TaxTMI 
TaxTMI 
2026 (9) TMI 1586
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....e service falling outside the scope of the MVAT Act. Factual Matrix:- 4. The facts relevant for adjudication of this Appeal are encapsulated below:- 5. The Appellant entered into contractual terms for hire with Hindustan Construction Company Ltd. and Era Constructions India Ltd. ("Companies" for short) dated 18th January 2005 and 31st July 2004, respectively. By the said contracts, the Appellant agreed to provide certain number of cranes, as stipulated in the contractual terms, for hire, to the said Companies. The Companies were to pay a fixed rate of Rs. 3,10,000/- per month and Rs. 2,50,000/- per month, respectively, as hire charges. 6. A dispute arose between the parties on the issue as to whether the hire charges/rent paid by the Companies to the Appellant should be treated as sale falling under the provisions MVAT Act or such activity should be categorized as service. 7. The matter then fell for adjudication before the Maharashtra Sales Tax Tribunal ("Tribunal" for short). The order of the Appellate Authority dated 6th June 2015 i.e. Deputy Commissioner of State Tax, was challenged by the Appellant before the Tribunal, as the case of the Respondent (Revenue) was....
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....ales Tax, Maharashtra vs. Ms. General Cranes 2015 SCC OnLine Bom 4867; II) State of Andhra Pradesh & Another vs. Rashtriya Ispat Nigam Ltd. 114 STC 126; III) State of Maharashtra vs. Sanghavi Movers Ltd. 128 GSTR 335; IV) K.P. Mozika vs. Oil and Natural Gas Corporation Ltd. & Ors. Civil Appeal No.3548 of 2017 December on 9th January 2024; V) Aurobindo Highway Services v. State of Maharashtra. MVXA No.8 of 2015 decided on 1st August 2023; According to her, the reasoning and ratio in the above decisions would clearly support the case of the Appellant. This, more particularly, when the legal right in the cranes including its ownership is retained by the Appellant, which, is duly supported by the contractual terms, executed by the Appellant with the Companies. She has also referred to the decision of the Supreme Court in Bharat Sanchar Nigam Ltd. and Another vs. Union of India and Others (2006) 3 SCC 1 to submit that none of the attributes, as set out in the decision to constitute transfer of right to use the goods, are present in the given facts, so as to attract MVAT under the Act. 13. Ms. Badheka would state that only the fuel for the cranes....
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....Ltd. (Supra), more particularly, on paragraph 97 thereof, to urge that the transaction in the given case would partake all attributes of sale to the Companies by the Appellant, which necessities transfer of right to use the goods. In view thereof, the transaction in the given case would clearly attract levy of MVAT, under the Act. 18. Ms. Chavan in rejoinder would submit that all decisions cited by Ms. Badheka are clearly distinguishable. This for the reason that considering the terms of the contract, in the given case, clearly establish the transfer of right in favour of the Companies, to use the cranes. According to Ms. Chavan, here is a situation where even under the contractual terms, evidently there is a transfer of right to use the cranes, the possession and control of which remains with the Companies. The provisions of the Act would, therefore, clearly apply attracting levy of MVAT, in terms of paragraph 97 of the Supreme Court decision in Bharat Sanchar Nigham Ltd (Supra). 19. For all the above reasons, Ms. Chavan would urge that the Appeal of the Appellant against the Impugned Order of the Tribunal be dismissed. Analysis :- 20. We have heard the submissions of ....
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....tracted as under:- (i) Subject/Re- Hiring of 3 numbers 75 MT Cranes; (ii) Rate - At Rs. 3,10,000.00 per month, round the clock for 28 days working. (Minimum 280 hours per month). Any working hours beyond 280 hours per month, shall be paid on prorata basis; (iii) Period of Hire / Duration of Rental Period - Period commencing from 01/02/2005 up to 30/04/2005 which may be extendable for further period; (iv) Insurance - Equipment shall be insured by the Appellant and the company shall not be liable for any damage to the equipment and/or property, personnel, etc; (v) Replacement - If the company finds that equipment or operator provided are not up to the mark, the company reserves the right to ask the replacement forthwith without any cost to Appellant; (vi) Mobilization and De Mobilization - Mobilization and Demobilization charges to be paid by the company to the Appellant, at the end of hire period. Similar contractual terms are reflected in the Contract dated 31st July 2004, between the Appellant and the Era Construction (India) Ltd. 23. On a plain reading of such terms it becomes clear that the ownership and effective control ....
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....ncluding 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 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 license 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." 27. Upon perusal of the above, it is apparent that none of the attributes, characteristics constituting right to transfer ownership / use of the goods are present, qua the transaction in the present case. This in as much as the legal right to use was never to the exclusion of the Appellant's ownership right over the cranes even during the period of hire. In fact, the contractual terms for hire in the given facts, would be indicative of license to use the cranes during the hire period, the ownership of which, at all material times, remained with the Appellant. For such reasons, we are not persuaded to accept that merely because temporary possession ....
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....2(24)(b)(iv) of the MVAT Act. We find that this Court has relied on several decisions in this regard, which have been duly noted in the said judgment, including that of General Cranes and Aurobindo Highway Services (supra). Upon analyzing the contract in that case, the Court held that the work order/contract would clearly indicate that the effective control of the cranes was never parted with. In view thereof, the question of law formulated in that case, was answered in the affirmative by holding that the transaction would not amount to a sale under Section 2(24) of the MVAT Act. Confronted with a similar situation in the given case, we have no hesitation to follow the said decision and the view taken therein. 31. We have duly considered the recent decision of the Supreme Court in K.P. Mozika (supra). The Supreme Court therein as noted in paragraph 22, inter alia was confronted with a similar issue of hiring of cranes. Relying upon the decision in Bharat Sanchar Nigam Ltd. (supra), it was observed that there exists a distinction between transferring the right to use and merely a license to use the goods. Reference was made to Section 65(105)(zzzzj) of the Finance Act effective f....