TaxTMI 
TaxTMI 
2015 (7) TMI 1180
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....companies for advertising their products. The revision petitioner receives rental charges for letting out the hoardings. During the year 2007-2008, the revision petitioner received rental charges amounting to Rs. 36,70,983/-. 3. The Assessing Officer held that the revision petitioner is liable to pay tax under the Kerala Value Added Tax Act, 2003 (hereinafter 'the Act' for short), on rental charges received during the aforesaid return period. In arriving at the conclusion, the Assessing Officer placed reliance on the decision of the West Bengal Taxation Tribunal in 'Selvel Advertising Private Ltd. and Another v. Commercial Tax Officer' [(1993) 89 STC 1] and BSNL v. Union of India reported in (2006) 14 KTR 115 = [(2006) 3 SCC 1]. Therefore, after making addition of 10% for probable omission and suppression to the rental amount received during the year, the total taxable turnover was fixed at Rs. 40,38,081/- and the turnover was assessed at the rate of 4% as provided under the Act. 4. Aggrieved, the assessee preferred appeal before the First Appellate Authority, which affirmed the findings of the Assessing Officer and held that the revision petitioner was liable....
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....vision petitioner contended that in order to attract liability for tax under Sec.6 (1)(c) of the Act, the paramount consideration should be whether there is 'goods' as defined under the Act available for transferring the right to use. He contended that so far as the structures involved in this case are concerned, the same are immovable properties attached to earth and therefore cannot be termed as 'goods' as defined under the Act. Inviting our attention to Annexure-D work order issued by one company to the revision petitioner, he contended that the effective control of the hoardings still vested with the revision petitioner, the same being an immovable property and therefore there is no transfer of 'goods' to the lessee. It is his further contention that in order to make a product taxable under 6(1)(c) of the Act, same should be goods, which is capable of being handed over or delivered. Further during the course of dismantling the structure, damage should not be caused to the said structure and it should be easily removable from one location to another, contended the revision petitioner. Therefore, according to the counsel, considering the nature of the inst....
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...., nor is it practicable to shift them frequently. Counsel for the appellant submitted before us that once they are erected and assembled they continue to operate from where they are positioned till such time as they are worn out or discarded. According to him they really become a component of the plant and machinery because without their aid a blast furnace cannot operate. It is not necessary for us to express any opinion as to whether the mudguns and the drilling machines are really a component of the plant and machinery of the steel plant, but we are satisfied that having regard to the manner in which these machines are erected and installed upon concrete structures, they do not answer the description of "goods" within the meaning of the term in the Excise Act." 10. According to us, the facts of the case will reveal that the machinery as such was erected to a platform by bringing a part of the machinery from outside and rest of the parts were erected within the factory premises making it a very cumbersome procedure which made the machinery itself attached to earth and it was in that factual situation, the Hon'ble Apex Court has held that the machinery is attached to earth ....
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....ral Clauses Act 2) Registration Act and 3) Transfer of Property Act and the Court has held that the first two are not of much assistance, for they merely say that 'immovable property includes things attached to the earth, or permanently fastened to anything attached to earth. These decisions do not give any guidance as to what is meant by 'attached' or 'permanently fastened to earth'. Section 3 of the third enactment describes what is meant by 'attached to the earth', to wit, (a) rooted in the earth as in the case of trees and shrubs; (b) imbedded in the earth, as in the case of walls or buildings; or (c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached. Broadly speaking, the degree, manner, extent and strength of the attachment of the chattel to the earth or building, are the main features to be regarded. Having considered so, in paragraph 3, it was held as follows: "x x x x x x x x x x For a chattel to become part of immovable property and to be regarded as such property, we should think, it must become attached to the immovable property as permanently as a building or a tree is attac....
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....gine, as in this case, stands on a different footing and from the very nature of this type of machinery. x x x x x x x x x x." Again in the decision of the Calcutta High Court supra, it was held as follows in paragraphs 27 and 30: "27. Now the task is as to whether on the basis of materials available, the case of the plaintiff has been proved or for that matter, the learned trial Judge passed a decree on the basis of acceptable material or not. Before we dilate this question, we feel it expedient to examine what is the requirement for passing a decree under clause (p) of Section 108 of the said Act. We think that in order to pass a decree under the aforesaid provision of the Act, the Court must see that the plaintiff pleads first that without the lessor's consent (here landlady's consent), the defendant erected any structure of permanent character. We notice that in paragraph 4 of the plaint, such averment is there. When there is a denial followed by framing of issues, it has to be proved. The plaintiff landlord has to prove with cogent evidence that there has been an erection of any structure of permanent nature, on the property. Whether it is lawful or wrongfu....
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....nsel for the petitioner has brought to our attention the judgment in 'State of Tamilnadu v. TVL Jayalakshmi Enterprises' [T.C. (Review) No.430/2006 dated 7.7.2011] and contended that in the said case also the issue related to the leasing out of hoardings for the purpose of advertisement and that the Madras High Court has held that since the hoardings erected on the concrete foundation, not capable of removal without causing any damage to the structure, is part of the immovable property and ceased to be goods for the purpose of attracting levy of tax under Sec.3A of the Act. But, according to us, the Madras High Court has considered the said case on appreciation of the covenants contained in the agreement between the parties and thereupon found that the entire responsibilities were carried out by the assessee and that therefore there is no transfer of right to use goods. 16. Now we shall proceed to consider whether the revision petitioner had effective control over the advertisement hoardings let out to the lessee, in order to ascertain whether there is transfer of right to use/for any purpose. The learned counsel for the revision petitioner contended that the effective c....
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....39;ble Apex Court in 'Imagic Creative (P) Ltd. v. Commissioner of Commercial Taxes and Others' [(2008) 2 SCC 614] which held in paragraphs 27-31 as follows: "27. What, however, did not fall for consideration in any of the aforementioned decisions is the concept of works contract involving both service as also supply of goods constituting a sale. Both, in Tata Consultancy as also in Associated Cement Companies what was in issue was the value of the goods and only for the said purpose, this Court went by the definition thereof both under the Customs Act as also the Sales Tax Act to hold that the same must have the attributes of its utility, capability of being bought and sold and capability of being transmitted, transferred, delivered, stored and possessed. As a software was found to be having the said attributes, they were held to be goods. 28. We have, however, a different problem at hand. The appellant admittedly is a service provider. When it provides for service, it is assessable to a tax known as service tax. Such tax is leviable by reason of a parliamentary statute. In the matter of interpretation of a taxing statute, as also other statutes where the applicabilit....
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.... the Constitution of India to Article 366 of the Constitution, sub-article 29A was added authorizing levy of tax on supply of any goods as part of service and held that even though there is sale of goods in supply of food and beverages, sales tax is leviable on the same by virtue of Sec.2(29) of the K.G.S.T Act introduced after the Constitutional amendment, it is essentially a contract of service. Therefore, payment of sales tax treating the transactions partly as sale of goods does not exonerate the petitioner from liability for service tax under the Central Legislation, since service of food and beverages by the caterers to aircraft amounts to sale of goods as well as rendering of service. 20. In the second cited decision also, a Division Bench of this Court was considering the question whether the Parliament is competent to authorise levy of service tax on banking and other financial services including equipments leasing and hire purchase. It was concluded that Article 366 (29A) empowers the authorities to impose levy of tax on deemed sale and purchase of goods and the same is not mutually exclusive with the liability for Service Tax. Therefore, according to us, the above two....
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....t, the product is 'goods' as defined under the Act, there is no manner of difficulty in identifying the right to use, because it is nothing but transfer of right to use of hoarding for a definite period under a defined relationship. In the decision cited supra, the Hon'ble Apex Court has held that the service tax and Karnataka Value Added Tax are mutually exclusive, taking into account the peculiar facts involved in the said case. 22. Again, the learned counsel has brought to our attention the order of the West Bengal Taxation Tribunal in 'Selvel Advertising Private Ltd. case' (supra) reported in [(1993) 89 STC 1] and drawn our attention to the dissenting order of the Judicial Member at paragraph 37, which reads thus: "37. L.N. Ray (Judicial Member).--I had the advantage of going through the judgments prepared by the Honourable Chairman and the Honourable Technical member. With respect, I have not been able to agree with the reasons given in the judgment of the Honourable Chairman. Though I find that my views in principle are in concurrence with those of the Honourable Technical Member, I am unable to agree with the conclusion reached by him to the e....
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.... lease, the revision petitioner is liable to return the vinyl fixture displayed on the hoarding in re-useful condition. It was further found that once the printed vinyl is fixed on the hoarding, the revision petitioner does not have any control over the hoardings and the effective control vests with the lessee till the expiry of the period for which the hoardings are to be taken on rent. So also, all the stipulations contained thereunder imposes strict liability on the assessee during the period of transfer and therefore the principles laid down by the Hon'ble Apex Court taking into account Article 366 (29A) of the Constitution clearly applies to the facts and circumstances of this case and in order to evaluate the said principle against the facts of this case, paragraph 98 is extracted hereunder: 98. To constitute a transaction for the transfer of the right to use the goods, the transaction must have the following attributes: (a) there must be goods available for delivery; (b) there must be a consensus ad idem as to the identity of the goods; (c) the transferee should have a legal right to use the goods-consequently all legal consequences of such use including any ....
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....ble to pay tax. 27. The learned counsel has also brought to our notice the judgment reported in 'Malabar Gold Pvt. Ltd. v. Commissioner of Central Excise and Customs & Others' [2013 (3) ECS (6) (Ker-HC]=[2013 (32) STR 3 Ker.] In the said judgment, a Division Bench of this Court was considering the question of transfer consequent to a franchisee agreement, by which the franchisee is granted representational right to sell or manufacture goods or to provide service or to undertake any process specified by the franchiser, whether or not a trade mark, service mark, trade name or logo or any such symbol, as the case may be. In the said case, after scrutinizing the entire covenants contained under the franchisee agreement, it was held that there are no goods deliverable at any stage which is the test laid down by the Apex Court in paragraphs 78 and 79 of the B.S.N.L's case (supra) and therefore there was no transfer of right to user at all. It was also found that during the period in question, the franchisee's right was not to the exclusion of the franchiser. It was also found that even during the period of the transaction, the franchiser can again transfer the franchis....