2014 (9) TMI 371 - GAUHATI HIGH COURT

Leviability of VAT - Assam Value Added Tax Act, 2003 - transfer of right to use the goods for consideration - whether the transaction covered by the contract in question involves transfer of right to use - Held that:- For determining whether transfer of right to use the goods was involved, there must be goods available for delivery; there should be consensus as to identity of goods; the transferee should have legal right to use the goods, to the exclusion of the transferor - Question whether it was transfer of right to use did not depend on the provisions of the service tax law and thus amendment by the Finance Act, 2008 had no relevance to determine the said question. Plea of indivisibility of the contract also did not make any difference, if the transaction clearly involved transfer of right to use. The terms of the contract have already been analyzed in the Division Bench judgment in Dipak Nath [2009 (11) TMI 834 - GAUHATI HIGH COURT] and present contract is substantially identical.

The agreement is for hiring of the cranes. The heading and the recital clearly show that nature of transaction is for the hiring. The hire charges are per day for all days except the off days, though the bill is to be raised monthly. The provisions for maintenance, providing staff for maintenance and operation and taking responsibility for claim of third parties do not affect the nature of the transaction.

A perusal of the above terms shows that (a) the contract is for hiring of the cranes for carrying out the operations of the ONGC; (b) the scope of work is mentioned to specify the operation in connection with which the cranes are hired; (c) the work is not to be executed by the contractor but by the ONGC itself; (d) the contractor is to provide cranes on hire in connection with the said work. It appears to have been wrongly assumed that the contractor is to execute the work mentioned in the heading of "scope of work". It is clear from the recital that the scope of work is mentioned as the work for which the cranes were hired; (e) clause 2.1 shows that the cranes are at the disposal of the ONGC and per day hire charges are paid for all days, except maintenance days; (f) services of staff and maintenance are incidental to the hiring of the cranes. (g) it is the ONGC alone which is entitled to exclusively use the cranes and not the assessee.

The transaction clearly involved transaction of right to use. - Decided in favor of revenue.