TaxTMI 
TaxTMI 
2016 (4) TMI 405
X X X X Extracts X X X X
X X X X Extracts X X X X
....the year (for Rs. 98,21,612), 2003-04 (for Rs. 1,33,96,344) and 2005-06 (for Rs. 1,01,53,180). 2. TPDL is a registered dealer under the Delhi Sales Tax Act, 1975 ('DST Act') [now under the Delhi Value Added Tax Act, 2004] as well as the CST Act. It took some equipment viz., , an LT Load Management System, on lease basis from M/s. RMS Automation Systems Limited, Nasik ('RASL'), Respondent No. 2 herein under a lease agreement dated 25th May 2000. The said lease agreement was originally entered into between RASL [as Lessor] and the Delhi Vidyut Board ('DVB") [Lessee], the predecessor of the Appellant. After the restructuring of DVB, with the Appellant having succeeded the DVB, the latter's rights and liabilities under the aforementioned lease agreement vested in the Appellant. It is stated that in terms of the above agreement, the equipment in question was sent by RASL, the Lessor in Maharashtra to the Appellant, the Lessee in Delhi. 3. By the 46th Constitutional Amendment, Article 366 of the Constitution was amended whereby clause (29A) was inserted to provide that transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tting this appeal on 22nd October 2008, the following questions of law were framed for consideration: (1) Whether the AT was correct in law in holding that the transfer of right to use equipment under the impugned transaction was not an interstate sale even though the goods moved from Maharashtra to Delhi pursuant to the lease agreement dated 25th May 2000? (2) Whether the only pre-condition for issuance of C-Form is that the buyer is a registered dealer and the goods are mentioned in his registration certificate as required for use in electricity generation and distribution? 8. To begin with a reference may be made to the definition of expression 'tax on the sale or purchase of goods' under Article 366 (29-A) which was inserted by the 46th Amendment of the Constitution, published in the Official Gazette on 2nd February 1983. The relevant portion reads as under: "29A "tax on the sale or purchase of goods" includes- (a) to (b)...... (d) a tax on the 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 (e)...... (f)...... and such transfer, delivery or supply of any goods shall be deemed t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the course of such movement the goods pass through the territory of any other State." 13. Section 8 of the CST Act set outs the rates of tax on sales in the course of inter-State trade or commerce. Section 9 of the CST Act talks of levy and collection of tax and penalties. Section 9 (1) which is the charging section as far as inter-State sales is concerned, reads as under: "9. Levy and Collection of Tax and Penalties.-(1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce, whether such sales fall within clause (a) or clause (b) of Section 3, shall be levied by the Government of India and the tax so levied shall be collected by the Government in accordance with the provisions of sub-section (2), in the State from which the movement of the goods commenced Provided that, in the case of sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods and being also a sale which does not fall within sub-section (2) of Section 6, the tax shall be levied not collected--- (a) where such subsequent sale has been effected by a registered deale....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... within its State irrespective of the fact that (a) the contract of transfer of right to use has been executed outside the State; (b) sale had taken place in the course of inter-State trade; and (c) sales are in the course of export or import into Indian territory. The case of the dealers was that the State Legislatures could not frame their respective laws so "as to convert an outside sale or a sale in the course of import or a sale in the course of inter-State trade or commerce into a sale inside the State." 15.2 After referring to the case law, then the Constitution Bench of the Supreme Court in 20th Century Finance Corporation Limited v. State of Maharashtra (supra) held as under: "20. ......... the situs of the sale or purchase is wholly immaterial as regards the inter-State trade or commerce, as held in Bengali Immunity Co. Ltd v. State of Bihar AIR 1955 SC 661. Further, the State legislature cannot by law, treat sales outside the State and sales in the course of import as 'sales within the State' by fixing the situs of sales within its State in the definition of sale, as it is within the exclusive domain of the appropriate legislature, i.e. Parliament to fix the lo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the contract is executed." 15.6 Of the conclusions arrived at by the Constitution Bench in 20th Century Finance Corporation Limited v. State of Maharashtra (supra), those in para 35 (a) to (e), which are relevant for the purposes read as under: "35. As a result of the aforesaid discussion our conclusions are these: (a) The State in exercise of power under Entry 54 of List II read with Article 366 (29A) (d) are not competent to levy sales tax on the transfer of right to use goods, which is a deemed sale, if such sale takes place outside the State or is a sale in the course of inter-State trade or commerce or is a sale in the course 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ore, answers description of the inter-State trade under Section 3 (a) of the CST Act. 17. Learned counsel for the Respondents sought to place reliance on the decision of the Division Bench of the Andhra Pradesh High Court in G.S. Lamba and Sons v. State of Andhra Pradesh 2015 (324) ELT 316 (AP) which in turn referred to 20th Century Finance Corporation Limited v. State of Maharashtra (supra) and the decision in Bharat Sanchar Nigam Limited v. Union of India (supra). In the first place, the Court notes that the facts of the case in G.S. Lamba and Sons v. State of Andhra Pradesh (supra) did not involve an inter-state sale at all. Para 3 of the said judgment states that the contracts in question were for providing transportation service for ready-mix concrete by hiring specially designed transit mixers. These transit mixers were "never transferred and the effective control over running and using of these vehicles, as well as the disciplinary control over the drivers, always remained with the Petitioners." Therefore, the decision in G.S. Lamba and Sons v. State of Andhra Pradesh (supra) is distinguishable on facts. Even the decision in Bharat Sanchar Nigam Limited v. Union of India (s....