TaxTMI 
TaxTMI 
2019 (2) TMI 2009
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....titioner will serve required number of copies of the petition on him." On 14th October, 2009, the following order was passed: "Mr. Sharma, learned counsel for the petitioner submits that he has no instruction in the matter and prays for deletion of his name from the Cause List. Paper Books have not yet been filed on behalf of the petitioner. Registry is directed to issue notice to the petitioner indicating the aforesaid facts and informing the necessity to engage counsel to represent its case within a period of four weeks from the date of receipt of such notice. List this matter in the month of January, 2010." And lastly on 30th January, 2019, the following order was passed: "After arguing the matter for some time, learned counsel for the petitioner seeks time to make further preparation of the matter. We make it clear that we are not extending the interim order dated 20.03.2001. List this matter on 13.02.2019." 3. These revisions arise out of S.A. Nos.1143 to 1147 of 1999-2000 decided by a common judgment dated 28.08.2000. Although the appeals referred to above relate to different assessment years, the dealer, namely, ....
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.... 27,17,070.00 in case of M/s EPI Ltd without considering the contention of the assessee-petitioner. (This question is confined to assessment year 1995-96). (h) Whether, on its own finding of the learned Tribunal that matter was decided and settled vide its order dated 08.03.95 (received by assessee on 18.05.95) that certain turnover is taxable, imposition of interest u/s12 (4-a) of OST Act in the assessment year 1994- 95 for alleged non submitting correct return of said turnover is justified. (This question is confined to assessment year 1994-95). (i) Whether levy of interest on the assessee is justified without deciding the fact as to whether there was any mensrea or motive of assess in not returning the said turnover or non inclusion of said turnover was due to lack of communication and non receipt of correct facts." 5. At the time of argument, learned counsel for the petitioner does not press the questions of law at "a, c, f, g, h and i" and argues only on the questions of law at "b, d and e". 6. To substantiate his argument for question 'b', he takes us to the order of the Sales Tax Officer, Rourkela I (for short "the Assessing Officer") at pages 20 to 2....
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....ction on such account can be made." And contended that the Assessing Officer has seriously committed an error in coming to the conclusion adverse against the petitioner. 7. He also takes us to the order of the Asst. Commissioner of Sales Tax, Rourkela (for short "the Appellate Authority"), more particularly paragraph-6 at pages 36, 37 and 38 of the paper book, which reads as under: "6. An important thrust of appellant's argument has been directed against the action of the learned Assessing Officer in levying tax on supply of materials from stock (store) worth Rs. 32,85,849.01 for the year 91-92 and Rs. 83,31,441.27 for the year 92-93 bricks, cement, rod, structural steel, bitumen to different contractors on cost recovery basis which was not included in the G.T.O. returned on the ground that the above materials were issued to the contractor for execution of work in the plant in order to ensure qualify and timely completion of the work. It is averred that the value of materials so supplied cannot be considered to be sale, since the contractors use the materials exclusively in execution of contract and rate is fixed to prevent the mis-utilisation of the said materials. ....
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....f payment of tax at the 1st point of sale of cement etc. as agitated by the appellant, the action of the learned Assessing Officer levying due tax thereon stands maintainable." 7.1 And lastly he takes us to the order of the Sales Tax Tribunal, Cuttack (for short "the Tribunal") at pages 58 to 63 of the paper book where the Tribunal has considered the same in detail. For ready reference the same is reproduced hereunder: "The next point for determination before us is whether the materials like cement, rods, bricks structural steel, bitumen, etc., supplied to different contractors on cost recovery basis will constitute sale to be exigible to sales tax. Drawing our attention to Clause 4 of what is said to be Special conditions of contract for Civil Engineering Works, the learned Advocate for the appellant emphatically contends that the materials so supplied to the contractors for use in the modernization work always remained the absolute property of the appellant-Company and at no point of time, the ownership of goods passed on to the contractors and, therefore, there is no instance of sale assessable to sales tax. He pleads that the case of the appellant is squarely covere....
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....e rates indicated in Clause No.17 plus 300% except bricks for which the recovery will be 100 % extra over the issue rate. (iii) All lap lengths in reinforcement rods have to be approved by the Engineer, Measurements of reinforcement will be inclusive of approved chairs, spacers, stays and overlaps. (iv) The contractor shall return the surplus steel to RSP. The contractor shall transport the surplus steel from site to place within Rourkela Steel Plant or Rourkela Steel Township as directed by the Site Engineer free of cost. (v) The wastage norms (irrecoverable loss) shall be 2% for reinforcement steel, recoveries shall be made at the rates indicated in Claust-17. (vi) The full credit at issue rate shall be given for the return of reinforcement steel of length seven metres and above. However, the contractor shall judiciously cut and use the reinforcement steel and exercise the control to minimize the cut lengths. (vii) The credit rate for return of reinforcement steel below 7 meters length will be at the prevailing scrap rate less 7% towards handling charges upto 3% scrap (over and above 2% irrecoverable loss). (viii) Penal recove....
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....'ble Supreme Court in the case of N.M. Goel & Co. 72 STC 368. The leaned Advocate for the appellant drawing our attention to the terms of the contract made strenuous attempt to distinguish the case of N.M. Goel from that of the appellant arguing that the judgment of the Hon'ble Supreme Court in the case of N.M. Goel was in the context of Entry Tax. We, however, hardly see any substance therein. Though in the case of Goel the dispute related to entry tax, the ratio laid down being materials equally applies to the levy of sales tax. In the case of Rashtriya Ispat Nigam, reported in 102 STC 454 the Hon'ble High Court of Andhra Pradesh with the clauses of the contract similar to that in the case of the appellant held that supply of stores materials to contractors on cost recovery basis constituted sales. In appeal before the Hon'ble Supreme Court, it was submitted by the learned counsel for the petitioner that there were differences between the case of Ispat Nigam and Goel's case (72 STC 368) that in Goel's case had the liberty to retain the goods that were supplied to him by the employer, the deduction of value thereof was on supply not on use; there was penal provision which....
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.... also not allowed to carry the machineries outside the plant and they can not use the machineries in any other work than the work entrusted by the plant. In this connection I am to say that Section 2(g)(iv) of O.S.T. Act very clearly and categorically envisaged that all its grammatical variations and cognate expressions, transfer of the right to any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. Thus in view of the definition of sale the instant dealer-ca is required to pay sales tax on the amount received towards hire charges for issue of machineries of the transfer of right to use the machineries have been vested to the contractors on the basis of recovery of hire charges. In this connection the judgment made by the Hon'ble Orissa High Court in case of Krushna Chandra Behera and others-vrs-State of Orissa and others (1991) 83-STC page 325 that fall all practical purposes the general control of the vehicle under the agreement rested with the corporation even though the driver was provided by the Corporation to the buses. There was possession of the bus by the Corporation and loss of possession by t....
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....Court of Orissa in the case of K.C. Behera Vs. State of Orissa (SC STC 325) and by the Hon'ble Bombay High Court in the case of 20th Century Finance Corporation vs. State of Maharashtra (72 STC 217), the case of the appellant very much falls in the net of Section 2(g)(iv) of OST Act. A meaning given to sale is the Transfer of right to use any goods for any purpose (Whether or not for a specified period) for cash, deferred payment or other valuable consideration. In the present case there is no dispute that the appellant has hired out machinery etc., to contractors and received consideration for such hiring out transactions though for a limited/specified period. This type of transaction has been judicially recognized as "deemed sale". In case of transfer of right to use goods, it is delivery of possession to the lessee by the lessor for its use which has been made taxable. In this case, the ownership is with the lessor but the possession with the lessee. It is, therefore, said that the lease is the outcome of rightful separation of ownership and possession. In order to scrutinize the entire gamut of transactions, it was necessary to see the agreement between the ap....
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....actors to whom it was let out. The function of the contractor was at best the custodian of the machineries. The Rashtriya Ispat Nigam was in possession and control of the machineries. It is in these circumstances the Hon'ble High Court of Andhra Pradesh, held that the charges received were not taxable. The facts and circumstances are altogether different in the present case. As stated above, the agreement was not supplied in its entirety. Portion/excerpts from here and there from the agreement was only furnished. What we have read therefrom, the contractor in the case on hand was not only in custody but in possession of the machinery. This distinguishes remarkably from Rashtriya Ispat Nigam case and the case law cited could not, therefore, be made available for its application to the present case. The learned Advocate for the appellant cited the case reported in (1997) 105 STC 409- Tripura Bus Syndicate Vs. State of Tripura, wherein the Government of Tripura requisitioned a large number of vehicles belonging to different operators for election purposes. The owner of the vehicle provided drivers, provided fuel cost. There was no endorsement of use by the Government in the r....
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....xability of the receipts of the appellant towards hire charges we have also taken note of the facts that in a good number of such cases, the appellant has collected tax from the customers who enjoyed the right to use against payment." 9. In support of his contention, he also relied upon the decision of the Orissa High Court in State of Orissa v. Dredging Corporation of India Ltd, [2009] 25 VST 522 (Orissa), more particularly paragraphs 15, 17 and 19, which read as under: "15. In Krushna Chandra Behera v. State of Orissa [1991] 83 STC 325 (Orissa); the petitioners hired out a bus belonging to them to the Orissa State Road Transport Corporation, under a contract under which the owner had to abide by all orders and directions of the general manager of the Corporation or any officer authorized by him in this behalf in regard to the starting station of the journey, operation, haltage, destination, timing and routes, issued from time to time. The owner could not use the vehicle covered by the agreement in any route except in accordance with the orders and directions issued by the Corporation under the agreement. Though the driver was provided by the owner he was answerable to....
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....onstitution, and resultantly in section 2(g)(iv) of the OST Act. So what is determinative as to whether or not there was a transfer of right to use the chattel (the dredger) is the stipulation in the agreement made between the Board and the appellant. Nothing is to be inferred, for such inference will be made, taking it as, or with a preconceived notion of, a bailment. In a bailment, possession of and control over, the goods by transferee is a necessary condition but in a sale under section 2(g)(iv) of the OST Act, a transaction of transfer of right to use any goods alone is the necessary condition. The agreement provides as follows: '... the Corporation hereby agrees to deploy its cutter Auction Dredger MOT Dredge-II in the dredging work...' There are stipulation to do a work to dredge the sea-bed, with men and machine deployed for the purpose, against a valuable consideration. So we find it a works contract, without transfer of property in goods in execution of such a contract. There is nothing in the agreement to prove that there was a transfer of right to use the dredger. The clauses in the agreement brought to our notice by Mr. Ray amply prove that there was ....
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....abourer agrees to plough the soil in whole of an agricultural field with his plough and bullock over a period time, and demands a daily wages for his work, and also refrains at times from work at the direction of the land-lord for passage of other ploughs and bullocks of other cultivators through the field. Then is it correct for some one to infer that because the labourer takes a daily wage, and refrains from work at times at the direction of land-lord, takes certain charges to bring home the bullock and the plough situated at a distance of, say, 10 kms., the right to use the bullock and plough has been transferred to the landlord, even without such an understanding between them even if one thinks it in the lines of a bailment? The answer is always in the negative. So we find that the learned ACST is not justified in confirming imposition of tax on the appellant in this case. His order, therefore, fails. 16. In the result, appeals filed by the dealer-assessee are allowed in full. Tax paid, if any, qualifies for refund in accordance with law." 10. Learned counsel for the opposite parties-Department, on the other hand, takes us to the order of learned Tribunal a....
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....purchase turnover of "Tanned Leather" without properly appreciating it in the facts and circumstances of the case, 5th proviso to Section 5 of the OST Act was applicable. (viii) That the forums below have acted arbitrarily in upholding the allegations of suppression of transactions as leveled against the appellant without causing enquiries to the basis back ground of the allegations and that the contentions of the appellant with regard to the alleged concealment of transactions have not been properly appreciated, with reference to facts on record and materials evidence produced, by the learned ACST who in the facts and circumstances of the case should have completely deleted the enhancement instead of confirming the same at Rs. 31.10 crores i.e. 10% of the disclosed turnover. (ix) That the facts and circumstance of the case in no way warrant charging of interest U/s.12(4a) of the OST Act for alleged filing of incorrect returns and withholding of substantial tax payable and there being no mens rea, the leaned ACST should have deleted the same. 10.1 And in that view of the matter, the learned Tribunal has no occasion to deal with the question now raised before th....