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2014 (5) TMI 336 - HC - VAT and Sales TaxWhether Tribunal is correct in interfering with the remand order of the Appellate Assistant Commissioner (CT) IV and restoring the order of assessment in respect of import-lease transactions and inter-State lease transactions, when it has no jurisdiction to interfere against a remand portion of the order of the Appellate Assistant Commissioner (CT) in view of the third proviso to Section 36(1) of the TNGST Act, 1959 - Jurisdiction of Tribunal - Levy of Tax on transactions of import-lease, inter-State lease and lease receipts – Held That:- Considering the technical objection raised by the learned counsel for the assesee about Tribunal exceeding its jurisdiction and interfered with the remand order even in respect of import-lease and inter-State lease agreements - On a perusal of the memorandum of grounds of appeal filed by the State before Tribunal, it is found that the State contended that the order of the First Appellate Authority is not correct and they have questioned the order in respect of lease receipts on imported goods, lease receipts on inter-State goods, lease receipts on agreements entered prior to 1.4.1986 as well as on the deletion of the surcharge and penalty - Therefore, this Court is unable to agree with the learned counsel for assessee that Tribunal exceeded its jurisdiction - Accordingly, such contention is rejected - Going by the terms of the agreement on the lease and proforma invoice of the foreign supplier apart from letter of credit opened and other import documents, the assessment in this case calls for a remand - Consequently, in so far as the turnover relating to agreements entered prior to 01.04.1986 on the import of machinery is concerned, There is no hesitation in upholding the order of the Appellate Assistant Commissioner, thereby, set aside the order of Tribunal. Relying upon Infrastructure Leasing and Financial Services Ltd Vs. Commissioner of Value Added Tax and Others [2010 (2) TMI 1057 - DELHI HIGH COURT] - It is not denied by the assessee that in respect of the transactions entered into post 01.04.1986, the liability on the leasing transactions arises every year - It is not the case of the assessee that merely because the first year of the leasing transactions are assessed u/s 3A, the second year of lease goes for exemption; for the liability to make the payment for every subsequent years arises under the agreement itself so that the lease may have the economic benefit of the goods given under the lease - Thus, extending the same principle, for the contracts entered into prior to 01.04.1986, with a clause in the lease agreement requiring the assessee to make the payment every month so that he may have the beneficial possession of the machinery and to keep the agreement alive; once the amendment expands the definition of 'sale' by including leasing transaction as a deemed sale and the charge is created u/s 3A with effect from 01.04.1986, irrespective of the date of entering into the agreement, the liability to pay tax gets activated under the provisions of Tamil Nadu General Sales Tax Act – Thus, contention of the assessee that transactions entered prior to 01.04.1986 would not be liable for any assessment u/s 3A - Therefore, Revisions are rejected. Whether Tribunal is wrong in holding that the lease receipts received for the lease agreements entered prior to 01.04.1986 is liable for tax under Section 3A of the TNGST Act is contrary to the law laid down by 20th Century Finance Corporation Ltd and another Vs. State of Maharashtra [2000 (5) TMI 980 - SUPREME COURT OF INDIA]– Liability for Tax – Held that:- Considering the fact that the nature of transactions in respect of the agreement entered prior to 01.04.1986 are not different from those transactions after that date, in fitness of things, order of Tribunal is set aside and matter is remanded back to AO for consideration of the turnover of the assessee on the question as to whether the subject matter of lease were purchases made on inter-State sale basis falling u/s 3A or on course of import and that depending on the materials that may be produced by the assessee viz., all the documents pertaining to the transactions on the leasing entered into post 01.04.1986 as well as prior to 01.04.1986, AO may consider the claim of the assessee keeping in the background the principles laid down in the case of 20th Century Finance Corporation Ltd and another Vs. State of Maharashtra [2000 (5) TMI 980 - SUPREME COURT OF INDIA]. Levy of Penalty - levy of penalty at this stage did not arise - In the result, Revisions stand disposed of on the above terms and matter is remanded back to AO – Decided partly in favour of assessee.
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