) to clause (29A) of article 366. Under sub-clause (d) with which the court would be concerned in the present group of appeals, transfer of the right to use any goods for cash, deferred payment or other valuable consideration would be exigible to tax as if the transaction in question gives rise to a sale. As held by the apex court in 20th Century Finance Corpn. Ltd. v. State of Maharashtra reported in [2000] 119 STC 182; [2000] 6 SCC 12, (para 26) the taxable event occurs on the transfer of the right to use the goods regardless of when or where the goods are delivered for use. The apex court in para 27 of the judgment further held that under article 366(29A)(d) the "levy of tax is not on use of goods but on the transfer of the right to use goods". However, in Bharat Sanchar Nigam Ltd. v. Union of India reported in [2006] 3 VST 95; [2006] 145 STC 91; [2006] 3 SCC 1, the apex court clarified that "the decision in 20th Century Finance Corpn. Ltd. v. State of Maharashtra reported in [2000] 119 STC 182 (SC); [2000] 6 SCC 12 ca....
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....ements between the parties, as laid down by the apex court, having been understood, the court must now proceed to answer the said question by understanding the correct scope and meaning of the terms of the contract involved in the present cases. 7. Though the contracts between the parties in the present group of cases are separate and distinct, certain common features in each of the contracts are noticeable. The aforesaid common features of all the contracts involved in the present appeals may best be understood by a reference to the essential terms of the contract involved in the proceeding registered and numbered as Writ Appeal No. 138 of 2007. It will, therefore, be convenient to set out herein the relevant clauses of the contract involved in the aforesaid proceeding. 8. The recitals in the cause title of the contract indicate the same to be born out of a desire of the ONGC to hire the services of the vehicles with particular apparatus along with crew for carrying out the Corporation's operations and the representation of the contractors that they have the necessary experience in the line leading to acceptance of the offers made by the contractors. The following....
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....ent of contract period' means the date on which the crane fully equipped with crew and in perfect working conditions has been placed at the disposal of ONGC at Sivasagar or any other appointed place in the Eastern Region of ONGC (refer clause 6 of this contract agreement). 1.20 Contract price: Shall mean the sum accepted or the sum calculated in accordance with the rates accepted by ONGC and amendments thereof, and shall include all fees, registration and other charges paid to statutory authorities without liability on ONGC for any of these charges. The prices will remain firm during currency of the contract unless specifically agreed to in writing by ONGC. 1.21 Equipment/materials/goods: Shall mean and include any equipment, machinery, instruments, stores, goods which contractor is required to provide to the ONGC for/under the contract and amendments thereto. 1.24 Mobilisation: Shall mean rendering the equipment fully manned and equipped as per contract and ready to begin work at site designating by ONGC after on hire survey and ONGC's acceptance thereafter. The date and time of ONGC's acceptance of on hire survey w....
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....t/rectification of any deficiency noticed during inspection. In case inspection team finds that crane needs major repairs or the performance of the crane is not satisfactory ONGC reserves the right to cancel the LOI. It is therefore suggested that the bidder must ensure that offered cranes meets the technical specification. 5.3 The crane(s) along with their original documents including the certificate at clause 5.2 shall be presented/produced for the inspection at the nominated place before putting it into operation/service of ONGC. The operation/service of crane along with its/their documents shall require the approval of the competent inspection authority for its deployment. Once a particular crane(s) and its documents have been approved for the service of ONGC, the same shall not be changed during the period of the contract, except on being defective or another crane of similar specifications offered as replacement. An intimation of such change shall be given to the authorized representative of ONGC for accepting such replacement. Such replacement shall require inspection afresh by ONGC representative(s). 5.4 The decision with regard to acceptance or rej....
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....dinarily required for operation of such contract by way of practices, customs or usage and/or as prescribed by the law of the land. 8.5 The contractor shall not employ ONGC's serving employees without its prior permission. Ex personnel of ONGC who have retired, resigned or have been terminated by ONGC shall also not be employed by the contractor during their I/II two years from the date of quitting the services without permission of ONGC. ONGC may decide not to deal with such contractors/firms who fail to comply with the above advice. 8.6 The bidder must have an office with regular telephone connection at Nazira/Sivasagar or submit an undertaking that he/they shall establish an office with telephone connection at Nazira/Sivasagar within 30 days from the date of issue of LOA. The bidder shall submit the duly notarized from notary public/magistrate of the recent telephone bill for proof of office and telephone connection. 8.7 For the purpose of day to day or time to time operations, instructions shall be given to the contractor's representative by an authorized representative of ONGC and the operations/loading/ unloading, etc., shall be carried out ....
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....he operations or for staff replacement needed in any particular filed/site or for any other purpose. The contractor shall maintain adequate transport for such immediate assistance. 8.15 The contractor shall have proper and adequate arrangement for fuel, lubricants and other consumables, etc., all the time to complete the job within the scheduled time. Without prejudice to any other rights that ONGC may have under the contract, the contractor shall be liable to pay the liquidated damages to ONGC in case the contractor fails to complete the work in scheduled time and the assigned manner. The scheduled time shall be computed based on standard norm of operations settled mutually. In case of any dispute the decision of the competent authority of ONGC, shall, however, be final and binding on contractor. 8.16 All the works related to operation of cranes, repairs/maintenance, POL shall be arranged by the contractor at his cost. In the event of failure of contractor to place the crane(s) at the disposal of ONGC for its works at the appointed time and place, ONGC shall be at liberty to make alternative arrangement at the risk and cost of the contractor and such arrangement ....
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.... the contract agreement also being relevant are extracted hereinbelow: "11.1 The contractor shall raise crane-wise monthly bills in triplicate in the prescribed pro forma in the name of finance and accounts officer, ONGC and submit the same to incharge-logistics operations, ONGC, or any other authority advised from time to time for arranging payment. These bills will be duly supported by the completed logbook sheets issued to him duly signed by the authorized officers for record by the logistics department. The bills after verification and checks by an authorized officer of ONGC (logistics department) will be sent to finance and accounts department for payment. The payment shall be made to the contractor by cheque drawn on State Bank of India. The payment shall normally be made within 30 days of the receipt of the bill duly complete in all respects. No interest shall be payable for any delay. No advance against anticipated hire charge is payable under any circumstances. 11.2 For work done under the contract the contractor shall be paid at the rate shown thereunder: For type III crane (A) Monthly operational charges for 26 days in a month and 10 hours per ....
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.... for 10 hours everyday with half an hour as lunch break. However, the said clause has specifically mentioned that the timings indicated therein are subject to change and cranes may be asked for services beyond the normal working hours at the sole discretion of the ONGC. Under clause 8.12, a contractor is required to provide the crane on all days in the calendar month except 4 (four) days which are to be treated as maintenance off days. Even on such maintenance off days the ONGC can demand operation of the cranes by the contractor. Under clause 8.14 the employees provided by the contractor are to be provided with suitable residence at a convenient place near the site of operations so as they can be available for duty for 10 hours starting from seven hours to 17.00 hours or as directed by the authorized representative of the ONGC. Under clause 9.10 of the contract agreement the contractor is to arrange the fuel lubricants and other consumable at all times. Under clause 8.15 the contractor is to additionally ensure that each crane while reporting for duty is provided with adequate fuel for at least 24 hours of work. Under clause 9.14 the staff of the contractor engaged in the operatio....
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..... The above features of the contract, in our considered view, makes it abundantly clear that it is the ONGC and not the contractor who has exclusive control and dominion over the crane during the subsistence of the contract, though, during the aforesaid period, at times, physical possession of the crane may come back to the contractor. Such temporary physical possession of the contractor, according to us, would hardly be relevant as under the contract the ONGC is vested with the authority to requisition the crane for operational purposes at any time. Besides, such temporary possession of the crane by the contractor does not mitigate against the transfer of the right to use the crane which event, as already indicated on the authority of the decision of the apex court in 20th Century Finance Corpn. Ltd. [2000] 119 STC 182 (SC); [2000] 6 SCC 12, constitutes the taxable event under article 366(29A)(d) of the Constitution. 12. The terms of other contracts pertaining to water tankers and trailers may also be briefly noticed to make the discussion complete. The terms of such contracts also visualize placing of the required vehicles at the disposal of the ONGC and the commencement of th....