TaxTMI 
TaxTMI 
2017 (3) TMI 1708
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....ion. Hence he has posed the questions during course of hearing with written contention and has amended the application and put specific questions for determination. On the background, fact and circumstances of case the questions are framed as under. A) The Supply of Printed Materials:- He has requested to decide whether transaction is related to works contract or sale? What is the rate of tax on printed flex/vinyl advertising material supplied to customers? B) Mounting charges:- Whether mounting charges which are charged separately forms the part of sale price? C) Hoardings:- Whether activity of leasing out the hoarding to the customer for specific period for remuneration is 'a sale' within the meaning of Section 2(24) of the Act? D) If the above transaction amounts to sale, then what is the sale price? 2. Facts of the case:- The applicant has informed that investigation officer visited to the place of business. The learned officer has expressed the view that the flex printed material will be liable to tax at the rate of 12.5%, the mounting charges received is part of sale price and it is also expressed that the hoarding charges will be liable to VAT as tr....
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....[1990] 77 STC 182, and held that there is no transfer of right to use and it is only for the hire charges, the same cannot be taxed. 2.6. In view of these facts, circumstances and issues raised by applicant the questions arise. The applicant has submitted details along with written submission. The arguments and contention are discussed in order with respect to each question. We have gone through facts, circumstances of case and legal provisions related to tax. 2.7 The applicant has requested to give benefit of prospective effect to this order under section 55(9) of MVAT ACT, 2002. On analysis of fact, circumstances of case and legal provisions, we found following issues have cropped up and needs to be decided on the said subject matter. 3. The issues involved in the present case:- We have gone through the facts and circumstances of case, documents submitted and contention put forth by applicant. In view of these circumstances, the following question arises, as to [a] Whether the supply of printing of vinyl/flex banner is sale or works contract under MVAT ACT, 2002 ? [b] What is the rate of tax on printed vinyl I flex banner? [c] Whether the mounting charg....
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.... respect of any sale of goods made during a given period after deducting the amount of - (a) sale price, if any, refunded by the seller, to a purchaser, in respect of any goods purchased and returned by the purchaser within the prescribed period; and (b) deposit, if any, refunded in the prescribed period, by the seller to a purchaser in respect of any goods sold by the dealer. With this background, the issues cropped out/raised by applicant are considered separately for determination of specific questions. 5. Whether the supply of printed vinyl I flex banner is sale or works contract under MVAT ACT.2002 ? 5.1 Mr. C.B. Thakar, Advocate along with Mr. Niket Mehta, CEO attended and informed that the applicant has received advertisement text, design from its customer along with purchase order. The advertisement texts, designs are as per specification of customers and cannot be used by any other party. Even, it is not useful to applicant. Pursuant to same, applicant puts order to its supplier, who has done printing work. The applicant has submitted the invoice and stated that he is charging for flex printing. He affirmed that the contract entered into is service contract ....
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....ls and sold them to the customers and raised the sale invoice accordingly. The customers, while placing orders did not supply papers, ink etc., for printing. The applicant has received order for printing of content for advertisement on flex or vinyl. This is very typical nature of transaction in which goods (printed material) belong to the customers, when they came into existence. The Hon. Apex Court in the case of Sarvodaya Printing Press held that such type of transaction is works contract. Similarly in DDQ order, Hon. CST in case of GMS Technology dated 2.4.2002 held that the transaction is of works contract. We are also of the same opinion. The goods which are incorporated while executing the works contract of printing are to be held taxable at prescribed rate of tax as per provision of law. 6. The rate of tax on Vinyl / flex printed material used for Advertisement:- 6.1 Mr. C. B. Thakar, Advocate attended and stated that the applicant has charged VAT under schedule entry C-76 at rate of 5.5%, being printed materials. The printed material can be on any base material, like paper, vinyl/flex or any other matter on which printing can be done. There is no restriction in the S....
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....g work is done from outside vendor. The vendor charges service charges with service tax. Since we are not doing the activity ourselves, we are not purchasing or using any material by ourselves. To our knowledge the outside vendor uses some negligible material like thin steel wires to tide the printed material. Even such materials also do not get transferred to customers as no control of site is given to customer. The basic charge is for labour for fitting the printed material in the hoarding at given height. Thus, this is pure labour charges and not liable under VAT. He further stated that If, at all the transaction is held to be taxable, still mounting charges being charged separately, cannot amount to sale price. There is no involvement of any goods. These charges will be post transfer of right to use goods and purely services in nature. Therefore, no tax is attracted on the same under MVAT Act. 7.2 We have perused the submission and written contention. The applicant stated that the activity of mounting is carried out from third agency. The applicant has not given the details as to whether any material is used for mounting and thus gets transferred during the execution of work....
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....ger board. This adhesive technique works well for fiber, RC, and digital prints, regardless of whether the photograph is to be matted or framed or to stand alone with the backing. 7.4 The customer wants displaying their hoarding at specified points, negotiates and enters into contracts with the applicant for display advertisement on the hoarding. The customer pays for sale of printed vinyl/flex banners and mounting charges to mounts them on specifically selected hoarding. It is necessary to see whether the mounting charges are collected before delivery of goods to customers or otherwise. To decide whether it forms the part of sale price, as provided in the section 2(25) of MVAT ACT, 2002. The applicant has received order for printing of advertisements and put them on selected hoarding for specific time period. The applicant charges separately for these activities in single invoice. The contract entered is completed when the advertising material is placed on specific hoarding. The applicant takes photograph of completed task and sends to the customer to realise the payment. The sale is completed when applicant puts the material on hoarding as per direction given by customer. The ....
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.... STJ 45), (2010)(45 TLD 96)(MP) viii) Orion International Support Services Pvt. Ltd. INDORE, V. Commissioner Commercial Tax (2015)(26 STJ 546), (2015) (54 TLD 296)(MP). 7.7 In view of above discussion, it is safely concluded that the Mounting charges received by applicant form the part of sale price and liable to tax under MVAT ACT, 2002. 8. Whether leasing out the hoarding to the customer for specific period for remuneration is 'a sale' within the meaning of Section 2(24) of the Act? 8.1 Mr. C.B. Thakar, Advocate attended and affirmed that the applicant has hired different types of hoardings from various vendors and public authorities like Railways & BMC etc through tenders. The hoarding structures are pre-existing or sometimes erected by the applicant. It was stated that such hoardings are created on embedding pillars in the land which are fixed and hence the applicant claimed the hoardings are immovable property. The applicant has informed that he is dealing in different types of hoardings. The applicant has stated that the right to use has never transferred, no possession is given and being immovable property VAT cannot be levied. He claimed that they are no....
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....nts. (c) He has not produced details of structures of various types of hoardings, their purchase orders, terms of contract etc. He has made reference to Railway sites only (specimen letter of Acceptance issued by Railway dt. 13.4.2015). He has tried to gather information from some clauses of Terms/Conditions and put them as indicative restrictions in tabular format as under. Terms Sr. No. Indicative restriction (1) Only permission (5) Service Tax and other taxes to be charged by Railway. (6) Prior approval about text/design of advertisement. (10) Right of Railway to direct changes in advertisement. (12) Right to disallow advertisement display. (13) First Right of Railway for its own use. (17) Termination of contract, in case of non performance or unsatisfactory performance of conditions. (23) Fine for misconduct. (24) Maintenance of hoarding responsibility of applicant. (d) He has stated that from over all reading of tender conditions, it will be appreciated that there is no transfer of right of hoarding to applicant by Railway. Correspondingly, applicant also cannot have that right and cannot effect transfer of righ....
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....ol given to party no Lease transaction takes place. c) He has referred to Hon Apex Court judgment in the case of Bharat Sanchar Nigam Ltd. (145 STC 91)(SC) and argued that the issue in this case was about levy of lease tax on services provided by Telephone Companies. The Hon. Supreme Court held that no such tax is applicable as the transaction pertains to service. He stated that one of the learned judges of the Bench has observed in "Para 98" about taxability for lease transaction. The submission is considered and discussed in later part of order. d) Mr. C.B. Thakar, Advocate has also placed reliance on judgment in case of Tim Delhi Airport Advertising Pvt. Ltd. vs. Special Commissioner-II, Department of Trade & Taxes and ors. (W.P.(C)1625/2014 & CM 3374/2014 DT. 2.5.2016 and stated that the display of advertisements on hoardings. High Court held that control of hoarding is not given to party and hence not liable to VAT. e) Mr. C.B. Thakar, Advocate has placed reliance on Hon. Bombay High Court Judgment in case of Mahyco Monsanto Biotech (India) Pvt. Ltd. (W.P. No. 9175 of 2015) & Subway Systems India Pvt. Ltd. (W.P. No. 497 of 2015) (Bom) and stated that the permission to....
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...., unless letter for renewal is issued by this office. 2. The boards/Glow signs should be clamped properly, displays should be arranged in proper line and level and no binding wires should be used. There should not be any cluttering up of concourse or station platforms with haphazard display of advertisements and should not obstruct free passenger movements. 3. The licensee, Station Master & SSE (W/A) BA may please ensure that the size and area of the displayed Boards/Glow signs should not exceed as per details mentioned above. 4. The Licensee will have to apply to the Railway for electricity connections wherever desired by them and they will pay connection charges, security deposits, augmentation charges and other charges including electricity bill separately for electricity connections to various publicity points immediately on receipt of Letter of Acceptance. 5. The licensee shall also be liable to pay Service Tax as applicable from time to time. Also the licensee shall pay directly all Cess/Taxes/assessments and any other charges/levies whatever payable or hereafter becomes payable to the Governments, Municipal Corporations and Local Bodies in respect of installation....
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....ilway premises. 16. In case of loss, damage, theft, removal of display, the same should be immediately got certified from the Station authorities and be brought to the notice of Railway Administration. 17. The Railway Administration reserves the right to terminate the contract in case of non-performance of unsatisfactory performance as per conditions of the contract or the Railway Administration does not want to continue the contract due to changes in the policy or on the administrative grounds. 18. Licensee shall comply with and abide by the judgments passed time to time by Hon. Supreme Court / High Courts or any other judiciary in the country. Instructions issued by Railway Administration for complying with such judgments have to be followed by the licensee. The Licensee shall be solely responsible for noncompliance of the directions of Hon'ble Court after due information of the same by Railway Administration. 19. If the Licensee desires to get the agreement registered as per law of the land, he shall be solely responsible for registration of the agreement. All costs, charges and expenses of and incidental to engrossing and completing the agreement in duplicate in....
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....al expectation clause which is provided for best and peaceful use of asset of lesser. The certain clauses are meant to follow the rules and regulation. It makes no difference as everyone has to fallow them. We do not find them as restrictions and interpret them by stretching to consider them as restrictions. The applicant or representatives have been permitted to display advertisement as per the details of hoardings and they shall be allowed to carry / change/ repair work/ display work and to take photographs of the site allotted at the respective station only till expiry date by the concerned Railway Authorities. Thus, only time limit provided till end of period as provided in agreement. The right to use for four hoardings as provided in agreement is vested to applicant. The agreement also specifies that the applicant, representative/ customer can use the hoarding for specific period. The agreement also provides that licensee shall pay directly all Cess/Taxes/assessments and any other charges/levies whatever payable or hereafter becomes payable to the Governments, Municipal Corporations and Local Bodies in respect of installation / display of advertisements and shall abide by t....
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....f MVAT ACT which is already reproduced in earlier para. In short the "goods" means every kind of moveable property and not being further excluded from said definition. In this context, it is necessary to decide whether the hoarding is goods or otherwise. 8.7 The constitutional background and Hon. Supreme Court Rulings:-Amendment to article 366 of constitution:- In article 366 of the Constitution, after clause (29), the following clause shall be inserted, namely:- (29A) "tax on the sale or purchase of goods" includes-(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 consideration. The Transfer of the right to use goods has come under consideration before different Courts of the country. These decided cases throw light on the controversy in hand. We shall now proceed to look at some of them. Three proposals were mooted by the Law Commission in its report of 1974 to give the power to the State to tax goods included in works contracts, hire purchase transaction and transfer of controlled commodities by virtue of statutory orders. The Law Commission noted that there ....
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....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 (f) on supply of services. The words and such transfer, delivery or supply, in the latter portion of clause (29A), therefore, refer to the words transfer, 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 subclauses (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 sub-clause (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 third sort of bailment referred to in Bailment by Palmer, 1979 edition, page 88. The third sort referred to there is when goods are left with the bai....
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....ort of the Law Commission, it has been observed that "if a hire-purchase transaction results in a sale, sales-tax is undoubtedly leviable by the States. No doubt, it is difficult to determine the "sale price" for the purpose of the sales tax law but this has no bearing on the question of legislative competence" . 8.11 To recapitulate the discussions done so far, the Constitution Bench of the apex Court in 20th Century Finance Corporation Ltd. [2000] 119 STC 182 : [2000] 6 SCC 12, while dwelling on the controversy as regards the competence of the State Legislature to levy sales tax under Clause (29-A)(d) of Article 366 of the Constitution of India on the transfer of right to use any goods held that on a plain construction of Sub-clause (d) of Clause (29A), the taxable event is the transfer of right to use the goods regardless of when or whether the same are delivered for use. lt held that the existence of the goods was essential so that they may be used and that a contract in respect thereof is executed. It is ruled that Article 366(29A)(d) envisages levy of tax on the transfer of the right to use goods and not on the use thereof.The apex Court was categorical in declaring that t....
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....he case of Aggarwal Brothers v. State of Haryana and another (1999) 9 SCC 182) a Division Bench of this Court has held that the provision under Section 2(l) (iv) of Haryana General Sales Tax Act, 1973 (which was similar to Section 2(g)(iv) of this Act) expressly spoke of "transfer of the right to use goods' and not 'transfer of goods'. In that matter it was argued on behalf of the assessee that in the case of a deemed sale within the meaning of Section 2(l) (iv) there must be a legal transfer of goods. This argument was rejected by this Court stating that the levy of tax was not on transfer of the goods itself but the levy was on the transfer of the right to use such goods for consideration. In our view, the judgment of this Court in Aggarwal case (supra) would squarely apply to the present case. [c] The constitutional Bench of the apex Court in 20th Century Finance Ltd. 2000] (119 STC 182) (SC) , while dwelling on the controversy as regards the competence of the State Legislature to levy sales tax under clause (29A)(d) of Article 366 of the constitution of India on the transfer of right to use any goods held that on a plain construction of sub-clause (d) of claus....
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.... consumer to make such use ; it can be said that the right to use is exclusively transferred to the consumer. As per condition 22.1.1 read with condition 12, it is the Board which installs the meters and collects rents. The rent collected is certainly taxable under section 5E of the Act." [f] Hon. Bombay High Court Judgment in case of Mahyco Monsanto Biotech (India) Pvt. Ltd. (W.P. No.9175 of 2015) & Subway Systems India Pvt. Ltd. (W.P.No.497 of 2015) (Bom) has endorsed the view taken by Andhra Pradesh High Court in G.S. Lamba & Sons v State of Andhra Pradesh (2011) 43 VST 323 regarding effective control and expressed that- "44. Mr. Sonpal's reliance on the decision of the Andhra Pradesh High Court in G.S. Lamba & Sons v State of Andhra Pradesh (2011) 43 VST 323. is, however, well-founded. The facts of that case are that one G manufactured ready mix concrete to its customers' specifications. Dealers entered into contracts with G to provide a transportation service for ready-made concrete by hiring transit mixers. G was given access to a dedicated fleet of such mixers, coloured and sized to its specifications, and could decide the delivery schedule of these mixers. The....
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....supports Mr. Sonpal in his argument that the sub-licensing actually amounts to passage of effective control as well of the Bollgard Technology embedded in the seeds." [g] The Apex Court in the matter of Century Finance Corporation Ltd. v. State of Maharashtra [2000] 119 STC 182: (2000) 6 SCC 12 has observed that "-----------there the right to use goods accrues only on account of the transfer of right. In other words, 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. It is amply clear that even if the goods become available for delivery at a later date, this event or the factum of delivery by itself would not be determinative of whether the right to use stands transferred or not. Therefore, the delivery per se cannot determine exigibility to tax under VAT/ Sales Tax. What is needed for such an exigency to arise is the actual transfer of right to use." [h]The Hon. Supreme Court decision in the case of State of Orissa V/s Asiatic Gases Ltd (2007)(007 VST 531) is referred to wherein the Hon. Court has held that: ....
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....wever, the Hon. Supreme Court decision (Three Judges bench) in the case of State Of Karnataka Etc. v/s M/S. Pro Lab &Ors (2015) (78 VST 451) is referred to. The Hon. Apex Court has rejected test of dominant intention by relying on the Para 64 to 70 of Hon. Apex Court in the case of Larsen and Toubro (LT) and held thus: "20 In M/s Larsen and Toubro, the Court, after extensive and elaborate discussion, once again specifically negated the argument predicated on dominant intention test having regard to the statement of law delineated in ACC Ltd. and Bharat Sanchar Nigam Ltd. cases. The reading of following passages from the said judgment is indicative of providing complete answer to the arguments of the respondent assessee herein".-----Then Para 64 to 70 of said judgment (LT) were reproduced. [k] Hon. Andhra Pradesh High Court in Ad Age Outdoor Advertising (P) Ltd. Versus Government of Andhra Pradesh and Ors., 2011 (2) TMI 125, has came across the very similar matter. The Court has analysed the issues like payment of service tax and legal liability to pay VAT and concept of 'goods' on the ground that they were engaged in leasing of hoardings to various customers displayin....
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....lied the dominant nature test. That is how it eventually concluded and in favour of BSNL that the goods do not include electromagnetic waves or radio frequencies for the purpose of article 366(29A)(d). The goods in telecommunication are limited to the handsets supplied by the service provider. As far as the SIM cards are concerned, the issue is left for determination by concerned assessing authorities. 49. It is with this conclusion that the His Lordship Justice Dr A.R. Lakshmanan (as His Lordship then was) agreed. He agreed and concurred with this conclusion but added his few paragraphs. The focus never shifted from the principle issue, namely, imposition of sales tax in the light of Article 326 (29A clause d) on different activities carried on by the telecommunication service provider. In para 96, the case of BSNL was referred. In para 97 the factual aspect, namely, the entire infrastructure / instruments / appliances and exchange being in physical control and possession of the petitioner BSNL at all times and there is neither any physical transfer of such goods nor any transfer of right to use such equipment or apparatuses has been referred and set out. Then comes para 98 whi....
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....Brothers v. State of Haryana and another (1999) 9 SCC 182) a Division Bench of this Court has held that the provision under Section 2(l)(iv) of Harayna General Sales Tax Act, 1973 (which was similar to Section 2(g)(iv) of this Act) expressly spoke of "transfer of the right to use goods' and not 'transfer of goods'. In that matter it was argued on behalf of the assessee that in the case of a deemed sale within the meaning of Section 2(l) (iv) there must be a legal transfer of goods. This arguments was rejected by this Court stating that the levy of tax was not on transfer of the goods itself but the levy was on the transfer of the right to use such goods for consideration. In our view, the judgment of this Court in Aggarwal case (supra) would squarely apply to the present case." o) It is relevant to note that the Hon. Supreme Court in the case of BOC India Limited v/s Assistant Commissioner has categorically distinguished the transfer of goods and transfer the right of use of goods and decided that tax is on "transfer of the right to use goods' and not 'on transfer of goods'. And there is no need of a legal transfer of goods. p) As opined by the Hon. Su....
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.... Hon. Supreme Court is applicable to the facts of this case. Hence, we are inclined to accept and rely upon those decisions like in the case of 20th Century Finance Corporation Limited, Aggarwal Bros. (1999) 9 SCC 182, Asiatic Gases Ltd (2007)(007 VST 531), BOC India (dated 21 February, 2008), Antrix Corporation, and TATA Sons (cited supra), etc as discussed in above paras. t) The contention advanced for applicability of judgment of Hon. Apex Court in the case of Rashtriya Ispat Nigam Ltd (RINL) v. Commercial Tax Officer, Company Circle, Visakhapatnam. The Court was dealing with a similar case and noted the following arguments of the parties: "...the learned Counsel for the petitioner, submits that under the terms and conditions of the contract, the contractor is provided with the facility of using the machinery if the same is available with the petitioner and there is no transfer of the right to use the machinery and for this purpose he relies on clauses 1, 5, 7, 13 and 14 of the contract to show that there is no transfer; while the learned Government Pleader submits that clauses 10 and 12 clearly show that there is a transfer of right and, therefore, tax is validly levied. ....
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....39;s, nor could he move it out during the period of the project. We do not see how we can draw a parallel from that case to the one at hand. u) Mr. C.B. Thakar, Advocate has placed reliance on Hon. Bombay High Court Judgment in case of Mahyco Monsanto Biotech (India) Pvt. Ltd. (W.P. No. 9175 of 2015) & Subway Systems India Pvt. Ltd. (W.P.No.497 of 2015) (Bom) and stated that the permission to use hoarding is given to customers. He has placed reliance on Para 69 of said judgment in isolated situation for interpretation and thus tried to equate the present transaction with franchisee agreement. Hence, we are in the view to consider the whole text of judgment by considering the relevant paras bearing No. 68 to 72 of said judgment. The paras are reproduced as under: "68. We have the greatest difficulty in accepting Mr. Sonpal's argument that Article 366(29A) allows a split of even a single composite agreement, where this is not the intention of the parties to the agreement. In our opinion, Mr. Shroff's reliance on the cases of Asian Oilfield and BSNL in support of his argument that Subway's transaction cannot be split into two distinct or severable components is corre....
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....er is granted by a company the exclusive right of retailing its goods in a specified area ... 72. We find, on facts, that the Subway franchise does not meet these tests.-" We have perused the said judgment on factual aspect of the case. The Hon. Bombay High Court has considered the "definition of franchise" and applied the test to the factual aspect of case and found that Subway franchise does not meet these tests. The Hon. Court pleased to held that the introduction of the word 'franchise' in the amended MVAT by notification will have to be read to mean those franchises that can reasonably and plausibly be construed to have the effect of a sale; it cannot be widened to include agreements styled as 'franchise' agreements simply because of the nomenclature. Indeed, it seems to us clearly that if we accept that a franchise agreement is, by definition, one that requires territorial exclusivity, then the Subway agreements are not franchise agreements at all, but purely licensing agreements. However Hon. Court has expressed the reservations as to its applicability of judgment for every franchise agreement. Hence, we do not find its applicability universally. In ....
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....lls etc. The right to use for four hoardings as provided in agreement is vested to applicant. The agreement also specifies that the applicant, representative / customer can use the hoarding for specific period. The hoarding proposal and orders by be customer provides the location, TRF, type, size, sq, feet area and days for which hoarding is required. The applicant has charged the customer as per size of hoarding and duration of time period and the customers are agreed on the same. Then, as per requirement of customer these hoardings are leased out for specific period by indicating sizes, structure location and area. It is seen that there is dedicated and effective control of the specific size of hoarding to enjoy the right for specific period. The customers have the freedom of choice of selecting the manner, size, time and nature of use of the hoarding, though within the frame work of the agreement of lease and hence, the right to use of hoarding falls within the extended definition of "sale" [section 2(24), (b-iv)] of MVAT Act. In as much as, there is transfer of right to use the hoarding in terms of display of advertises selected by customer at the place and address as desired b....
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.... ACT, 2002. 9. Whether hoardings are moveable or immoveable goods:- The Section- 2(12) of MVAT ACT, 2002 provides the meaning of goods 9.1 The "goods" means every kind of moveable property not being newspapers, actionable claims, money, stocks, shares, securities or lottery tickets and includes live stocks, growing crop, grass and trees and plants including the produce thereof including property in such goods attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. In this respect it is necessary to see whether the goods namely, hoardings are moveable or immoveable? 9.2 Mr. C.B. Thakar, Advocate attended and stated that the goods namely, hoarding raised on pillars are immovable in nature. He has invited attention towards various judgments. He has stated that on factual position, this aspect is to be dealt. 9.3 He stated that we have submitted agreement with Railways for procuring sites and also explained the implication of the terms and conditions along with photographs of few of the sites which are procured from various vendors. On this basis, he tried to explain that the Railway hoardings are embedded in the ....
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....vable property.Therefore, we submit that the hoarding structure is immovable property and it is not covered under MVAT Act, 2002. 9.7 We have perused the submission. The applicant has submitted that he is in business of different types of hoarding as stated above. Out of these types, the applicant stated that the transaction submitted for determination is relating to sites which are procured from Railway is to be decided. We have enquired about different types hoarding. He has submitted the list of type of hoardings and their photograph. There are 286 sites on which the different types of hoardings which are given to customer for display of advertisement. The nature of different types of hoardings is to be verified to decide the issue. 9.8 The Hon. Apex Court and various high Courts have decided the issues of moveable and immoveable goods by considering the constructional provisions. We are referring few of them to have clarity on the subject. (a) The Hon. Supreme Court of India in the case of Commissioner of Central Excise, ...vs Solid & Correct Engg. Works and others on 8 April, 2010 have discussed the issue of moveable and immoveable goods at length. The Hon. Apex Court....
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..... It is nobody's case that the attachment of the plant to the foundation is meant for permanent beneficial enjoyment of either the foundation or the land in which the same is imbedded. [b] The Hon. Apex Court in Sirpur Paper Mills Ltd. V. Collector of Central Excise, Hyderabad (1998 (1) SCC 400) has dealt the issue of moveable and immoveable Goods. The question, whether the paper machine assembled at site mainly with the help of components bought from the market was dutiable under the Central Excise Act, 1944. The argument advanced on behalf of the assessee was that since the machine was embedded in a concrete base the same was immoveable property even when the embedding was meant only to provide a wobble free operation of the machine. Repelling that contention the Apex Court held that just because the machine was attached to earth for a more efficient working and operation the same did not per se become immoveable property. The Court observed: "5. Apart from this finding of fact made by the Tribunal, the point advanced on behalf of the appellant, that whatever is embedded in earth must be treated as immoveable property is basically not sound. For example, a factory owner....
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.... like payment of service tax and legal liability to pay VAT and concept of 'goods'. The issues are dealt at length and held that- "----------it was a question which depended on the circumstances of each case and mainly on two circumstances as indicating the intention, i.e., the degree of annexation and the object of annexation; the degree of annexation can be such that the hoarding or structures can be attachable or detachable; the hoarding and signage boards are attached to the steel structures and unipoles; in order to use the hoarding, and the signage boards, it has to be attached to the steel structure and unipoles; such attachment lasts only as long as the hoarding and signage boards are used and, when not used, it can be detached and shifted to some other place; such attachment does not make the hoarding, and signage boards, part of the permanent structure; hence it is moveable property; if the object of annexation is to let out advertisement boards, signage boards and hoarding, etc., to different persons, companies and departments for display of advertisements of their products, it should be construed that the annexation is made for that purpose, and not for the p....
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....vable property which is not dismantled to be called as goods. There is nothing on record to show that the hoardings were detachable and remained as goods to be used as and when they were required for the assessee to render its services as an advertisement agency. However, it is relevant to note that the Section 3(26) of the General Clauses Act and section3 of Transfer of Property Act for the interpretation movable and immovable goods was not brought before the Hon. Court. Hon. Andhra Pradesh High Court has applied the principles laid down by Hon. Apex Court in case of Solid and Correct Engineering Works, [2010] 5 SCC 122 to interpret the concept of goods and movable and immovable goods and we found it on sound footing and having more presidential value. 10. Pavment of service tax:- Another argument advanced by the appellant is regarding the Levy of Service Tax on the higher income received from employers. It is the contention of the appellant that he has been paying Service Tax on the income which received from employers by treating the transaction as transaction of rendering service. It is contended that as Service Tax has been paid on the income generated from hiring ....
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....f 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 judgments are an authority for the proposition that the service tax and Value Added Tax are not mutually exclusive and if there is liability, both are to be paid by the concerned assessee. Viewed in that background, the contention raised by the revision petitioner that since it is paying service tax, is not liable to pay Value Added Tax can never be sustained. 11. Conclusion:- In ....
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....as the same were used as per their requirements. During the period under the agreement the applicant cannot let out the said hoarding to other customers. Thus, we are of opinion that there is transfer of right to use specific, identified, and precise size of hoarding. Such 'transfer' is the divesting of a right of hoarding from transferor and the investing of the same in the transferee to enjoy it as transferor cannot gives rights to other customers for specific period. 11.4 Thus, in nutshell, the transactions of leasing of the hoarding for a particular fixed period and for valuable consideration thus constitute a transfer of right to use goods and the transaction between the applicant and its customer is a 'lease' transaction is exigible to VAT under MVAT Act. The customers have enjoyed the right to use hoardings of definite size for definite period. The transaction of transfer of hoarding by the applicant to his clients is liable to be treated as transaction involving transfer of right to use goods. Hence, it is covered by the definition of "sale" as provided in section 2(24) Maharashtra Value Added Tax, 2002 i.e. sub clause "(iv) the transfer of the right to u....
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....ional burden will be unbearable and applicant will financially break down, affecting its viability in business. In past, all assessments are completed as per position adopted by applicant up to 2011-12. There is statutory misguidance as clear from above assessment orders. This is a case of mutual mistake on part of Department which justifies grant of prospective effect. Applicant has treated its transaction as other dealers in Maharashtra. No adverse judgments till today on above issues leading to other position. Under above circumstances prospective effect till date of ruling is most deserving. Accordingly, he requested to give the prospective effect to advance ruling order. 12.3 To support the claim, he has made the reference to following judgments. i) German Remedies Ltd. (A. No.97 of 1991 dt.18.5.1996)(Page 210 to 214) In this case Hon. Tribunal considering that previous assessments have been completed at lower rate granted prospective effect to DDQ. Similar position is arising in case of applicant and the same ratio is required to be followed. On similar line there are other DDQs like; ii) Rajhans Products. (DDQ No.DDQ-11-2002/Adm-5/30/B-5 dt.30.8.2006). iii)....
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....andate but a discretionary power vested in the Commissioner. This discretionary power has to be exercised and while exercising it, the Commissioner, has to be guided by certain inbuilt checks and safeguards. He cannot in the garb of giving relief of the nature contemplated by subsection (2) totally wipe out the liability of any and every dealer. 11. The Commissioner is expected to exercise this discretionary power so as not to defeat the law or render its provisions meaningless or redundant. The power must be exercised bearing in mind the facts and circumstances in each case. No general rule can be laid down. The exercise of this discretionary power must be bonafide and reasonable so also sub-serving the larger public interest. The highest officer in the hierarchy is chosen by the legislature as there is a presumption that this executive functionary will exercise the discretion in genuine and bonafide cases. He must be satisfied that there is a real need and the circumstances warrant exercise of the same. The power being wide, the satisfaction must be backed by cogent and strong reasons which can be tested in a Court of law. 12. The words are of wide amplitude and if the Comm....