TaxTMI 
TaxTMI 
2026 (10) TMI 245
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....d from the Regional Vigilance & Enforcement Office and on authorization of Deputy Commissioner, 1st respondent issued Show Cause Notice dated 25.06.2018 inter alia alleging that petitioner suppressed hire charges received from the 3rd respondent and is liable to tax @ 14.5% as per Section 4(8) of the Act. Opportunity of personal hearing was afforded on 23.03.2020 and petitioner filed written submissions inter alia contending that the transactions does not involve a transfer of right to use goods etc., that the assessment is barred by limitation and the allegations of suppression are baseless. Objections of the petitioner were rejected vide Order dated 16.11.2020 and an amount of Rs.96,17,394/- was levied towards tax for the period from 2014-15 to 2016-17. Hence, the said writ petition. 3. The brief facts of W.P.No.17913 of 2025 are as follows: Petitioner entered into an Agreement dated 10.10.2011 with the APSRTC. As per the said agreement, it agreed to pay the petitioner / owner of the bus, an agreed rate of Rs.12.24 ps., per operated kilo meter towards hire charges. Pursuant to report of Regional Vigilance & Enforcement Office, Tirupati, 2nd respondent / Commercial Tax....
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....earned counsel submits that the issue is squarely covered and seeks to allow the writ petitions. 1. M/s.NAC Infrastructure Equipment Ltd., v. Assistant Commissioner (CT)-III (W.P.Nos.27359 and 27360 of 2008, dt.15.12.2025) 2. K.P.Mozika v. Oil and Natural Gas Corporation Ltd., and Others- 2024 SCC OnLine SC 28 3. Hari Durga Travels v. Commissioner of Trade and Taxes, Delhi- 2015 SCC OnLine Del 9442 4. Transocean Offshore, International Ventures Limited v. Union of India and Others- 2017 SCC OnLine Hyd 64 6. On the other hand, learned Government Pleader made submissions to impress upon the Court that the proceedings of the tax authorities are valid, legal and contentions contra are not tenable. He made submissions to distinguish the decisions referred to above. 7. It is his contention that as the petitioners have to operate their buses exclusively for the purpose of APSRTC under the terms of the Agreement, it amounts to a 'deemed sale' and the transactions falls within the purview of Section 4 (8) of the Act. Further the writ petitions are not maintainable as the petitioners have efficacious remedy under the Act, that there are no merits and....
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....time. Petitioners, in effect, not only retained full responsibility for plying the buses by manning the same. In such circumstances, transactions pursuant to the agreements entered with the APSRTC would not fall within the purview of Section 4 (8) of the Act. They cannot be treated as a deemed sale. 12. In M/s.NAC Infrastructure Equipment Ltd., a learned Division Bench of the High Court for the State of Telangana, was dealing with questions, similar to those raised in the present writ petitions. On the basis of inspection of Commercial Tax Department (Enforcement Wing), alleging that the petitioner company dealt with the high value equipments like excavators, cranes, wheel loaders and transit mixers etc., and petitioner received amounts for making available the facilities to its customers, notices were issued by treating the transactions exigible tax under Section 4 (8) of the Act. Objections were filed inter alia to the effect that supply of equipment is only for a specific purpose, that the same are operated by technicians and operators employed by the petitioner, maintenance of the same was also undertaken by it and that ownership / right of the equipments are never transferr....
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.... under the scope of the proposed service. Whether a transaction involves transfer of possession and control is a question of facts and is to be decided based on the terms of the contract and other material facts. This could be ascertainable from the fact whether or not VAT is payable or paid." 11. One of the primary proceedings which needs to be appreciated at this juncture is that the said Circular categorically in the aforesaid clause more particularly in 4.4.1 clarified that transfer of right to use involves transfer of both possession and control of the goods, to the user of the goods. In this context we need to look into the nature of transactions and the conditions adopted to the contract / agreement entered into between the petitioners and their customers. Sample agreements are already on record and the terms and conditions have already been referred to in the earlier paragraphs of this order. The aforesaid terms and conditions clearly spell out that these goods have been given on rent to the customers by the petitioners and the charges collected are also on hourly basis and for a fixed period during the day beyond the fixed period of time if the vehicles are used t....
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....e Constitution of India and the earlier legal precedents including Bharat Sanchar Nigam Ltd. v. Union of India - (2006) 3 VST 95 (S.C.), the Division Bench answered the question in favour of the appellant. The relevant portion of the order at Para Nos.34 and 36 reads as follows: 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 of the two vehicles (goods for purposes at hand) unto DTC. On the contrary, the various terms of the contract, summarized above, make it vividly clear that the possession has always remained with the owner. Undoubtedly, it is the obligation of the registered owner to make the vehicles available, with their respective drivers, for being deployed on routes, and as per schedule, specified by DTC. The owner cannot withdraw the buses unilaterally nor send them for repairs and nor can alienate their ownership in favour of a third party, except by incurring penalties. The goods are specified, the right to deploy th....
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....ed under Article 366(29-A) (d). It was held at Para No.75 as follows: "75. In our opinion, the essence of the right under Article 366(29-A)(d) is that it relates to user of goods. It may be that the actual delivery of the goods is not necessary for effecting the transfer of the right to use the goods but the goods must be available at the time of transfer, must be deliverable and delivered at some stage. It is assumed, at the time of execution of any agreement to transfer the right to use, that the goods are available and deliverable. If the goods, or what is claimed to be goods by the respondents, are not deliverable at all by the service providers to the subscribers, the question of the right to use those goods, would not arise." 18. In a separate, but concurring judgment, Dr.Justice A.R.Lakshmanan, opined that to constitute a transaction for the transfer of the right to use of 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 co....