TaxTMI 
TaxTMI 
2019 (5) TMI 502
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Brief facts of the case are that the applicant is a transporter and is engaged in transporting the petroleum products, which are purchased by the parties from Hindustan Petroleum Corporation Limited. As per the agreement executed in between the applicant and Hindustan Petroleum Corporation Limited there are certain conditions stipulated namely that the contractor will operate the tank trucks for haulage and deliver of bulk dangerous/ non dangerous petroleum products of the corporation as and when required by the corporation. Condition Nos. IV, V, VIII and XV provides as follows:- "(iv) Use tank trucks, for the transportation of the products of the corporation, which are fit for carrying the products and which shall be main....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cost of the tank trucks. (xv) Be responsible for any non-delivery or short delivery of the products at the destination and shall be bound to reimburse to the corporation to the extent of the shortages of the products at the corporation's for ex installation/depot price. However, the corporation shall have the right and authority to deduct the cost of products out of the amount payable by the corporation under clause 3(ii) hereunder, or separately debit the Carrier, as the case may be." The contention of the counsel for the applicant is that the control and possession of the truck tanker remained with the applicant and that the maintenance, salary of the driver and every employees, insurance and other expenses are borne by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re, and different rates may be declared for different goods or different classes of dealers." The bare perusal of Section 3-F of the Act shows that the provision of Section 3-F is applicable only in cases where there is transfer of right to use the goods. Similar question came up for consideration in Kando Transport & Others Vs. S.T.O. Assessment Unit, Barbil & others (1992) 43 STL 67 Orissa. In this case also the petitioner entered into a contract with M/s Minerals & Metals Trading Corporation of India Ltd. For transportation work including loading, unloading and stacking. The contention of the transporter was that there was no transaction of sale and that the contract was for purely labour and service. The department, however, conte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment in view of the enlarged definition of 'sale'. Then the Andhra Pradesh High Court held that under the agreement, the effective control of the machinery, even while the machinery was in the use of the contractor, was that of petitioner company. The contractor' was not free to make use of the same for other works or move it out during the period the machinery was in his use. Therefore, the contractor was entitled to make use of the machinery for purpose of execution of the works of the petitioner and there was no transfer of the right to use it as such in favour of the contractor. This is how the court held that the hire charges collected by the petitioner from the contractors were not exigible to sales tax. To come to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r of right to use machinery, the hire charges collected by the respondent from the contractors were not exigible to sales tax. On a careful reading and analysis of the various clauses contained in the agreement and in particular, looking to Clauses 1,5,7,13 and 14, it becomes clear that the transaction did not involve transfer of right to use the machinery in favour of contractors. The High Court was right in arriving at such a conclusion. In the impugned order, it is stated and rightly so in our opinion, that the effective control of the machinery even while the machinery was in use of the contractor was that of the respondent-company; the contractor was not free to make use of the machinery for the works other than the project work of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssion even of the vehicle, which were being used for carrying the goods. On these facts Division bench held that in the absence of transfer of possession of vehicle there was no transfer of right to use the goods and the provisions of Section 3-F of the act shall not applicable. In view of the ratio laid down by the aforesaid decisions of the High Court and the Apex Court, it is clear that for the transfer of right to use the goods and to invoke the provisions of Section 3-F of the act, it is necessary that there should be transfer of effective control of the goods in favour of the party. In the case of Bharat Sanchar Nigam Ltd. and another vs. Union of India and others, reported in JT 2006 (6) SC, 114, Apex Court held that for the tr....