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2023 (8) TMI 116
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....peal No. 8 of 2015. 2. Appellant in MVAT Appeal No. 8 of 2015, Aurobindo Highway Services (hereinafter referred to as "AHS"), is a sole proprietory business of one Jirankalgi. AHS runs a petrol pump and also owns tank trucks (hereinafter referred to as "Tankers"). The tankers were registered with the Regional Transport Authority (RTO) in the name of appellant. AHS also holds Goods Carriage Permit under the Motor Vehicles Act. AHS renders services to oil companies like Hindustan Petroleum Corporation Limited (hereinafter referred to as "HPCL") by giving on hire these tankers. AHS has filed four appeals being MVXA/8/2015, MVXA/12/2015, MVXA/29/2015 and MVXA/15/2015 pertaining to Financial Year 2006-2007, 2008-2009, 2005-2006 and 2007-2008, respectively. MVXA/15/2015 filed by AHS is not listed but by consent is also taken up for final hearing. Facts are identical in as much as issue is the same and agreement was with HPCL on same terms and conditions. Also, common questions of law has been framed in MVXA/8/2015, MVXA/9/2015, MVXA/11/2015, MVXA/12/2015 and MVXA/13/2015. 3. HPCL had issued a notice inviting tender for transportation of bulk petroleum products (white oil) by road E....
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....o use goods. In addition, it was also submitted that AHS was not a "dealer" in view of Exception III in the definition of dealer in Section 2(8) of the MVAT Act because Exception III provides that a transporter holding permit for transport vehicles (including cranes) granted under the Motor Vehicles Act, 1988 which are used or adopted to be used for hire or reward shall not be deemed to be a dealer in respect of sale or purchase of such transport vehicles or parts, components or accessories thereof. AHS's submissions were rejected and the STO levied tax on the receipts. 6. Being aggrieved, AHS preferred an appeal before the Deputy Commissioner of Sales Tax, Solapur. The appeal was dismissed against which AHS preferred an appeal before the Maharashtra Sales Tax Tribunal at Mumbai (Tribunal). Four appeals were filed by AHS for Financial Year 2005-2006, 2006-2007, 2007-2008 and 2008-2009. The appeals of AHS were dismissed by the Tribunal vide Order dated 9th February 2015. The Tribunal confirmed the action of the STO and the First Appellate Authority. It is against this order of the Tribunal passed on 9th February 2015 the present appeal(s) have been filed. All other appeals were a....
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....eeded rupees [five lakh], or, as the case may be, who was an importer in the said year [and his turnover of sales or purchases the said year had] exceeded rupees one lakh, be liable to pay tax, with effect from the appointed day, in accordance with the provisions of the Act, till his certificate or licence is duly cancelled under this Act. Explanation - For the purposes of this sub-section, the expressions "turnover of sales", "turnover of purchases" and "importer" shall have the respective meanings assigned to them under the relevant earlier laws. (2) A dealer to whom sub-section (1) does not apply and whose [turnover either of all sales or, as the case may be, purchases] made, during the year commencing on the appointed day or any year subsequent thereto, first exceeds the relevant limit, specified in sub-section (4), shall, until such liability ceases under sub-section (3), be liable to pay tax under this Act with effect from the 1st day of April of the said respective year : Provided that, a dealer shall not be liable to pay tax in respect of [such sales and purchases] as take place during the period commencing on the 1st day of April of the said resp....
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....ase tax as specified in sections 6A and 6B shall be considered. The provisions of sub-section (5) in respect of sales shall apply mutatis mutandis.] (6) Notwithstanding anything contained in any contract or any law for the time being in force, but subject to the provisions of this Act, any person covered by [sub-clause (a), (b) or (c)] of clause (8) of section 2 shall be liable to pay tax under this Act, whether or not the principal is a dealer and whether or not such principal is liable to pay tax under this Act and whether or not the principals are disclosed (7) [xxxxxxxxxxx] (8) Where a dealer liable to pay tax under this Act is succeeded in the business by any person in the manner described in clause (a) of sub-section (1) or sub-section (4) of section 44, then such person shall, notwithstanding anything contained in this section, be liable to pay tax on the sales or purchases of goods effected by him on and after the date of such succession and accordingly nothing contained in the proviso to sub-section (2) shall apply to him in any year. (9) Any person who is not liable to pay tax under the foregoing provisions of this section but ....
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....not and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of the principal; (c) a non-resident dealer or as the case may be, an agent, residing in the State of a non-resident dealer, who buys or sells goods in the State for the purposes of or consequential to his engagement in or in connection with or incidental to or in the course of, the business; (d) any society, club or other association of persons which buys goods from, or sells goods to, its members; Explanation - For the purposes of this clause, each of the following persons, bodies and entities who [sell any goods] whether by auction or otherwise, directly or through an agent for cash, or for deferred payment, or for any other valuable consideration, shall, notwithstanding anything contained in clause (4) or any other provision of this Act, be deemed to be a dealer, namely : (i) Customs Department of the Government of India administering the Customs Act, 1962 (52 of 1962); (ii) Departments of Union Government and any Department of any State Government; (iii) Local authorities; (iv) Port Trusts; (iv-a) Publi....
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....", with all their grammatical variations and cognate expressions, shall be construed accordingly. Explanation. - For the purposes of this clause, - (a) a sale within the State includes a sale determined to be inside the State in accordance with the principles formulated in section 4 of the Central Sales Tax Act, 1956 (74 of 1956); (b)(i) the transfer of property in any goods, otherwise than in pursuance of a contract, for cash, deferred payment or other valuable consideration; (ii) the transfer of property in goods (whether as goods or in some other form) involved in the execution of a [works contract including], an agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property; (iii) a delivery of goods on hire-purchase or any system of payment by installments; (iv) 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 considera....
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....d. (Supra), the Apex Court, after considering various judgments, laid down as to what would constitute a transaction to come within the ambit of the transfer of the right to use the goods. Paragraph 98 thereof reads as under : 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 permissions or licences required therefor should be available to the transferee; (d) For the period during which the transferee has such legal right, it has to be to the exclusion to the transferor - this is the necessary concomitant of the plain language of the statute - viz., a "transfer of the right to use" and not merely a licence to use the goods; (e) Having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others. 13. Therefore, the Apex....
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....on Bench observed in paragraph 28 that : It is, therefore, clear that in order to constitute a transfer of right to use goods, there must be parting with the possession of the goods for the limited period of its use in favour of the lessee by the lessor. The effective control of the goods must not remain with the owner, but must stand transferred to the lessee for the use by the latter at his will and it is this transfer of the effective control of the goods, which attracts sales tax. After taking into consideration the various clauses of contract entered between the assessee and the owners of the vehicles, the Division Bench held that there was no transfer of right to use to make it taxable under the Act. The Court, therefore, found that show cause notice issued was without jurisdiction and as such, allowed the petition, setting aside the show cause notice. 15. This subject/issue also came up for consideration in the case of Commissioner, VAT, Trade and Taxes Department V/s. International Travel House Ltd.(2009) 25 VST 653 (Delhi) where Delhi High Court has considered as to whether the contract between respondent/assessee and M/s. NDPL for hiring of Maruti Omni cabs....
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....ces with respect to the goods. In the present case, the permissions and licences with respect to the Cabs are not available to the transferee and remained in control and possession of the respondent. It is the Driver of the vehicle who keeps in his custody and control the permissions and licences with respect to the Maruti Omni Cabs or the said permissions and licences remained in possession of the respondent. These are never transferred to M/s. NDPL. It, therefore, cannot be said that there is a sale of goods by transfer of right to use goods inasmuch a necessary ingredient of the sale being the transfer of right to use the goods is absent, namely, ingredient as stated in para 97(c) of the BSNL's case. The judgments which were cited during the course of arguments, namely, State of A.P. v. Rashtriya Ispat Nigam Ltd., (2002) 3 SCC 314 and Aggarwal Bros. V. State of Haryana, (1999) 9 SCC 182 have been duly explained by the Supreme Court in BSNL's case. The crucial factor in this regard differentiating the two cases was the intention to transfer the right to use. Whereas in the case of Rashtriya Ispat Nigam Ltd., there was no intention to transfer the right to use, in the cas....
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....he owner was not free to make use of the tankers for the works other than the project work of respondent or for his own use. That would mean there was a deemed sale; (e) Bramhaputra Vally Construction and Suppliers V/s. ONGC (2012) 53 VST 401, is clear on the proposition that where a party has effective control and dominion over the goods during the subsistence of the contract, though the physical possession may be with the owner, there will be a deemed transfer of right; (f) In Waltor Buthello of Mumbai V/s. The Commissioner of Sales Tax Unreported judgment dated 7.2.2017 in MVA No. 33 of 2016, where the facts were similar, the Bombay High Court had held that there was an effective transfer. Even in the case of Waltor Buthello of Mumbai (Supra), the driver with uniform was to be provided by the lessor at his cost, the wages had to be paid by the lessor, the fuel and maintenance was to be provided by the lessor and the damages were to be borne by the lessor. The driver was obliged to follow instructions of the authorities of PMT (lessee). The agreement also provided that in no circumstances a hired bus will be diverted by contractor for personal use or gain of any other busin....
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....ol over the tankers and crew for transportation and delivery of petroleum products to customers/other locations. The agreement in clear terms provides for transfer of right to use the trucks for transportation of petroleum products of oil company. 18. Let us examine what does the agreement dated 26th June 2006 and the work order/LOI dated 5th May 2006 between appellant and HPCL say. The agreement dated 26th June 2006 reads as under : This agreement made 26th day of June 2006 between Hindustan Petroleum company registered under Indian Companies Act, 1913/1956 having registered office at 17, J. Tata Road, Mumbai hereinafter called "THE COMPANY" (which expression unless repugnant to the context shall include its successors and assigns) of the ONE PART and M/s. Aurobindo Highway Station a Proprietorship firm Private Limited / Limited Company having registered office / place of business at Takli (Dist. Solapur) hereinafter called "THE CARRIER" or Carrier (which expression shall be deemed to include legal heirs and executors of the present constituents in case of firm or official liquidator in case of Company) of the OTHER PART. WHEREAS the company is engaged in refi....
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.... from the same loading location. 3. Carrier will ensure that Tank Trucks listed in the LOI / Work Order are always : (a) Maintained in sound mechanical conditions and having all the fittings up to the standards laid down by the Company from time to time. (b) Meeting requirement of the Company as regards safety and operational norms, e.g., Company may require that Tank Trucks are painted in particular specifications, epicoated and / or chambers are cleaned periodically, additional declarations are made in Emergency Information Panel, colour code band, logos and advertisement of the specified Brand names as directed by Oil Company from time to time, etc. is painted, at the cost of Carrier. The Carrier will ensure that panels are provided on the Tank Truck for display of Oil Company Brands as specified by Oil Company on regular basis. (c) Conform to the statutory regulations like Indian Petroleum Act, Petroleum Rules, Motor Vehicle Act etc. as applicable from time to time. (d) Properly calibrated / stamped under the Weights & Measures Act. These shall be calibrated for single capacity up to maximum permitted under Motor Vehicles Act. Compan....
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....er any statute or regulation both under regular working and arising from accident etc; b) Carrier shall keep Company indemnified in respect of above. In case, Company is made liable to pay any part of above cost, the same shall be recovered from the Cartier. The Company shall not be obliged to contest any claim made upon it for payment. c) It is agreed that the Tank Trucks covered by this agreement shall operate at the sole risk of the Carrier. In no case, Company would be held responsible for any loss or damage done to / by the Tank Truck while on the Company's work or parked in their premises or anywhere else. d) Carrier shall make their own arrangement for parking of their vehicle overnight and / or during holidays. e) The Carrier shall comply with all statutory provisions relating to his trade / business / profession including his own employees or employees engaged by the Carrier and Oil Company shall not be responsible for his omission or commission. 6(a) xxxxxxxxxxxxxxxxxx (b) xxxxxxxxxxxxxxxxxx (c)(i) Octroi charges levied on the product would be reimbursed by the Company against production of original receip....
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....products received by him for transportation. Acknowledgment by any member of Crew of the Tank Truck or by any other authorized person of the Carrier by way of signing on the Challan or any other Dispatch Document would be sufficient proof of acceptance of product quantity and quality by the Carrier. (b) The Carrier will comply with and give full cooperation to the Company in meeting the requirement of prevailing 'Marketing Discipline Guidelines - 2001' as applicable to them. (c) ............. (i)............. (a) .................... (b) .................... (c) .................... (ii) ................... (a) ................... (b) Carrier will allow representative of Company and the party, to whom the products are being sent, to travel with him. (10) Carrier will be responsible for ensuring that : (a) ............... (b) ............... (c) ............... (d) ............... (e) Any position tracking system (for eg. Global Tracking System) decided by the Company to tract the movement of the Tank Truck will be unconditionally accepted by....
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....ed or revoked. (d) ............. (e) ............. (f) ............. (g) .............. (h) .............. 16 ................. 17 ................. 18 ................. 19 ................. The work order dated 5th May 2006 provides : AWARD OF CONTRACT : TRANSPORTION OF BULK PETROLEUM PRODUCTS (WHITE OIL) BY ROAD EX PAKNI DEPOT. TENDER NO.WZ/IND/MH/POL/BULK/2005-08. This has reference to your response to the subject Tender. We are pleased to award the contract for transportation of bulk petroleum products by road Ex our storage point at Pakni. CONTRACT PERIOD This contract will be valid from 1.09.2005 for a period of 2 years, with a provision to extend by one more year, as per the terms and condition of the agreement, at the sole discretion of HPCL. RATE SCHEDULE The rates applicable w.ef. 1-9-2005 after providing escalation towards increase in RSP of HSD after 6-6-2005 (Due date of the tender) will be as follows :- Sector White Oil Local delivery within 39 kms RTD In Rupees per KL 90.77 Outstation delivery beyond 39 kms RTD....
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....S was to operate these tankers; (xiii) the tankers were required by HPCL to carry bulk petroleum products from the particular loading location to HPCL's retail outlets; (xiv) AHS was to ensure that the tankers were always maintained in sound mechanical condition, meeting all safety requirements and operation norms as per the instructions of HPCL. This was required because AHS was carrying hazardous goods; (xv) AHS was to conform to the statutory regulations like Indian Petroleum Act, Petroleum Rules, Motor Vehicle Act as applicable from time to time; (xvi) AHS was to ensure that the tankers were properly calibrated/stamped under the Weights and Measures Act; (xvii) AHS shall have adequately trained crew (driver and cleaner) and the driving licence should be endorsed for transportation of hazardous goods; (xviii) AHS shall ensure the tankers are covered by insurance policy; (xix) the officials of HPCL would be entitled to inspect at any time the tankers or the documents of the tankers or the crew, which right need not be reserved if there was transfer of right to use the tankers for any purpose; (xx) HPCL would ....
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....eneral Cranes (Supra) etc., has read the agreement in bits and pieces and referred to only certain clauses which were in place to ensure commitment for uninterrupted efficient transportation service. The Tribunal has referred to the clauses which provides that the tankers are not under agreement with any other party, AHS not to assign right in the tankers or the tankers should not be used for products other than oil of HPCL, HPCL has right to change the loading location etc. The Tribunal has failed to appreciate that these clauses referred to and provided for in the agreement with HPCL were only to ensure uninterrupted transportation services by AHS to HPCL. The right to use of tankers does not get transferred because of these clauses. The possession and effective control was always with AHS and HPCL had no right to direct AHS for any other work or any other area than agreed. There is no provision that HPCL could even sublet. The Tribunal has failed to appreciate that the services for the tankers were provided with man power and road tax, insurance, permit, salary and wages of staff, cost of fuel, lubricants, tyres, repair etc., were being paid by AHS. The agreement entered into be....