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2015 (4) TMI 210 - HC - VAT and Sales TaxDeletion of the levy of tax under the provisions of the Karnataka Value Added Tax Act, 2003 - Whether the Tribunal was justified in giving a finding that the lease rentals received after 1.4.2005 in respect of transfer of right to use KST suffered cars leased out prior to 1.4.2005 is not exigible to tax under the KVAT Act - Held that:- The assessee under a lease agreement leased to its customers KST suffered cars after purchasing them from local registered dealers. The tenure of the Master Lease Agreement were continuous and unbreakable for 5 years though lease rentals were payable by the customers on a monthly basis. Therefore, the assessee had a vested right of giving the cars on hire and receiving the rentals which was not exigible to tax. From 1.4.2005 KVAT Act has come into force. Section 3 is the charging Section. It provides that, the tax shall be levied on every sale of goods in the State by a registered dealer or a dealer liable to be registered, in accordance with the provisions of this Act. Therefore, the incidence of tax under Section 3 of the KVAT Act is the sale of goods. After the coming into force of the new Act, the assessee has not leased any car to his customers. Lease was prior to 1.4.2005. It is for a period of 5 years. Under the terms of the agreement, the customer has to pay lease rents for every month for a period of 5 years. Therefore, though the assessee continued to receive rentals every month after 1.4.2005, it is in pursuance of a sale which took place prior to 1.4.2005. As no sale has taken place after 1.4.2005, the liability to pay tax under Section 3 does not arise. - finding recorded by the Tribunal is just and proper and is in accordance with law. Therefore, the question of law is answered in favour of the assessee and against the revenue. Hence, we do not see any merit in these revisions - Decided against Revenue.
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