TaxTMI 
TaxTMI 
2011 (4) TMI 1238
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....e case of the petitioner is that it took some machinery on lease at Delhi which was treated as part of turnover on the ground that the said machinery was in the State of Haryana at time of its use and thus could be subjected to tax in the State of Haryana under section 2(j)(iv) read with note 4 of the Act. The finding recorded by the revisional authority to this effect is as under: "Regarding illegality mentioned at serial No. 2 the dealer/counsel has submitted that the leased machinery were taken on hire from a company outside the State of Haryana and the transactions being inter-State could not be taken as the purchases made in the State of Haryana. There is no force in the contention of the dealer in this rega....
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....bsp; Note 4. A purchase falling under sub-clause (iv) shall be deemed to have taken place within the State if the goods in respect of which right to use has been transferred are within the State at the time of their use." 4. The contention raised in the writ petition is that the impugned provisions to the extent it seeks to tax transaction of purchase taking place outside the State is invalid. By merely incorporating a deeming fiction to include a purchase taking place outside the State as having taken place in the State if the goods are in the State at the time of use, the State Legislature cannot extend its legislative competence with reference to entry 54 of List II of the Seventh Schedule. 5. In the reply filed, the stand taken by....
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....d by the judgment of the honourable Supreme Court in 20th Century Finance Corpn. Ltd. [2000] 119 STC 182 (SC) wherein it was observed (pages 201 and 202 in 119 STC): "We, therefore, find that the location or delivery of goods within the State cannot be made a basis for levy of tax on sales of goods. Under general law, merely because the goods are located or delivery of which has been effected for use within the State would not be the situs of deemed sale for levy of tax if the transfer or right to use has taken place in another State. Therefore, the contention, on behalf of the respondents that there would be no completed transfer of right to use goods till the goods are delivered is to prevail, then the responde....
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....er, delivery and supply, as applicable, used in the various sub-clauses. Thus, the transfer of goods will be a deemed sale in the cases of sub-clauses (a) and (b), the delivery of goods will be a deemed sale in case of sub-clause (c), the supply of goods and services respectively will be deemed sales in the cases of sub-clauses (e) and (f) and the transfer of the right to use any goods will be a deemed sale in the case of sub-clause (d). Clause (29A) cannot, in our view, be read as implying that the tax under subclause (d) is to be imposed not on the transfer of the right to use goods but on the delivery of the goods for use. Nor, in our view, can a transfer of the right to use goods in sub-clause (d) of clause (29A) be equated with the thi....