2014 (5) TMI 720 - HC - VAT and Sales Tax

Leviability of Tax - Advertisement via Hoardings Hoardings being immovable property Not subject matter of Sale as goods - U/s 3A of the Tamil Nadu General Sales Tax Act - Held that - Judgment in UPASANA FINANCE LIMITED v. STATE OF TAMIL NADU 1999 (1) TMI 510 - TAMIL NADU TAXATION SPECIAL TRIBUNAL followed Only goods can be a subject matter of sale as well as of a deemed sale - In order to bring the transaction under the provisions of Section 3A relating to transfer of right to use the goods, the transferee must have control over economic benefit of the property, in which event, the possession also has to be with the transferee - In the absence of any elements, viz., the goods, the transfer of right to use the goods, the said transaction could not be brought under the provisions of Section 3A. The Tribunal had held that the hoardings are part of the immovable property which are not dismantled to be called as goods - There is nothing on record to show that the hoardings were detachable and remained as goods to be used as and when they were required for the assessee to render its services as an advertisement agency - The hoardings erected on the concrete foundation not capable of removal without causing any damage to the structure is part of the immovable property and ceased to be goods for the purpose of attracting levy of tax under Section 3A of the Act - This court has no hesitation in dismissing the case of the Revenue - Therefore, order of the Tribunal is confirmed and revision is dismissed Decided against Revenue.

Summary

Issues:
Assessability of turnover under Section 3A of the Tamil Nadu General Sales Tax Act.

Detailed Analysis:
The assessment under review pertains to the year 1993-94, with the Revenue seeking revision against the Tribunal's order. The core issue revolves around the assessability of turnover under Section 3A of the Tamil Nadu General Sales Tax Act. The assessee, engaged in offering publicity services, had leased out its right to use hoardings and structures to various companies during the lease period. The Assessing Officer contended that there was a transfer of right to use goods, justifying the assessment under Section 3A. However, the Appellate Assistant Commissioner and subsequently the Sales Tax Appellate Tribunal disagreed, emphasizing that the hoardings were part of immovable property and no transfer of possession had occurred, thereby negating the application of Section 3A.

On further appeal, the Revenue argued that since the structures could be removed at the end of the lease term without damage, they should not be considered permanent and should fall under Section 3A. The Tribunal, citing relevant precedents, reiterated that no transfer of possession of the hoardings had taken place, as they were firmly embedded in concrete foundations and thus constituted immovable property. The Tribunal's decision was based on the premise that for Section 3A to apply, there must be a transfer of right to use goods with control over economic benefits, which was absent in this case.

The Special Government Pleader contended that the hoardings fell under Section 3A due to the potential for removal and transfer of benefits to use them. Conversely, the assessee's counsel argued that the Tribunal's findings on the hoardings being immovable property justified the cancellation of tax levy under Section 3A. Reference was made to a decision from the Andhra Pradesh High Court emphasizing the need to examine the nature of transactions to determine if there was a transfer of right to use.

The Tribunal's detailed examination of the transaction aspects revealed that the hoardings were firmly fixed and maintained by the assessee, making them part of immovable property. The Tribunal's factual findings favored the assessee, as the hoardings were deemed immovable and not detachable goods subject to Section 3A. The Tribunal's decision remained unchallenged, leading to the dismissal of the Revenue's case and confirmation of the Tribunal's order.

In conclusion, the Court upheld the Tribunal's decision, emphasizing that the hoardings' immovable nature precluded them from being considered goods under Section 3A, thereby dismissing the tax case revision with no costs incurred.