TaxTMI 
TaxTMI 
2024 (12) TMI 1234
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....nstituted a "transfer of a right to use" and thus exigible to tax under Section 2 (g) (vi) of the Central Sales Tax Act, 1956 [CST Act] and Section 2 (zc) (vi) of the DVAT Act. 3. The appellants had contended that the agreement dated 11 February 2003, and which constituted the repository of the bargain between the parties did not involve a "transfer of a right to use". The appellants would urge us to hold that tested on the principles underlying Article 366 (29A) (d) of the Constitution, the tax authorities as well as the Tribunal have clearly erred in holding to the contrary. 4. For the purposes of examining the challenge which stands raised, we at the outset, take note of the following two questions of law on which the appeal came to be admitted on 12 January 2023: "a) Whether as per terms of agreements executed by the Appellant with its customers, hiring of helicopters is covered under the meaning of "Sale" under Section 2 (g) (iv) CST Act? b) Whether in the facts and circumstances of the case, the hon'ble Tribunal has erred in coming to the conclusion that the Appellant has transferred the effective control and possession and right to use the helicopters to its customer s....
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....e flights shall be limited to the flights as per the programme for the day. Notwithstanding the foregoing, the Lessor shall in an emergency endeavor to provide a flight or flights not later than two hour after the receipt of information thereof, from the Lessor's Representative unless there are any operational or regulatory limitations prohibiting or preventing such a flight which shall be intimated by the Lessor to the Lessee. 3.3 The Lessor shall provide experienced IFR, licensed pilots for operations and qualified & experienced maintenance crew for servicing of the helicopter in order to maintain the helicopter for operational use during the currency of this agreement 3.4 The Charterer shall (before departure of a flight) provide to the Lessor a Manifest containing the number, names & weights of the passengers, cargo weight on board and the estimated time of departure/ arrival of the flight. NOTWITHSTANDING the foregoing it shall be the Lessor's sole to determine the acceptable load/passengers before each flight and upon such determination the Lessor may vary the proposed load/ passengers to be carried by the helicopter. 3.5 The Lessor shall carry out the services and pe....
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....or flights as per the programme that may be curated for the day. The aircraft was to be operated by licensed pilots and maintenance crew to be provided by the appellant and which is duly recorded in Clause 3.3. In terms of Clause 3.4, it was the appellant's responsibility to determine the acceptable pay load as well as the number of passengers that may be permitted on each flight. 13. By virtue of Clause 3.7, the agreement provisioned for a contingency where a helicopter may become a "total loss" or a "constructive total loss" and in which situation, the lessor was to replace the equipment at its expense with an identical helicopter or a helicopter acceptable to the Charterer within 14 days of such loss. Clause 3.8 then clarified that the liability with respect to expenses and responsibilities with regard to licensing requirements permits and compliances would be of the appellant. 14. We also deem it apposite to extract 4.2, 5.1, 5.2 and 5.3.2 of the agreement hereinbelow: "4.2 The Lessor may make additions or deletions to the equipment or make modifications to the helicopter as deemed fit and proper from time to time for its operational use. xxxx xxxx xxxx 5.1 The Lessor s....
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....rvice in accordance with this Agreement as follows: - (i) Fixed Monthly Charges : Rs. 28.25 lacs per helicopter Plus (ii) Additional overhead charges : Rs. 2.00 lacs per month No charges shall be payable for grounding in excess of allowable days subject to adjustment of accumulated days, if any, allowed to the Lessor as per Clause 5.3.1. 10. 2 Hourly Flying Charges The Lessee shall pay to Lessor the corresponding flying charges per hour and prorata thereof to the nearest 5 (Five) minutes to the flying hours of the helicopter as per the following rates: (i) Hourly Flying Charges Rs.29,250/- per hour upto 90 hrs flying per month (ii) Hourly Flying Charges beyond 90 hrs. flying per month will be increased by 30% over Rs. 29,250/- per hour mentioned above. In case fuel is provided by the Lessee at its cost, then in that case a deduction of Rs. 6388/- per hour (ATF consumption: 338 Ltrs/hr@Rs 18 90 per litre) would be given on the Hourly Flying Charges mentioned above." 17. Clause 13 of the agreement embodied the indemnity clause and is extracted hereunder: - "13. INDEMINITY 13.1 The Lessor shall indemnify and hold harmless the Lessee from and against all claims,....
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....eld all the assessments pertaining to tax, interest and penalties by observing in the manner as:- "Further, in terms of clause 13.3 of an Agreement of the objector made by him with one of his Charterers also reads as "however, the charterer shall indemnify and keep harmless the Lessor and shall assume the risk of and be solely responsible for any and all damages to the helicopter, associated and: allied equipments, tools, supplies, spare parts, materials and all other properly furnished by the Lessor or caused by the gross negligence of the Charterer, its employees, agents of sub-contractors". This too clearly and unequivocally goes to suggest and prove beyond any doubt that the helicopters, crew and others related goods etc. were placed by the objector at the disposal of the Lessees/Charterers making the transaction to clearly fall within the ambit of deemed sale by way of transfer of right to use the goods ie. the helicopters in this case. Simultaneously, from the case record and the documents placed on file, it also transpires and come up that many rights and obligations of the parties are linked with the possession of the goods. One of the most important effects is that "Ri....
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....nt to be carried out for the helicopter at-least for 7 days or 10 flying hours in advance. 9a. wherever required the lessee shall provide suitable helipads with necessary equipments and facilities like firefighting, fuel, adequate communication etc. The lessee shall pay for and provide accommodation, transport and meals for the lessor personnel whenever they are required to stay out overnight of the base. 9.2 Security of helicopters and helipads, security checking of passenger's baggage and cargo is to be arranged by lessee on all locations. 9.4 The lessee shall provide necessary security for helicopters, crew and fuel at the main base and the other locations. Therefore, as seen, the above clauses in themselves make it clear that the possession and effective control of the helicopters remain with the lessees and the pilots and crews provided by the objector were for the purpose of facilitating the flying of the helicopters including determining of the route and suitability of flying and landing conditions and that once the helicopter has been made available at the base, the lessees as per their absolute will and option were entitled to use the helicopter in the way the mann....
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....is clients/customers. Moreover, the judgments of higher Courts cited and relied upon by the objector in support of his case support the case of the Revenue rather than the case of the objector. Therefore, in the entirety of the facts and circumstances of the case and the detailed discussion made above, the irresistible conclusion arrived at by the undersigned is that there is no force and substance in the arguments of the objector and orders of default assessments framed by the VATO of Special Zone are found to be absolutely in accordance with the provisions of law. Hence, the objections of the objector are rejected and the orders of default assessments of tax, interest and penalties issued by the VATO of the Special Zone are upheld. Ordered Accordingly."" 21. Proceeding then to deal with the questions touching upon the merits of the dispute, the Tribunal framed the first issue to be of effective control and possession. After noticing the rival submissions which were addressed, the Tribunal held as follows: "17. As noticed above, admittedly the dealer-appellant did not submit before learned OHA all the agreements arrived at between the dealer-appellant and the other party, and....
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....A for the appellant also referred to its terms also. In the given situation, the issue regarding transfer of right to use Helicopter is being decided keeping in view the terms and conditions of the agreements made available to this Appellate Tribunal." 22. The Tribunal thereafter proceeded to notice the various decisions which appear to have been cited for its consideration and took note of what it chose to describe as the special features of the agreement in question. It, in this regard, firstly took into consideration Clauses 17 and 18 which principally dealt with confidentiality and security. Upon construing those clauses, it proceeded to hold that the judgment of our Court in Hari Durga Travels vs. CTT 2015 SCC OnLine Del 9442 was clearly distinguishable. This becomes evident from a reading of paragraph 21 of the order impugned before us: "21. Same clause 17 regarding confidentiality also finds mention in the agreement between Appellant and Punjab Government, other governments and certain non-govt. entities. In Hari Durga Travel's cast neither any security concerns of the passengers were involved nor there was any such term in the agreement. This special feature of the....
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....pparent that the Tribunal has thereafter proceeded to evaluate a host of judgments which were cited by respective sides and essentially sought to ascribe and assign reasons as to why those were either distinguishable or did not apply to the facts which obtained in the present matter. 26. Its conclusions ultimately appear in paragraph 37 and which is extracted hereinbelow: "37. As a result, it is held that this is a case of transfer of legal right to use the goods by the appellant to the lessees to the exclusion of itself and all others, and the transaction have rightly been considered and declared to be a transactions of sale in view of the provision of section 2(zc)(vi) of DVAT Act. In view of the above discussion, the settled law and applying the same to the facts of the present case, it is held that in the agreements, the intention of the parties was to transfer right of use of the goods-helicopter(s)-by the appellant to the other party (lessee) and that De dealer-appellant actually and legally transferred right to use the goods to them. Consequently, as regards the agreements executed, there is no merit in the appeals regards levy of tax and interest u/s 32 of DVAT Act, ....
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....xation of hire purchase transactions as well as transfer of controlled commodities. It was these complexities faced by various Provincial Governments, Mr. Gulati explained, which led to a reference being made to the Law Commission of India. 30. It was the recommendations ultimately formulated by the Law Commission which led to the insertion of clause (29A) in Article 366 of the Constitution. According to Mr. Gulati the scope and the meaning to be ascribed to the phrase "transfer of right to use" is no longer res integra and stands authoritatively settled by the Supreme Court in BSNL vs. Union of India (2006) 3 SCC 1. Mr. Gulati submitted that the decision in BSNL had identified the five principal attributes which must be found to imbue a transaction in order for it to be held that there had been a transfer of a 'right to use'. Mr. Gulati submitted that tested on the aforesaid principles, it would be apparent that none of the clauses of the agreement could possibly be construed as embodying a transfer of a right to use. 31. In order to buttress the aforenoted submission, Mr. Gulati firstly took us through the decision of the Supreme Court in BSNL and more particularly to the follo....
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....he sale element could be isolated and be subjected to sales tax. xxxx xxxx xxxx 44. Of all the different kinds of composite transactions the drafters of the Forty-sixth Amendment chose three specific situations, a works contract, a hire-purchase contract and a catering contract to bring them within the fiction of a deemed sale. Of these three, the first and third involve a kind of service and sale at the same time. Apart from these two cases where splitting of the service and supply has been constitutionally permitted in sub-clauses (b) and (f) of clause (29-A) of Article 366, there is no other service which has been permitted to be so split. For example, the sub-clauses of Article 366 (29-A) do not cover hospital services. Therefore, if during the treatment of a patient in a hospital, he or she is given a pill, can the Sales Tax Authorities tax the transaction as a sale? Doctors, lawyers and other professionals render service in the course of which can it be said that there is a sale of goods when a doctor writes out and hands over a prescription or a lawyer drafts a document and delivers it to his/her client? Strictly speaking, with the payment of fees, consideration does pas....
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....f Objects and Reasons for the Forty-sixth Amendment is, inter alia, as follows: "2. By a series of subsequent decisions, the Supreme Court has, on the basis of the decision in Gannon Dunkerley case [State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd., (1958) 9 STC 353 : AIR 1958 SC 560 : 1959 SCR 379] held various other transactions which resemble, in substance, transactions by way of sales, to be not liable to sales tax. As a result of these decisions, a transaction, in order to be subject to the levy of sales tax under Entry 92-A of the Union List or Entry 54 of the State List, should have the following ingredients, namely, parties competent to contract, mutual assent and transfer of property in goods from one of the parties to the contract to the other party thereto for a price. 3. This position has resulted in scope for avoidance of tax in various ways. An example of this is the practice of inter-State consignment transfers i.e. transfer of goods from head office or a principal in one State to a branch or agent in another State or vice versa or transfer of goods on consignment account, to avoid the payment of sales tax on inter-State sales under the Central Sales Tax Ac....
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....Gannon Dunkerley & Co. [State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd., (1958) 9 STC 353 : AIR 1958 SC 560 : 1959 SCR 379] Sub-clause (c) is the result of K.L. Johar and Co. v. CTO [(1965) 2 SCR 112 : AIR 1965 SC 1082] . Sub-clause (d) is consequent to A.V. Meiyappan v. CCT [(1967) 20 STC 115 (Mad)]. Sub-clause (e) is the result of CTO v. Young Men's Indian Assn. (Regd.) [(1970) 1 SCC 462]. Sub-clause (f) is the result of Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [(1978) 4 SCC 36 : 1978 SCC (Tax) 198] and State of Punjab v. Associated Hotels of India Ltd. [(1972) 1 SCC 472 : (1972) 29 STC 474]. 106. In the background of the above, the history prevailing at the time of the Forty-sixth Amendment and pre-enacting history as seen in the Statement of Objects and Reasons, Article 366 (29-A) has to be interpreted. Each fiction by which those six transactions which are not otherwise sales are deemed to be sales independently operates only in that sub-clause." 34. The issue of a "transfer of a right to use" again arose for consideration of the Supreme Court in Rashtriya Ispat Nigam, which was yet another decision cited by Mr. Gulati for our consideration. The....
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.... it had provided two deluxe busses on hire for being plied as per the requirements of the latter. The taxing authorities appear to have taken the position that the same would be exigible to tax in light of Section 2 (zc) (vi) of the DVAT Act. Negating that contention, our Court in Hari Durga Travels after noticing the judgment of the Supreme Court in BSNL held as follows: "25. A copy of the agreement dated January 19, 2005, initially for a period of five years (from January 20, 2005 to January 19, 2010) entered upon by the appellant (assessee) with DTC has been filed on record. It created an obligation on the assessee to provide on hire to DTC its "new AC deluxe buses (volvo) (specified buses bearing registration No. DL1PB 7420 and DL1PB 7421) together with the driver" for being run on "long inter-State routes" of DTC. The seating capacity and other specifications including the model of the vehicles (2004), body, colour of the exterior, etc., were spelt out in the contract in detail. It was stipulated that the drivers, employees (whole time) of the assessee (owner), must hold HTV licence with PSB badge having minimum five years' experience and terms and conditions of his engageme....
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.... the driver and extent of their respective obligation. 29. The owner is obliged by the contractual terms to take prior permission before the vehicles are sent for repairs with obligation to indicate in advance the period of non-availability of the vehicles on such account. The owner is not entitled to "withdraw the bus from operation without prior written consent" of DTC nor can it use these vehicles "for any other purpose at any time", nor "transfer or otherwise alienate (except with prior written permission of DTC) vehicles" during the period of agreement. It is under a general obligation to "abide by the orders" of DTC or an officer authorized by it." 36. After noticing the relevant provisions of the agreement, the Court held: "32. The Revenue's contention is that effective control was made over to the DTC. In support, it relies upon the various stipulations in the agreement such as-exclusive use of the bus on DTC routes; exclusive right to collect advertisement revenue by the DTC; the entire revenue being collected by DTC employees, i.e., its conductor; maintenance or repairs not at the choice of the owner but after approval of the DTC; restriction upon right to terminate ....
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....stitution of India. Rashtriya Ispat Nigam Ltd. [2002] 126 STC 114 (S.C.); (2002) 3 SCC 214 spells out that where even access or physical control of machinery or such like goods are made over, such a transaction by itself would not be transfer of the right to use if effective control is maintained by the owner. In the present case, the owner bears responsibility for any mishappening or accident. It commits to be the bus owner at all times; the registration and licenses are in its favour and most importantly, the DTC has limited use for these buses, i.e., to ply them (of course through driver provided by the owner) at the scheduled routes in terms of the contract. In these circumstances, this court is of the opinion that the Tribunal could not have distinguished the decision of the Division Bench of this court in International Travel House [2009] 25 VST 653 (Delhi); (2009) 8 AD (Delhi) 13. 34. In our considered opinion, the Tribunal has fallen into error by declining to apply the ratio of International Travel House Ltd. [2009] 25 VST 653 (Delhi); (2009) 8 AD 13 (Delhi) and by concluding that the contract in question has resulted in transfer of the effective control and possession o....
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....ime. In simple terms, "charter party" is the mere hiring of a ship. 44. Under the maritime law, charter parties are standardised and grouped into 3 main classifications, namely, (i) voyage charters, (ii) time charters, and (iii) demise or bare boat charters. 45. In a voyage charter, the ship is hired to carry a full cargo on a single voyage. In a time charter, the ship is hired for a fixed period of time. In a demise or bare boat charter, the charterer takes over complete control of the ship for a specific purpose or period of time. The difference between a voyage charter and time charter on the one hand and a demise/bare boat charter on the other is that under the first two categories, the ship remains under the control of the owner, as to manning and navigation. In the case of demise or bare boat charter, the control shifts to the charterer. 46. In the case on hand, the parties to the contract have used the expression "charter hire", only because of the fact that they were dealing with offshore drilling rigs. Articles 3.0, 4.0 and 9.2 of the agreement make it clear that the agreement between the parties does not fall under the category of a charter similar to a demise or ba....
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....lant has merely agreed to provide services for a limited number of hours by the use of the helicopters. The helicopter remains in the possession and control of the Appellant who operates it for providing services to its client. Therefore, there is no exclusion of the transferor's rights as the Appellant uses it for the flights operated for the client and can use the helicopter for any other purpose beyond the hours for which the Helicopter is used for providing services to its client. (f) The customer during the term of the agreement cannot direct the use of the helicopter at its free will, without the consent of the Appellant. The customer is obligated to take prior permissions from the Appellant and also act as per the directions given by the Appellant. It is only the Appellant who uses the Helicopter and the clients only instructs the Appellant on the flights it wants to undertake. (g) The Appellant is under an obligation to provide the helicopters as per the hire schedule and program of the day provided by the customer. The customer is only concerned about the availability of helicopter. The Appellant is free to provide services of the helicopter to other customers when not....
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....ading of Clauses 5.3.1 to 5.3.6 and which read as under: "5.3.1 The Lessor shall be allowed to ground the helicopter for maintenance@ 4 days per month during the term of this Agreement. The said ground time for the entire period of the Agreement shall be credited to the Lessor's account at the commencement of this agreement and the Lessor shall be free to utilize such credited days at any time of the year. However, the helicopter shall not be physically grounded by the Lessor for more than 7 days at a stretch at one time & such long groundings shall not exceed two times during the term. Further, if the helicopter is grounded for maintenance for days more than the limits specified under this clause, the Lessee shall have discretion to deduct Fixed Monthly Charges on prorata basis for the entire number of days of grounding excluding allowable days of grounding under this clause. 5.3.2 The Lessor will carry out all its maintenance, repair, overhaul or service activities during such times other than the timings of an operational day so that the flying activities during the days other than ground time as specified in Article 5.3.1 is not hampered or jeopardized. The Lessor shall g....
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....ss of the rival submissions which were addressed, it would be appropriate to indicate the position which appears to emerge upon an evaluation of the various clauses of the agreement which were cited for our consideration. It must be noted at the outset that the mere stationing of the helicopter at a particular base, and in this case at Port Blair, would perhaps neither be decisive nor conclusive of the question which stands posited. We are not concerned with where the equipment may be based or stationed and which, in any case, would distract one from focusing on the primary question of a transfer of a right to use. While the appellant was undoubtedly required to fulfil the obligations attached to the charter, the principal question which arises for our consideration is whether the agreement entailed and embodied a transfer of a right to use. 44. The placement of the equipment for the exclusive use of the A & N Administration or the dedicated hours which were required to be adhered to would also not be determinative. The primordial question which would remain would be whether the possession and control of the helicopter stood transferred and placed in the hands of the Charterer to ....
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....transfer of right to use" as involving a passage of control over economic benefits of property coupled with a termination of rights inhering in one of the parties and a corresponding creation in the hands of another. While we do not propose to render any comment on the aforenoted formulation, we for the time being proceed on the basis that the aforesaid quotation represents the correct test to be applied for the purposes of discerning a transfer of a right to use. 49. As per the Tribunal itself, there has to be a transfer of control over property and the said transfer must result in the rights in the property moving from one entity and being conferred on another. However, and as the Supreme Court succinctly explained in BSNL, the transfer of a right to use would be satisfied provided it entails the conferment of a legal right to use the goods and the same being to the exclusion of the transferor's right to use. 50. We recently, in Indian Compressors Ltd. vs. Union of India & Ors. W.P.(C) 2960/2017 dated 04 November 2024, had an occasion to review the precedents rendered in the context of Article 366 (29A) (d) and the transfer of a right to use which by way of a constitutional fic....
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.... the terms of the charter party agreement, held: "43. We are not turning our decision upon the terms used like 'let', 'hire', 'delivery' and 'redelivery' but on the other essential terms of the Charter Party Agreement entered in the instant case which clearly makes out that there is a transfer of exclusive right to use the vessel which is a deemed sale and is liable to tax under the KST Act. In the instant case, full control of the vessel had been given to the charterer to use exclusively for six months, and delivery had also been made. The use by charterer exclusively for six months makes it out that it is definitely a contract of transfer of right to use the vessel with which we are concerned in the instant matter, and that is a deemed sale as specified in article 366 (29A) (d). On the basis of the abovementioned decision, it was urged that all Charter Party Agreements are service agreements. The submission cannot be accepted, as there is no general/invariable rule/law in this regard. It depends upon the terms and conditions of the charter-party when it is to be treated as only for service and when it is the transfer of right to use. ... 54. When we consider the charter-par....
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.... such activities that enable the customer's use of the service provider's goods without transfer of the right of possession and effective control. This provision creates an element of taxation over a service, as opposed to a "deemed sale" under article 366 (29A) (d). For the purpose of clarification, the Department of Revenue issued a Circular, D.O. F. No. 334/1/2008-TRU, dated February 29, 2008. The said circular clarified the applicability of section 65(105) (zzzzj) vis-a-vis article 366 (29A) (d). The relevant portions of the circular are as follows : "4.4 Supply of tangible goods for use : 4.4.1 Transfer of the right to use any goods is leviable to sales tax/ VAT as deemed sale of goods (article 366 (29A) (d) of the Constitution of India). Transfer of right to use involves transfer of both possession and control of the goods to the user of the goods. 4.4.2 Excavators, wheel loaders, dump trucks, crawler carriers, compaction equipment, cranes, etc., offshore construction vessels and barges, geo-technical vessels, tug and barge flotillas, rigs and high value machineries are supplied for use, with no legal right of possession and effective control. Transaction of allowing an....
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....ence of two characteristics, namely, (a) supply of tangible goods including machinery, equipment and appliances for use, (b) there is no transfer of right of possession and effective control of such machinery, equipment and appliances. According to the members of the first petitioner, they supply offshore support vessels to carry out jobs like anchor handling, towing of vessels, supply to rig or platform, diving support, fire fighting, etc. Their marine construction barges support offshore construction, provide accommodation, crane support and stoppage area on main deck or equipment. Their harbour tugs are deployed for piloting big vessels in and out of the harbour and for husbanding main fleet. They give vessels on time-charter basis to oil and gas producers to carry out offshore exploration and production activities. The right of possession and effective control of such machinery, equipment and appliances is not parted with. " (emphasis supplied) 20. The taxable service is defined as a service which is provided or which is to be provided by any person to another "in relation to supply of tangible goods". The provision indicates that the goods may include machinery, equipment or....
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....eself of ; to employ ; to utilize ; to carry out a purpose or action by means of ; to put into action or service, especially to attain an end. State v. Howard, 221 Kan. 51, 557 P.2d 1280, 1281. Non-technical sense. The 'use' of a thing means that one is to enjoy, hold, occupy or have some manner of benefit thereof. Use also means usefulness, utility, advantage, productive of benefit." 27. The expression "use" does not have a fixed meaning. The content of the expression must be based on the context in which the expression is adopted. The use of an article may or may not result in a visible change in its form or substance. Moreover, the nature of use is conditioned by the kind of article which is put to use. Section 65 (105) of the Finance Act, 1994 envisages myriad interpretations of the expression "use", in a variety of services such as telecommunication, renting of immovable property, and services related to art, entertainment, and marriage. In the case of some articles, use may be signified by a physical operation of the article by the person who uses it. In such a case, actual physical use is what is meant by the supply of the goods for the use of another. In the case of oth....
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....eed, without the SKID equipment there would be no gas supply agreement. In fact, in the GSA, the buyer has also provided a warranty to ensure that the "buyer's facilities" remain technically and operationally compatible with the "seller's facilities", both of which include the "measurement equipment". This warranty would not have been provided if the measurement equipment was not of "use" to the buyer. The equipment is thus a vital ingredient of the agreement towards protecting the mutual rights of the parties and in ensuring the fulfilment of their reciprocal obligations as seller and buyer in regulating the supply of gas. As an incident of regulating supply, it determines the correct quantity of gas that is supplied. The obligation to supply, install and maintain the equipment is cast upon the seller as an incident of control and possession being with the seller. Section 65 (105) (zzzzj) applies precisely in a situation where the use of the goods by a person is not accompanied by control and possession. "Use" in the context of SKID equipment postulates the utilization of the equipment for the purpose of fulfilling the purpose of the contract. Section 65 (105) (zzzzj) does not req....
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.... basis of which the contractual stipulations may now be examined. 52. The agreement in unequivocal terms defined the equipment to be the Dauphin SA 365N or equivalent helicopter. While it was admittedly stationed at Port Blair, no part of the agreement can possibly be construed as placement of that equipment exclusively in the hands of the A & N Administration. The identification of the equipment was in furtherance of the charter facility which was proposed to be extended by the appellant to that Administration. 53. While defining the scope of service, all that the agreement provided was that the helicopter would be exclusively available to the Charterer. Similarly, the Charterer was conferred the right to requisition such flights as may be required from time to time. However, the flight as well as the equipment was to be exclusively managed and regulated by the appellant and the flights were to be operated by personnel who were in their employment. There was no contractual relationship that existed between those operators and staff on the one hand and the A & N Administration on the other. Additionally, the obligation to keep the equipment insured was also one which stood placed....
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....ven the right to use all outfits, equipment, and appliances on board the vessel at the time of the delivery, including the whole reach, burthen, and deck capacity. Thus, in our considered opinion, merely by providing the staff, insurance, indemnity, and other responsibilities of bearing officials costs. Effective control for the entire period of six months has been given to the charterers. It is a case of transfer of right to use the vessel for which certain expenses and staff are to be provided by the contractor, which is not sufficient to make out that the control and possession of the vehicle are with the contractor. The possession and control are clearly with the charterer. As in essence, it has to be seen from a conjoint reading of various conditions whether there is a transfer of right to use the vessel. In our considered opinion there is not even an iota of doubt that under the charter agreement coupled with the instructions to tenderers, general conditions and special conditions for the contract as specified in the tender documents and charter party clauses, there is a transfer of right to use the vessel for the purposes specified in the agreement." 56. The Supreme Court t....
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....ision in Aggarwal Bros., we find that the assessee therein was dealing in shuttering material used in the course of construction of buildings. It was receiving hire charges in respect of the shuttering material. The Supreme Court on facts had found that the customers who had hired the shuttering material had complete and effective control over the same during the construction process. It was in the aforesaid backdrop that it held as follows: "2. The assessees (appellants) hire shuttering to builders and contractors who use it in the course of construction of buildings. The assessees were served with notices under the Haryana General Sales Tax Act, 1973 ("the said Act") requiring them to pay sales tax on such hire charges and assessment orders were then so made. The assessment order in the case of M/s DD Shuttering recorded that the assessee dealt in shuttering materials used in the construction of buildings and received hire charges from its various customers. The hire charges received by it were sales within the meaning of Section 2(l)(iv) of the said Act. The writ petitions were filed to quash these assessment orders and it was contended that the aforementioned provision of the....
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....pe of "tax on sale or purchase of goods" so that it may include within its scope, the transfer, delivery or supply of goods that may take place under any of the transactions referred to in sub-clauses (a) to (f) of clause (29-A) of Article 366. The works contracts, hire purchase contracts, supply of food for human consumption, supply of goods by association and clubs, contract for transfer of the right to use any goods are some such economic activities. 53.2. The transfer of the right to use goods, as distinct from the transfer of goods, is yet another economic activity intended to be exigible to State tax. 53.3. There are clear distinguishing features between ordinary sales and deemed sales. 53.4. Article 366 (29-A) (d) of the Constitution implies tax not on the delivery of the goods for use, but implies tax on the transfer of the right to use goods. The transfer of the right to use the goods contemplated in sub-clause (d) of clause (29-A) cannot be equated with that category of bailment where goods are left with the bailee to be used by him for hire. 53.5. In the case of Article 366 (29-A) (d) the goods are not required to be left with the transferee. All that is required....
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.... whether the goods are delivered for use subject to the condition that the goods should be in existence for use. 54.3. In the transaction for the transfer of the right to use goods, delivery of the goods is not a condition precedent, but the delivery of goods may be one of the elements of the transaction. 54.4. The effective or general control does not mean always physical control and, even if the manner, method, modalities and the time of the use of goods is decided by the lessee or the customer, it would be under the effective or general control over the goods. 54.5. The approvals, concessions, licences and permits in relation to goods would also be available to the user of goods, even if such licences or permits are in the name of owner (transferor) of the goods. 54.6. During the period of contract exclusive right to use goods along with permits, licences, etc. vests in the lessee." 62. Ultimately, on facts the Supreme Court in Quick Heal held as under: "57. The sum and substance of the ratio of BSNL [BSNL v. Union of India, (2006) 3 SCC 1] as discernible is that the contract cannot be vivisected or split into two. Once a lump sum has been charged for the sale of CD (....