2013 (12) TMI 443 - MADRAS HIGH COURT - CST, VAT & Sales Tax

Head Note / Extract:
Liability to sales tax - Exemption under Section 3A(2)(a) of the Tamil Nadu General Sales Tax Act - Transfer of possession accompanied by transfer of right to use - Leasing of ship - Held that:- there was no transfer of right to use to have an effective control of the Vessel by the charterer under the time charter so as to attract the charge under the provisions of Section 3A of the Act - mere fact that the agreement had been entered into and that the assessee had been paid the hire charges, does not, per se, bring the transaction within the scope of Section 3A of the Act - amendment to the Central Sales Tax Act in including the transfer of right to use any goods as deemed sale was brought in under the definition of "sale" in Section 2(g) under the Finance Act (No.20 of) 2002, effective from 11th May 2002. In any event, even otherwise, the enlarged definition of "sale", available on and from 11th May 2002, can have no relevance to the transaction of time charter for considering the same even by way of a deduction under Section 3A(2)(a) of the Tamil Nadu General Sales Tax Act. Question of considering a deduction under Section 3A(2)(a) of the Act does not arise and it would be in excess of what is contemplated under Section 3A of the Act, or for that matter, beyond the legislative power of a State - This is the reproduction of Section 4 of the Central Sales Tax Act. Thus the location of goods at the time of sale determines the jurisdiction of that State to levy sales tax under the State Sales Tax Act. Thus in the case of ascertained goods, the place where the goods are at the time of contract, is the State which has the jurisdiction to assess the transaction. In the case of unascertained or future goods, the State where appropriation takes place, would be the competent State to impose tax. As on the date of sale relating to the assessment years 1993-94 to 1997-98, the agreement was for named ships which were nowhere near the jurisdiction of the State of Tamil Nadu, to levy sales tax on the transactions under the provisions of Tamil Nadu General Sales Tax Act, treating them as local sales. The mere fact that the contract is entered into in Tamil Nadu, or for that matter the assessee has sought for registration under the State Act, by itself, would not confer jurisdiction on the State to impose tax on the sale of the assets located outside the territorial application of the Tamil Nadu General Sales Tax Act. Except for contending that the sale of ships is assessable under the Tamil Nadu General Sales Tax Act, no material is placed before us to challenge the findings of the Tribunal on the sale of specifically named ships. In the circumstances, we agree with the assessee that having regard to the fact that the agreement is with reference to the sale of specific Vessel by name, we have no hesitation in holding that all these being specific goods located outside the State of Tamil Nadu, the transactions are not chargeable to tax - In the light of the above, cancelling the assessment, the question of levy of penalty does not arise - Decided against Revenue.