TaxTMI 
TaxTMI 
2026 (1) TMI 647
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....ation Limited is engaged in the business of dealing with tractors, trailers and agricultural implements. During the assessment year 2001-02, under the APGST Act, the assessing authority initially allowed exemption on hire charges received by the respondent for the bulldozers working on an hourly basis considering these transactions as service charges rather than transfer of right to use goods. However, the Deputy Commissioner (CT), Abids, revised this order and levied tax at 8% under Section 5(E) of the APGST Act, treating the bulldozer hire charges as turnover liable to tax. The Deputy Commissioner further held that the transaction involved transfer of right to use goods in the form of bulldozers hired to farmers on hourly basis. 4. Aggrieved by the Deputy Commissioner's order, the respondent filed an appeal before the STAT. The STAT allowed the appeal in favor of the respondent, setting aside the order of the Deputy Commissioner. The STAT opined that there was no transfer of right to use the goods as there was no effective control of the chattel vested with the transferee (farmers). The STAT concluded that the essential ingredients of transfer of right to use goods under S....
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....the bulldozers for the agreed period and purposes and the fact that the tenure of use is short (hourly basis) and that ownership is not transferred does not vitiate the transaction from being a transfer of right to use goods. He thus contends that it is immaterial whether the bulldozers are used for purposes other than those mentioned in the agreement or even works executed strictly within the framework of the agreements constitute taxable turnover under Section 5(E) of the APGST Act. 9. Lastly, the learned Special Government Pleader for State Tax relied on several judicial precedents to support his contentions. Firstly, he relied upon a full Bench judgment of the STAT in M/s. Vananberg IT Park vs. State of A.P. (T.A. Nos. 958, 959, 960/2007) wherein it was upheld that tax levied on rentals received towards lease of equipment to IT companies, recognizing such transactions as falling within the definition of Section 5(E) of the APGST Act. Secondly, he relied upon a decision rendered by the Gauhati High Court in M/s. HLS Asio Limited vs. State of Assam 8 VST 314 wherein it was held that transfer of equipment, tools and machinery to be operated by technically qualified personnel of....
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....assessment years 1986-87 and 1987-88 which held that under similar terms and conditions there was no transfer of right to use machinery in favour of contractors. The learned counsel for the respondent argues that the application form clearly describes it as an "Application for development of land by bulldozer and related apparatus" emphasizing that it is a service contract for land development work, rather than a lease or transfer of equipment. The various rules appended to the application further demonstrate that the respondent maintains responsibility for the machinery, its operation, and execution of the work while the farmers' obligations are limited to payment and providing access to the land. 13. Having heard the contentions put forth on either side and on perusal of records, the question of law that arises for consideration in the instant case is "whether the transaction involving bulldozer hire charges collected by the respondent corporation constitutes a transfer of right to use goods under Section 5(E) of the APGST Act?" 14. It would be trite at this juncture to refer to a recent judgment of the Hon'ble Supreme Court in the case of K.P. Mozika vs. Oil and Natura....
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....ies and only after obtaining such permission, the Corporation commences the work. The applicant has to give an undertaking to corporation stating that for executing the above works, if any loss is incurred the corporation do not have any responsibility. Rules & Regulations 4) On satisfying the above conditions and on receipt of the advance, though the date of commencement of work is not specified by the Corporation, the Corporation would take all steps for executing the work. The Corporation is not responsible for the delay in executing the works. The Corporation has got full authority to withdraw the men and machinery after executing the work and before concluding the work. In such circumstances, the applicant has got a right to receive the balance amount from the Corporation. The applicant has no authority to seek compensation. 5) If the execution of the works by machine is halted for any reason on account of the applicant, the amounts payable to the Corporation are to be paid by the applicant according to the price list. 6) The Corporation is not responsible for results in the execution of works. The applicant do not have any right to seek ref....
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....respondent and the bulldozer operators are the employees of the respondent; there was no delivery of bulldozer at any point of time to clients; there is absolutely no transfer of right to use the bulldozer; even during the period covered by the contract the road taxes, tolls and other imposts are paid by the respondent and licenses are in the name of the respondent; even during the period covered by the contract the insurance is paid by the respondent; even during the period covered by contract the road-risk is borne by the respondent; during the contract period the fuel and maintenance expenses are borne by the respondent; and lastly the respondent is paid on hourly basis for the period bulldozer work. 18. The amendments to the statute and the judicial precedents cited by the State deal with the situations where there is actual transfer of possession, control and legal right to use the goods to the transferee, which is fundamentally different from the present case where the respondent retains complete dominion over the machinery throughout the transaction. The fact that security responsibility is placed on the applicant (farmers') or that amounts remain payable even if work is ....