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2015 (3) TMI 259 - HC - VAT and Sales TaxExemption u/s 3F of CST - Authority took the view that the contract for transfer of right to use machines was executed at Kanpur, which is a separate transaction, and import of machine from outside of the State is a separate transaction. The dealer transferred the machine with right to use the same at Kanpur on a lease rent of ₹ 5457837/- per quarter, which being independent transaction is taxable under Section 3F of Act, 1956 - whether transaction in question of dealer is taxable under Section 3F or the dealer is entitled to exemption under Section 3F(2)(B)(1) of Act, 1956. Held that:- A simple reading of the Section 3F clearly show that it is transfer of right to use any goods in the State which is the taxable incident under the aforesaid provisions. However, this aspect has been considered by a Constitution Bench of Apex Court with respect to similar statutes of various States including the State of U.P., Therefore, it would be useful to look into the aforesaid decision, namely, 20th Century Finance Corporation Ltd. and another Vs. State of Maharashtra, AIR 2000 SC 2436. After addressing entire history of certain amendments in the constitution, as also State Legislation in respect of sale or purchase of goods, the Court observed that, by virtue of entry 92-A, List 1, Seventh Schedule of the Constitution, the Parliament has power to legislate in regard to taxes on sales or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce. Article 269 provides for levy and collection of such taxes. Vide Article 286 (1) of the Constitution, the State legislature is precluded to make law imposing tax on the transactions of transfer of right to use any goods where such deemed sales takes place (a) outside the State and (b) in the course of import of goods into the territory of India. There are some other limitations on the taxing power of the State legislature by Article 286(3) of the Constitution. In respect to inter-State trade or commerce the situs of sale or purchase is wholly immaterial. The State legislature cannot by law, treat sales outside the State and sales in the course of import as 'sales' within the State by fixing the situs of sales within its State in the definition of 'sale' as it is within the exclusive domain of Parliament to fix the location of sale by creating legal fiction or otherwise. The situs of sale can only be fixed by the appropriate legislature. Tribunal has considered the question whether there was any inside sale or not, in the light of relevant facts and applying the dictum laid down and discussed above, has found that no transfer of right to use the goods had taken place inside the State of U.P. and on the contrary, it has taken place outside U.P., which view, I find myself in entire agreement. Learned Standing Counsel could not point out any manifest, legal or otherwise error in the view taken by the Tribunal, so as to persuade the Court to take a different view. I, therefore, find no justification to interfere with the view taken by the Tribunal in the impugned order. - Decided against Revenue.
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