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2014 (5) TMI 496 - HC - VAT and Sales TaxLiability to Tax - Agreement for importing and leasing of machinery – Deemed Transfer - Transaction in the course of import - Held that:- Once the arrangement between the assessee and the lessee as regards lease agreement got finalised for the purpose of import of machinery, the subsequent documentation is merely a follow up action and it is difficult to read each one of the documents in isolation - When the first of the documents viz., master lease agreement got dovetailed into the purchase order placed by the assessee with the foreign manufacturer/supplier, the subsequent documentation completes the balance of the transaction that the assessee had with the lessee - Relying upon 20TH CENTURY FINANCE CORPORATION LTD. v. STATE OF MAHARASHTRA [2000 (5) TMI 980 - SUPREME COURT OF INDIA] – wherein SC rejected the claim of Revenue holding that accepting Revenue`s contention that on execution of the master lease, the transfer under Sub-clause(d) of Clause (29A) of Constitution is complete, will be to give the revenue the legitimacy to tax the consideration mentioned in the master lease even before the appellants acquire a right to receive the same - This will be not only an unintended consequence of enacting Sub-clause(d), but also an improper and unjust action having approval of the Court - Referring decision in GANNON DUNKERLEY & CO., v. STATE OF RAJASTHAN [1992 (11) TMI 254 - SUPREME COURT OF INDIA], Apex Court pointed out that in taxing the deemed sale, the restrictions that are available in the case of normal sale also would have relevance. Expression of the words 'In the course of import' - Held That:- The absence of an amendment to the definition of "sale" contained in Section 2(g) of the Central Sales Tax Act, so as to include transfer of property in goods involved in execution of works contract, does not, in any way, affect the applicability of Sections 3, 4 and 5 and Sections 14 and 15 of the Central Sales Tax Act to sales under the Local Act - Relying upon INDURE LIMITED v. CTO. [2010 (9) TMI 883 - SUPREME COURT OF INDIA] - In order that the sale should be one in the course of import, it must occasion the import and to occasion the import there must be integral connection or inextricable link between the first sale following the import and the actual import provided by an obligation to import arising from statute, contract or mutual understanding or nature of the transaction which links the sale to import. The various documents placed by assessee, in particular the Bill of Lading, indicating the name of Hindustan Power Plant Limited show that the import is linked to the purchase order placed on behalf of Hindustan Power Plant Limited - Thus, but for the purchase order placed by Hindustan Power Plant Limited and later thereon approaching the assessee for financial arrangement, the question of the assessee ever placing any purchase order with the Japanese manufacturer/supplier would not have arisen - The purchase order placed by the assessee with the foreign supplier in turn clearly refers to the purchase order of Hindustan Power Plant Limited with the Japanese firm and the import itself was in connection with the master agreement between the assessee and the lessee - On the arrival of the goods, the clearing agent cleared the goods and delivered it to Hindustan Power Plant Limited - Thus, these facts clearly establish that the receipt of rental by the assessee was on account of the transaction in the course of import, which is not liable to be taxed by the State – Revision is rejected – Decided in favour of assessee
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