2010 (5) TMI 759 - GAUHATI HIGH COURT

Whether in terms of the clauses of the contracts, the transactions are evidently not of sale as envisaged under the Act or within the meaning of clause (29A)(d) of article 366 of the Constitution of India and, therefore, no tax is payable by them?

Held that:- The enjoinments proclaimed by the various clauses of the contract agreements albeit are to secure the maximum utilization of the manned cranes and the quality services to be rendered thereby, (i) all permeable supervision of the contractors over the works to be executed on the instructions of the representatives of the corporation, (ii) their singular responsibilities and liabilities to guarantee the availability of the manned cranes while ensuring the perfect working condition thereof, (iii) the insulatory stance of the corporation from all liabilities, risks, hazards, claims, etc., that may arise from the operations and (iv) recognition of the independence of the contractors and their employees considered cumulatively, in the opinion of this court are extinctive of any supervening dominion of the corporation over the possession, custody and control of the cranes so as to signify transfer of right of use thereof to it by the contractors. No patent or latent comprehension of the contracting parties is perceptible from the contract agreements to deduce any transfer of right to use the cranes so as to render the transactions exigible to tax under the Act.

On a totality of the considerations as hereinabove and in the wake of the determinations made, this court is of the view that the petitioners' assailment ought to succeed. The proposed action of the respondents to deduct tax under the Act at source qua the transactions is thus adjudged to be illegal and without jurisdiction. Petition allowed.