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2015 (4) TMI 527 - HC - VAT and Sales TaxClassification of transaction - inter State Sale transaction or inter-State Lease Transaction - sale of Empty Gas Cylinders against the assessee to Reliance Industrial Infrastructure Limited on the basis of a tripartite agreement by which on one hand the RIIL was purchaser (buyer) of the EGC. On the basis of the tripartite agreement, the cylinders were to be sent to Reliance Petroleum Limited - Held that:- Admittedly, the assessee is only a supplier/seller of EGC to one RIIL/purchaser (buyer/lessor) who had an agreement of lease with one RPL (consignee/lessee) and agreement has been entered by the two Reliance Companies where certain lease money was required to be paid by the lessee RPL to lessor RIIL on the terms and conditions entered into by and between those two Reliance Companies. However, merely because the assessee has been shown to be a party who supplied the EGC in the lease agreement, in my view, cannot claim any benefit out of the two lease agreements which were basically in between RIIL and RPL Ltd.. It would be appropriate and fruitful to quote Section 3 of the CST Act, which is the bone of contention between the parties. Admittedly, the entire sale consideration on the basis of the so called lease agreement having supplied EGC to RPL on behalf of RIIL was received by the assessee as per the terms and conditions and no amount, over and above, was received or receivable in terms of the lease agreement in between the parties. The Tax Board, in the impugned order, has gone into the terms and conditions in between the two Reliance Companies vis-a-vis the assessee and it would be appropriate to observe that the terms and conditions specifically provided that the purchase order for the procurement of the EGC, to be provided on lease by the RIIL to RPL, would be given by RIIL (lessor) only to those suppliers of the EGC which would be selected by both i.e. the lessor and lessee on the basis of their mutual consultation and on such terms as were agreed to by and between them. It was not that entire purchases were required to be made from the assessee and there could be several suppliers but the supplier was also to be selected by lessor (RIIL) in consultation with RPL (lessee). Both the contracts despite being mutually inter-dependent were exclusive in seeking the fulfillment of different objectives for which these were entered. The RIIL, in pursuance of the contract of sale, placed the order with the assessee for the supply of goods on behalf of the RPL (lessee) in compliance of which the assessee sent goods to RPL (lessor) after raising invoices in favour of RIIL (lessor). Therefore, in my view, the justification of the Tax Board and the Revenue Authorities appears to be just and proper that the inter-State movement of the goods was the result of the purchase order placed by the RIIL and in pursuance thereof, the assessee supplied goods which occasioned the movement of the goods and not the lease agreement. Subsequent leasing after having goods purchased from the assessee by the two Reliance Companies does not take the entire transaction as contended by counsel for the assessee that it is a lease agreement in between the assessee RIIL and RPL, as the case may be. The goods were delivered and title passed. If under the agreement, the movement of goods was because of a clause in the contract of sale (purchase order placed by RIIL to the assessee) or as an incident of contract of sale (leasing of goods under the agreement between RIIL and RPL) , the same shall be deemed to have taken place in the course of inter-State trade and commerce. On perusal of clauses of the agreement, it is crystal clear that the movement of goods took place in fulfillment of the purchase order which was in the nature of the contract of sale between the assessee and RIIL. Therefore, I have no hesitation in holding that the transaction in between the assessee and the RIIL was certainly in the nature of inter-State sale within the meaning of Section 3(a) of the CST Act, no matter whether the purchase order was incidental to the lease agreement between the RIIL and RPL. - there is no hesitation in holding that the aforesaid transaction is sale of Empty Gas Cylinders (EGC) is inter State Sale transaction and not at all in the nature of inter-State Lease Transaction. - Decided against assessee.
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