TaxTMI 
TaxTMI 
2010 (2) TMI 1094
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....ter referred to as, "the ONGC") for installation of two EPABX systems along with allied accessories and spare parts, on rent and guarantee basis. The equipment contemplated under the said agreement was not available with the TCIL at the time of execution of the contract. Accordingly, TCIL placed a purchase order with M/s. Northern Digital Exchange Ltd., New Delhi (hereinafter referred to as, "the NDEL") on December 27, 1989. In furtherance of the said purchase order, NDEL supplied equipment, in furtherance of the aforesaid purchase order, from Mohali (in the State of Punjab) to Dehradun (in the State of Uttar Pradesh/Uttarakhand) on January 8, 1990. It is not a matter of dispute that the purchase order dated December 27, 1989 and the movement of goods based thereon, from Mohali to Dehradun, were in pursuance of the agreement entered into by the revision petitioner with the ONGC dated November 1, 1988. The revision petitioner entered into another similar agreement (as it had earlier entered into with the ONGC) with M/s. Bharat Heavy Electricals Ltd. (hereinafter referred to as, "the BHEL") for installation of Digital ISND-EPABX along with allied accessories and spare parts, on re....
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....28,38,000 (from the ONGC). During the period 2000-01, TCIL received total rent of Rs. 46,96,862 (Rs. 25,54,200 from the ONGC and Rs. 21,42,662 from the BHEL). For the year 2001-02, TCIL received total rent of Rs. 43,62,871 (Rs. 29,14,999 from the ONGC and Rs. 14,47,872 from the BHEL). The assessing authority under the Uttar Pradesh Trade Tax Act, 1948 (hereinafter referred to as, "the Trade Tax Act, 1948") passed an assessment order dated February 28, 2003 levying tax under section 3F of the Trade Tax Act, 1948, in respect of the amount of rent received by the revision petitioner, i.e., the TCIL, in lieu of the transfer of the right to use equipment, given by the TCIL to the ONGC, as well as, the BHEL. The assessing authority was of the view, that since both the lessor (ONGC/ BHEL) and the lessee (TCIL) were registered with the Trade Tax Office, Dehradun (in the State of Uttar Pradesh/Uttarakhand) and the agreements executed by the lessor and the lessee were in respect of equipment supplied for use in the State of Uttar Pradesh/Uttarakhand, section 3F of the Trade Tax Act, 1948 was invokable, for levy of sales tax on the transfer of the right to use goods. Accordingly, th....
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....ing contract, and as such, the payments received by the contractor in execution of the building contract, could not be divided into two components, one representing the goods used in the execution of the contract, and the other representing the labour costs. The Madras High Court, accordingly, held, that tax could not be levied by splitting the total consideration into two components. On the same issue, the High Courts of Nagpur, Rajasthan, Mysore and Kerala had held otherwise. The Supreme Court in State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. [1958] 9 STC 353, upheld the view taken by the Madras High Court. Again in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386, the apex court held, that payments in lieu of food and drinks provided to guests staying in a hotel could not be divided into two components, one representing the value of food and drinks, and the other representing the charges for services rendered. The issue of avoidance of tax based on the aforesaid pronouncements, as well as, avoidance of Central sales tax leviable on inter-State sale of goods, was examined by the Law Commission of India. In its sixty first report, the Law Co....
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....ament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). (3) Any law of a State shall, in so far as it imposes, or authorises the imposition of,- (a) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or (b) a tax on the sale or purchase of goods, being a tax of the nature referred to in sub-clause (b), sub-clause (c) or sub-clause (d) of clause (29A) of article 366, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify." A perusal of clause (1) of article 286 of the Constitution of India reveals, that it is not open to a State to frame law(s) for imposing or authorising the imposition of tax on the sale (or purchase) of goods from outside the State, i.e., on inter-State sale (or purchase) transactions. The other aspects of the aforesaid provision need not be deliberated here, as the same are irrelevant to the present controversy. From a collective reading of clause (29A) of article 366 of the Constitut....
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....iament has power to legislate in regard to taxes on sales or purchase of goods other than newspapers where such sale or purchase takes place in the course of inter-State trade or commerce. Article 269 provides for levy and collection of such taxes. Because of these restrictions, State Legislatures are not competent to enact law imposing tax on the transactions of transfer of right to use any goods which take place in the course of inter-State trade or commerce. Further, by virtue of clause (1) of article 286, the State Legislature is precluded from making law imposing tax on the transactions of transfer of right to use any goods where such deemed sales take place (a) outside the State and (b) in the course of import of goods into the territory of India. Yet, there are other limitations on the taxing power of the State Legislature by virtue of clause (3) of article 286. Although Parliament has enacted law under clause (3)(a) of article 286 no law so far has been enacted by Parliament under clause (3)(b) of article 286. When such law is enacted by Parliament, the State Legislature would be required to exercise its legislative power in conformity with such law. Thus, what we ....
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....lause (29A) of article 366 are not actual sales within the meaning of 'sale' but are deemed sales by legal fiction created therein. The situs of sale can only be fixed either by the appropriate Legislature or by judge-made law, and there is no settled principles for determining the situs of sale. There are conflicting views on this question. One of the principles providing situs of sale was engrafted in Explanation to clause (1)(a) of article 286, as it existed prior to the Constitution (Sixth Amendment) Act, which provided that the situs of sale would be where the goods are delivered for consumption. The second view is, situs of sale would be the place where the contract is concluded. The third view is that the place where the goods are sold or delivered would be the situs of sale. The fourth view is, that where the essential ingredients, which complete a sale, are found in majority would be the situs of sale. There would be no difficulty in finding out situs of sale where it has been provided by legal fiction by the appropriate Legislature. In the present case, we do not find Parliament has, by creating any fiction, fixed the location of sale in case of the transfer of ri....
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....e of the lease agreement, where purchase has taken place outside the State), is taxable under the local sales tax law. In this connection, it is further contended that situs of such sale would be treated in the State from where the goods were consigned and it shall be treated only inter-State. (4) Admit the revision on following questions of law: (i) Whether the lease agreement and purchase order were integrally connected with the movement of goods and ultimate delivery of the goods to the lessee at whose address the goods are consigned by ex State supplier, and was it an integral transfer under section 3(a) of the Central Sales Tax Act, as held in the case of I.T.C. Classic Finance and Services v. Commissioner of Commercial Taxes [1995] 97 STC 330 (AP), and accepted by the apex court in 20th Century Finance Corpn. Ltd. v. State of Maharashtra [2000] 119 STC 182; [2000] 6 SCC 12? (ii) Whether the Commercial Tax Tribunal has erred in law in relying the minority view given in the aforesaid 20th Century Finance Corpn. Ltd. case [2000] 119 STC 182 (SC); [2000] 6 SCC 12 and not following the majority view given by the apex court on the point that the tax was leviable ....
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....tax on transfer of right to use goods merely on the basis that the goods put to use are located within its State irrespective of the facts that-(a) the contract of transfer of right to use has been executed outside the State; (b) sale has taken place in the course of an inter-State trade; and (c) sales are in the course of export or import into the territory of India. The appellant's case is that, the State Legislature cannot so frame its law as to convert an outside sale or a sale in the course of import or a sale in the course of an interState trade or commerce into a sale inside the State." The factual background of the controversy in 20th Century Finance Corpn. Ltd.'s case [2000] 119 STC 182 (SC); [2000] 6 SCC 12 was narrated in paragraph 2 of the said judgment. The same is also being extracted hereunder: "2. The appellants in the civil appeals and the petitioners in the writ petitions filed under article 32 of the Constitution and transferred petition, and respondent in Civil Appeal Nos. 6218 to 6223 of 1995 are companies incorporated under the Companies Act, 1956 and some have their registered offices at places outside the respondentStates and others have inside....
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....llenged the validity of the legislations by various States whereby one transaction of transfer of right to use goods has been subjected to tax by more than one States." The majority view considered the issue of fictional sale expressed in subclause (d) of article 366(29A) pertaining to the fructification of a sale based on the transfer of a right to use goods. In this behalf, the question which arose for consideration was in respect of the place, where the "taxable event" on the transfer of the right to use goods had arisen. The deliberations in this behalf were recorded in the majority view as under: "26. The next question that arises for consideration is, where is the taxable event on the transfer of the right to use any goods. Article 366(29A)(d) empowers the State Legislature to enact law imposing sales tax on the transfer of the right to use goods. The various subclauses of clause (29A) of article 366 permit the imposition of tax thus: sub-clause (a) on transfer of property in goods; sub-clause (b) on transfer of property in goods; sub-clause (c) on delivery of goods; sub-clause (d) on transfer of the right to use goods; sub-clause (e) on supply of goods; and sub-clause ....
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....ds, right to use arises only on the transfer of such a right and unless there is transfer of right, the right to use does not arise. Therefore, it is the transfer which is sine qua non for the right to use any goods. If the goods are available, the transfer of the right to use takes place when the contract in respect thereof is executed. As soon as the contract is executed, the right is vested in the lessee. Thus, the situs of taxable event of such a tax would be the transfer which legally transfers the right to use goods. In other words, if the goods are available irrespective of the fact where the goods are located and a written contract is entered into between the parties, the taxable event on such a deemed sale would be the execution of the contract for the transfer of right to use goods. But in case of an oral or implied transfer of the right to use goods it may be effected by the delivery of the goods. 28.. No authority of this court has been shown on behalf of the respondents that there would be no completed transfer of right to use goods unless the goods are delivered. Thus, the delivery of goods cannot constitute a basis for levy of tax on the transfer of right t....
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....e of import or export. (b) The appropriate Legislature by creating legal fiction can fix situs of sale. In the absence of any such legal fiction the situs of sale in case of the transaction of transfer of right to use any goods would be the place where the property in goods passes, i.e., where the written agreement transferring the right to use is executed. (c) Where the goods are available for the transfer of right to use the taxable event on the transfer of right to use any goods is on the transfer which results in right to use and the situs of sale would be the place where the contract is executed and not where the goods are located for use. (d) In cases where goods are not in existence or where there is an oral or implied transfer of the right to use goods, such transactions may be effected by the delivery of the goods. In such cases, the taxable event would be on the delivery of goods. (e) The transaction of transfer of right to use goods cannot be termed as contract of bailment as it is deemed sale within the meaning of the legal fiction engrafted in clause (29A)(d) of article 366 of the Constitution wherein the location or delivery of goods to put to use is immat....
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....re to levy tax on the transaction embodied in sub-clause (d) of clause (29A) of article 366 of the Constitution? (2) What is the real import of sub-clause (d) of clause (29A) of article 366 and where does the taxable event on the transfer of right to use goods arise? (3) Whether the impugned legislations of the States are unconstitutional being in violation of clauses (1) to (3) of article 286 and clauses (1) and (3) of article 269 of the Constitution? (4) Whether the orders impugned in the appeals, the provisions challenged in writ petitions and transfer petitions are sustainable? " In the course of its consideration in respect of the transfer of the right to use goods, wherein the goods are not in existence at the time of execution of the contract, the minority expressed its determination in the following manner: "75. We shall now examine the contention that the transfer of right to use the goods is complete on executing the master lease only and nothing more need be done. In the factual matrix, in the case of the appellants, there is a master lease which is entered into between the appellants and the hirer for leasing of an equipment. The equipment, on that date, ....
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....hen the control of the equipment passes to the hirer that the transfer of right to use the goods will be complete. And it is at that stage that the liability of the appellants to pay sales tax will arise." Insofar as deemed sales covered by sub-clause (d) of article 366(29A) are concerned, the minority expressed the view, that the taxable event emerged from the ". . . transfer of right to use any goods. . ." Elucidating the issue of a deemed sales under sub-clause (d) of article 366(29A) of the Constitution of India, the minority concluded, that in case of a deemed sale of goods, whether specified or unspecified, under sub-clause (d), where more than one State is involved, the taxable event would arise at the place where the transfer is completed. It was further observed that in case where the contract for use of goods is oral, the taxable event would arise at the place of the delivery of the goods. In case of a contract in writing, the taxable event would be subject to the terms and conditions of the contract based on the intention of the parties, i.e., at the place where giving control of the goods was postulated. The minority clarified to observe, that the transfer will be co....
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....orded in paragraph 95 of the aforesaid judgment, though some observations recorded in paragraph 94 are also relevant for determination of the present controversy. Accordingly, paragraphs 94 and 95, expounding the conclusions of the minority view, are being reproduced hereunder (at pages 228 and 229 of 119 STC): "94. One aspect, however, remains to be considered and that arises in C.A. Nos. 6218 to 6223 of 1995 from the judgment of the Andhra Pradesh High Court reported in I.T.C. Classic Finance and Services v. Commissioner of Commercial Taxes [1995] 97 STC 330. The facts in that case are identical with the facts in 20th Century Finance Corporation Ltd. v. State of Maharashtra case [1989] 75 STC 217 (Bom) except for the fact that in cases before the High Court of Andhra Pradesh assessment of tax for the years 1989-90 to 1994-95 was in fact made under the provisions of the Andhra Pradesh General Sales Tax Act. The crucial question before the High Court was when on the basis of master lease, the contract to take the equipment on lease, entered into between the respondent and the hirer, the respondent placed an order with the supplier at Calcutta with instructions to deliver it to t....
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....ng of the equipment and the fact that at the instance of the hirer the appellant placed the order for purchase are immaterial. There is always a difference between purchasing any goods for the reason that hirer wanted to hire it and the hirer himself ordering purchase of the goods. In the instant case, the purchase of the equipment was by the respondent, the fact that the hirer wanted to hire the equipment might have prompted the respondent to place an order for its purchase but that fact is irrelevant in arriving at the conclusion whether the lease in respect of nonexistent unspecified equipment would be complete on the execution of the master lease. On this aspect, we have held that before an unspecified equipment reaches the hirer, the sale of the equipment by the respondent itself would not be complete. The deemed sale under sub-clause (d) is only a consequential transaction which follows the completion of the sale in favour of the respondent and cannot precede it." Despite the conclusions recorded in the paragraphs extracted herein above, certain vital observations were also recorded by the minority in paragraph 96. The same is, therefore, also being reproduced hereunder: ....
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....n by way of a mortgage, hypothecation, charge or pledge) for cash or deferred payment or other valuable consideration, and includes- (i) to (iii) . . . (iv) a 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.' 44. Clause (ii) of Explanation I to section 2(h) runs as under: '(ii) in a case falling under sub-clause (iv), if the goods are used by the lessee within the State during any period, notwithstanding that agreement for the lease has been entered into outside the State or that the goods have been delivered to the lessee outside the State.' 45.. Section 3F is a charging section which provides tax on transfer of right to use any goods and it is extracted as under: '3F. (1) Notwithstanding anything contained in section 3A or section 3AAA or section 3D but subject to the provisions of sections 14 and 15 of the Central Sales Tax Act, 1956, every dealer shall, for each assessment year, pay a tax on the net turnover of- (a) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment of o....
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....e the State or in respect of inter-State sales. As against the view expressed by the majority, the minority in its conclusion held, that the statutory provisions pertaining to the imposition of sales tax of all the concerned States (Maharashtra, Haryana, Andhra Pradesh, Uttar Pradesh and Rajasthan), were ultra vires the mandate of article 366(29A) of the Constitution of India. Relevant observations recorded by the minority in this behalf are being reproduced hereunder (at pages 225 and 226 of 119 STC): "88. Since the subject-matter of the appeal under consideration is the impugned provisions of the Maharashtra Act which are similar to the provisions of the Acts of other States, noted in the statement, we shall examine the Explanation to section 2(10) of the Maharashtra Act. The impugned Explanation says that for purposes of sub-clause (d) the transfer of the right to use any goods shall be deemed to have taken place in the State of Maharashtra, if the goods are in the State of Maharashtra at the time of their use irrespective of the place where the agreement for such transfer of the right to use such goods is made and whether the assent of the party is prior or subsequent to ....
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....s tax in respect of sale (or purchase of goods) in respect of an "outside sale", as also in respect of an "inter-State sale". A perusal of the motion bench order dated April 6, 2009 (extracted above) would reveal that the learned counsel for the revision petitioner also placed reliance on the decision rendered by a Division Bench of the Andhra Pradesh High Court in I.T.C. Classic Finance and Services v. Commissioner of Commercial Taxes [1995] 97 STC 330. Referring to the aforesaid judgment, learned counsel for the revision petitioner pointed out, that a controversy similar to the one in hand, came up for consideration before the High Court of Andhra Pradesh in I.T.C. Classic Finance and Services case [1995] 97 STC 330, wherein section 5E of the Andhra Pradesh General Sales Tax Act, 1957 was applied to levy tax on the assessee. The Division Bench, while dealing with the issues canvassed, inter alia, reasoned and held as under (at page 344 of STC): ". . . The placing of the purchase order by the assessee with the manufacturer was because of the lease agreement with the customer. Both are integrally connected; one cannot be split up from the other . . . Independent of the lea....
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....e Central Sales Tax Act, 1956. The movement of the goods from the State of Madras to Hyderabad is the result of the contract. It is immaterial in which State the property in the goods passed. What is material is that the inter-State movement must be the result of a covenant, express or implied, in the contract of sale or an incident of the contract. It is not necessary that the inter-State movement must be preceded by a sale. (English Electric Company of India Ltd. v. Deputy Commercial Tax Officer [1976] 38 STC 475 (SC), Balabhagas Hulaschand v. State of Orissa [1976] 37 STC 207 (SC) and Union of India v. K.G. Khosla and Co. Ltd. [1979] 43 STC 457 (SC)). If the movement of the goods is because of a clause in the contract or as an incident of contract, the same shall be deemed to have taken place in the course of inter-State trade or commerce. In the transaction illustratively discussed by the Commissioner, the transport of goods from one State to another was an incident of the contract between the assessee and the lessee. The very hiring itself is the incident of the contract of sale, which occasioned the inter-State movement of the goods from Madras to Andhra Pradesh. Without this....
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....also pointed out, that the factual matrix of the present controversy was exactly similar to the one dealt with in I.T.C. Classic Finance and Services case [1995] 97 STC 330 (AP), wherein the court arrived at the conclusion, that the purchase order, which occasioned the movement of the goods, was indeed the direct outcome of "the right to use" contract executed (just as is the case of the revision petitioner in the present controversy). It was submitted, that the lease agreement and the purchase order should be treated as a part and parcel of the same transaction, as the both are integrally connected. It was pointed out, that independent of the lease order executed with the ONGC/BHEL, the purchase order would not have been placed by the TCIL with the NDEL/ABSL. Consequently, for the same reasons as have been recorded in I.T.C. Classic Finance and Services case [1995] 97 STC 330 (AP), it was submitted, that the "right to use" agreement was nothing but an inter-State sale. And, therefore, the same cannot be subjected to the imposition of sales tax at the hands of the State Government. In order to give further credence to his aforesaid submission, based on the decision rendered by the ....
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....r giving on lease nine computers of a particular specification as enumerated in the agreement. They were not in existence on 11th January, 1995. The said nine computer machines were to be accompanied by accessories. The computers were to be manufactured later on. In pursuance of the said agreement dated January 11, 1995, M/s. Tata Elxsi Ltd. placed a purchase order on various manufacturers/suppliers of computers accessories in the month of February, 1995. One such purchase order was dated January 31, 1995 on NIT for supply/manufacture in accordance with specification enumerated in the lease agreement. At the time of the lease agreement the computers were not available. The goods were made to order. Before the assessing authority, the petitioner contended that since the goods were not in existence, the transfer of right to use did not take place at Haridwar where the agreement was executed. According to the petitioner, the placing of the purchase order by the petitioner with the manufacturers/suppliers was only because of the lease agreement between petitioner and Bharat Heavy Electricals Ltd., and, therefore, the purchase order was an integral part of the lease and, therefore, t....
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.... placed by the petitioner on the selling dealers of U.S.A. and U.K. In the circumstances, in all the above three cases it has been argued that the movement of the goods was in pursuance of the lease; that the purchase order was issued because of the lease; that the purchase order was a part of the lease transaction; that the lease transaction was a sale in the course of inter-State trade and commerce and, therefore, it cannot be subjected to tax within the State of Uttaranchal merely because lease was executed at Haridwar and consequently imposition of tax under section 3F of the U.P. Trade Tax Act, 1948 was illegal and bad in law." Having demonstrated that the facts in the present controversy were similar to the facts in Tata Elxsi Limited's case [2004] 134 STC 403 (Uttara), learned counsel for the revision petitioner, then, invited our attention to section 3 of the Central Sales Tax Act, 1956. Section 3 (aforesaid) is being reproduced hereunder: "3. When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce.-A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale o....
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....y be contemplated by the parties as an implied term of the contract. Even if the movement of the goods is not specified in the contract still if the movement of the goods takes place incidental to the contract then also in such cases the transaction would be an interState sale. (ii) The question as to whether a sale is an inter-State sale or intra-State sale does not depend upon the passing of the property in the goods. What is decisive is whether the sale causes the movement of goods from one State to other. (iii) Depending upon facts and circumstances of each case, even lease transaction could be construed as deemed sale in the course of inter-State trade and commerce. In the determination of inter-State character of a sale the situs is immaterial. Where a State, while defining the expression "sale", makes the situs relevant for the purposes of deciding a deemed sale it cannot touch inter-State sale. This is because any State law concerning "deemed sale" covered by article 366(29A)(a) to (f) of the Constitution must satisfy the requirement of article 286 as also the provisions of the Central Sales Tax Act, 1956. In fact, article 366(29A) explains the expression 'sale or....
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....sessing authority while remanding the matter. The aforesaid remark, contained in paragraph 6 of the judgment, is extracted hereunder (at page 413): ". . . In this connection the assessing authority has to ascertain whether the movement of the goods sold is contemplated by the terms of contract of sale or by a covenant or whether the movement of goods sold is incidental to the contract of sale. In the present case it is alleged that at the time of execution of lease dated January 11, 1995 and December 10, 1999, the goods were not in existence. The assessing authority is bound to give a finding on this allegation after examining the terms and conditions of the lease, rental order, invoice and accounts of the petitioner. If the assessing authority finds that computers were not in existence on the date of the lease then he has to consider also the status of the purchase order. He has to find out whether the purchase order was an integral part of lease or whether purchase order was a separate transaction vis-a-vis the lease. . ." Based on section 3 of the Central Sales Tax Act, 1956, as also the observations recorded by the Division Bench of this court (extracted herein above) in ....
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....ssued by the Division Bench in Tata Elxsi Limited's case [2004] 134 STC 403 (Uttara) (extracted hereinabove) so as to contend, that in the facts and circumstances of this case, the deemed sales contemplated by the contracts, authorising "right to use" to the ONGC/BHEL through the lease deeds executed by the TCIL, are liable to be treated as inter-State sale transactions. It is, therefore, prayed that the assessing authority, as also the appellate authorities, must be held to have erred in arriving at the conclusion, that sales tax was leviable on the rent received by the TCIL on the basis of the aforesaid "right to use" contracts. The third contention advanced by the learned counsel for the revision petitioner was, that in recording its conclusions, the authorities, while passing the impugned orders, had relied on the minority view expressed in 20th Century Finance Corpn. Ltd. v. State of Maharashtra [2000] 119 STC 182 (SC); [2000] 6 SCC 12. In this behalf, it was pointed out that there was divergence of views expressed by the Andhra Pradesh High Court in I.T.C. Classic Finance and Services v. Commissioner of Commercial Taxes [1995] 97 STC 330 and the one rendered by the Bom....
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....e is an inter-State sale is not correct. . ." The first two lines (reproduced hereinabove), though not pointed out by the learned counsel for the respondent, have been extracted by us so as to be able to record, that the observations relied upon by the learned counsel for the respondent, do not actually represent the view expressed by the court, but was the basis of the determination of the controversy by the first appellate authority. The conclusions drawn by the court in I.T.C. Classic Finance and Services case [1995] 97 STC 330 (AP) have been extracted by us in paragraphs 32 and 33 hereinabove. Based on the aforesaid conclusions, we are satisfied that the submission advanced by the learned counsel for the respondent, does not, in any manner whatsoever, repudiate the submission advanced at the hands of the learned counsel for the revision petitioner. Having examined the sole objection raised by the learned counsel for the respondent, we have considered the first contention advanced by the learned counsel for the revision petitioner. By a fiction of law, a contract authorising "right to use" goods, constitutes a deemed sale (article 366(29A)(d) of the Constitution of India). Su....
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....t available with the TCIL at the time of execution of the lease agreements. The purchase orders, placed by the TCIL with the NDEL/ABSL, arose out of the necessity to fulfil the obligation undertaken by the TCIL in executing the lease agreements with the ONGC/BHEL. The purchase orders are, therefore, the inevitable outcome of the lease agreements. In the absence of the lease agreements, executed between the TCIL and the ONGC/BHEL, there would have been no occasion for the TCIL to execute the purchase orders (which were placed with the NDEL/ABSL). In the absence of the purchase order, the lease agreement could not have been fulfilled. Facts brought to our notice by the learned counsel for the revision petitioner, would also be relevant for us to arrive at a conclusion, on way or the other, on the instant aspect of the matter. Although the purchase order was placed by the TCIL, the goods were to be delivered to the ONGC/BHEL. The representatives of the ONGC/BHEL were identified by the purchase orders as the consignees to receive the goods dispatched by the NDEL/ABSL. Furthermore, the ONGC/BHEL had also been given the authority to determine suitability of the goods purchased. It is the....
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....re entered into at Dehradun/Haridwar (in the State of Uttar Pradesh/Uttarakhand). The goods, which were leased in the nature of a deemed sale to the ONGC/ BHEL, were handed over to the ONGC/BHEL at Dehradun/Haridwar (in the State of Uttar Pradesh/Uttarakhand). The lessees, i.e., the ONGC/ BHEL, had also put the leased goods to effective use at Dehradun/Haridwar (in the State of Uttar Pradesh/Uttarakhand). Accordingly, it was pointed out, that since all components of the transactions, resulting in the deemed sale authorising the ONGC/BHEL the "right to use" goods, had taken place in the State of Uttar Pradesh/Uttarakhand, there could be no justification whatsoever, in treating the deemed sale transaction, contemplated through the lease agreements executed by the TCIL with the ONGC/ BHEL, as inter-State sales. It is, therefore, contended that the submission advanced by the learned counsel for the revision petitioner, based on section 3 of the Central Sales Tax Act, 1956, as also the judgment rendered by this court in Tata Elxsi Limited's case [2004] 134 STC 403 (Uttara), is liable to be rejected. We have given our thoughtful consideration to the second aspect of the contention....
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.... executed by the TCIL with the ONGC/BHEL, prompted the execution of the purchase orders between the TCIL and the NDEL/ABSL, which in turn, prompted the movement of goods from Mohali/Bangalore (in the States of Punjab/Karnataka respectively) to Dehradun/Haridwar (in the State of Uttar Pradesh/Uttarakhand) (our conclusions on this aspect of the matter, as well as, the basis thereof, have been recorded in the foregoing paragraph). In our view, therefore, the movement of goods from the States of Punjab/Karnataka to the State of Uttar Pradesh/Uttarakhand was initiated by the lease agreements executed by the TCIL with the ONGC/BHEL. Having so concluded, we have further held, that the ingredients of section 3 of the Central Sales Tax Act, 1956 must be deemed to have been satisfied by the deemed sales, contemplated through the lease agreements executed between the TCIL and the ONGC/BHEL. This determination has lead to the further conclusion, that the same constitute inter-State sales. The Central Government alone is however competent to levy sales tax on interState sales. That being so, the imposition of sales tax at the hands of the State of Uttar Pradesh on the revision petitioner, would....
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.... in paragraph 25 hereinabove). Insofar as the aforesaid conclusions (as were recorded as (a) and (d) in paragraph 35) are concerned, the minority view, in paragraph 58 of the judgment, also expressed its concurrence with the same. Thus viewed, we are of the view that insofar as the merits of the present controversy are concerned, wherein only the conclusions drawn at (a) and (d) in paragraph 35 in 20th Century Finance Corporation Ltd.'s case [2000] 119 STC 182 (SC); [2000] 6 SCC 12 are relevant, there is no divergence of opinion. As such, reference to the majority view or the minority view, for the adjudication of the present controversy, would be a debate in futility. But then, it is not possible to overlook the contention advanced by the learned counsel for the respondent to substantiate his submission. It is the pointed assertion of the learned counsel for the respondent, that if the observations recorded by the minority view in paragraphs 94 to 96 are taken into consideration, the impugned orders passed by the assessing authority, as also, the appellate orders, will have to be upheld. The submission advanced by the learned counsel for the respondent, in our view, is intertw....