TaxTMI 
TaxTMI 
2025 (4) TMI 439
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....ver, for facility of reference, the facts are being taken from VATAP-53-2015. BRIEF FACTS OF THE CASE 3. The appellant-company is engaged in the sale of distribution of telecommunication equipments for infrastructure services to telecom companies in India. The appellant company had purchased telecom equipment from M/s ZTE Corporation China, as per agreement dated 21.11.2006. The equipments were bought on a total credit basis for 24 months after which the payment was required to be made in installments by the appellant-company to M/s ZTE Corporation, China as per the agreement. Thereafter, the appellant company entered into a further agreement with M/s Spice Communications Ltd., on 20.12.2006 for supplying the equipments to them on a two years trial use basis and also gave an option to M/s Spice Communications Ltd to decide the purchase of said equipments at the end of two years trial period. 4. The Assistant Excise and Taxation Commissioner cum Designated Officer, U.T. Chandigarh, on the basis of inspection on the business premises of M/s Global Mobile Infrastructure Pvt. Limited 190, Ramdarbar, Industrial Area, Phase II, Chandigarh, conducted by the ETO-cum-Designated Off....
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....eived is also not sale. 9. Learned counsel for the appellant (s) further contends that if the right to use goods is to be taxed, it is only rental value of the goods, which can be taxed. Although, the appellant-company has not received any rent, therefore, the entire value of the goods cannot be taxed. 10. He has relied upon judgment of this Court in a case of GE Captial Transportation Financial Services Ltd vs. State of Haryana and anr., [2013] 63 VST 329 (P&H). 11. Per contra, learned counsel for the respondent contends that the goods were delivered by the appellant-company to M/s Spice Communications Pvt. Ltd. on trial basis for 24 months, which amounts to complete sale and, thus covered under the definition, as defined under Section 2 (zf) (iv) of the Act, 2005. 12. He further contends that the amount of consideration is also mentioned in the agreement and goods are not returned till date. Further the price of goods is mentioned in the challans which are very much on record. As per the challans, most of goods are consumable, therefore, the price of goods would be sale price. 13. We have heard learned counsel for the parties and perused the whole records of the ca....
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.... transfer of property in goods for cash, deferred payment or other valuable consideration and includes:- iv) 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. A perusal of above mentioned Section and the transfer of goods that has taken place makes it clear that the goods transferred by the appellant company are covered under the definition of 'Sale'. I also find that the appellant transferred goods through delivery challan which contains the value of the transferred goods. It is also seen that two years period has already passed after the transfer of goods. During the course of the arguments, the Ld. Counsel was asked whether the goods transferred on trial basis for two years have been received back but he failed to give the answer in the affirmative. Nor any such documentation has been shown to this court or to the authorities below. It is clear that the goods transferred had already been consumed. The delivery of these goods by the appellant Company to M/s Spice Communications Ltd. thus necessarily constitutes a sale. In view of all the facts on reco....
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....at the end of the respective trial period of 24 months from the date of each supply. Spice Mobile or any Suppler designated by Spice Mobile in this behalf, shall provide the Equipments and the Services in accordance with this Article 2 read with Annexures A to D1 attached to this Agreement as follows:- ANNEXURE A: Priced BOQ: ANNEXURE B: Technical Specifications; ANNEXURE B1: Planning Guidelines; ANNEXURE B2: Network KRI Measures: ANNEXURE C: Scope of Supply ANNEXURE C1: Scope of Work (Swap Sites) ANNEXURE C2: Responsibility Matrix ANNEXURE C3: Scope of Service ANNEXURE D: BSS-TCT ANNEXURE D1: NSS-TCT XXX xxx xxxx Article 5: PRICE OF THE AGREEMENT The total price of this Agreement is Indian rupees equivalent to US$ 39.5 million (US dollar Thirty Nine point Five Million only) as all inclusive price under this Agreement as set out in Priced BOQ: However taxes and duties as may be applicable at the time of raising of Invoice by Spice Mobile (after completion of 24 months trial period and KPIs having been met), shall be charged extra. ARTICLE 6: TERMS OF PAYMENT....
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....e equipments by accepting each such equipments, failing which Spice Com shall return each of such Equipments on "as is where is" basis at the end of the respective trial period of 24 months from the date of each supply. 20. Further Article 8 as referred to above specifically states that the Spice Mobile shall despatch the equipments within 15 days after receipt of security deposit from Spice Com as specified in Article 6.1 (Payment for Equipment Price) of the agreement. 21. The delivery challan in the remark column shows that the material is being sent on trial basis. 22. A perusal of the agreement between the appellant-Company and Spice Communications Pvt. Ltd. shows that the goods were transferred/supplied on trial use basis for a period of 24 months. It is specifically mentioned in the agreement that if the Spice Communications does not decide to purchase each of the respective equipments by accepting each, it shall return each of such equipment. Further, if the Spice Communications Pvt. Ltd. does not intend to purchase the equipments at the end of 2 year trial period, it shall return each of such equipment. 23. Undisputedly, in the present case, the goods are not re....
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....ement is terms of the payment which states about the security deposits and the payment to be made in installments. 29. Now coming to GE Captial Transportation Financial Services Ltd's case (supra), referred to by learned counsel for the petitioner. The relevant portion of the judgment reads as under:- "1 xxx xxx xxx "2. After hearing the learned counsel for the parties, we find that the following substantial question of law arises for consideration:- "Whether in the facts and circumstances of the present case, the Haryana Tax Tribunal, Chandigarh has correctly passed an order that the lease rentals for the entire lease period is a sale price when the appellant delivered the goods, therefore, the lease amount received or receivable would be quantified as turnover? 7. In terms of Article 366 (29A) (d) of the Constitution, sale includes sale and purchase of goods including the transfer of the right to use in goods for any purpose whether or not for a specific period for cash, deferred payment or other valuable consideration. The "sale", as defined under the Act is in tune with the said provisions in the Constitution. In terms of the provisions of....
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....f sub-clause (d), the goods are not required to be left with the transferee. All that is required is that there is a transfer of the right to use the goods. In our view, therefore, on a plain construction of sub-clause (d) of Clause (29A), the taxable event is the transfer of the right to use the goods regardless of when or whether the goods are delivered for use. What is required is that the goods should be in existence so that they may be used. And further contract in respect thereof is also required to be executed. Given that, the locus of the deemed sale is the place where the right to use the goods is transferred. Where the goods are when the right to use them is transferred is of no relevance to the locus of the deemed sale. Also of no relevance to the deemed sale is where the goods are delivered for use pursuant to the transfer of the right to use them, though it may be that in the case of an oral or implied transfer of the right to use goods, it is effected by the delivery of the goods. (27) Article 366 (29A) (d) further shows that levy of tax is not on use of goods but on the transfer of the right to use goods. The right to use goods accrues only on account of the....
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....The turnover is aggregate of the goods sold or purchased by a dealer during a tax period in terms of Rule 2 (zg) of the Rules. Since the transfer of the right of use in the vehicle is the sale falling within the definition of Section 2(zf), therefore, the rentals received or receivable during the tax period is the sale price received by the dealer, exigible to tax in a Financial Year. The right to use vehicle is dependent upon the monthly payment of rentals and therefore, the monthly rentals received or receivable by the dealer is a turnover and consequently the sale price. 11. In view of the said fact, we find that the orders passed by the Authorities under the Act are not sustainable. The lease rental received or receivable during the tax period only, as a right to use goods, is the turnover forming part of sale price." 30. A perusal of the above referred to judgment shows that the facts of the same are distinguishable from the facts of the present case since the substantial question of law in the above referred to judgment reads as under:- "Whether in the facts and circumstances of the present case, the Haryana Tax Tribunal, Chandigarh has correctly passed a....