Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2015 (5) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (5) TMI 461 - HC - VAT and Sales TaxRight of use - VAT liability - hiring of Deluxe buses by state transport corporation - transfer of the effective control and possession - Whether the agreement between the appellant and Delhi Transport Corporation giving on hire two Deluxe buses for being plied as per requirement of the latter on the routes and as per schedule specified its transfer of right to use of goods so as to be liable to VAT under Section 2(zc)(vi) of DVAT Act - Held that:- While the bus-related responsibilities under the contract are to be borne by the owner (the assessee), it is the duty of DTC to provide a conductor - The contract also stipulated that the owner shall be obliged to keep the bus in neat, clean and presentable condition and for purposes of upkeep, make the necessary arrangements with service centres/dealers/repair shops, etc. on the routes where they were deployed as per schedule decided upon by the DTC. In terms of the contract, it is the owner who would arrange fuel (on reimbursable basis), lubricant, tubes, spare parts, etc. The owner is obliged by the contractual terms to take prior permission before the vehicles are sent for repairs with obligation to indicate in advance the period of non-availability of the vehicles on such account. The owner is not entitled to “withdraw the bus from operation without prior written consent” of DTC nor can it use these vehicles “for any other purpose at any time”, nor “transfer or otherwise alienate (except with prior written permission of DTC) vehicles” during the period of agreement. It is under a general obligation to “abide by the orders” of DTC or an officer authorized by it. Both the majority and concurring opinion in Bharat Sanchar Nigam Limited (2006 (3) TMI 1 - Supreme court) emphasize that the goods should be “ultimately delivered”, for the transaction to constitute a “sale” within the extended meaning, defined by Article 366(29A) of the Constitution of India. Rashtriya Ispat Nigam Limited (2002 (3) TMI 705 - SUPREME COURT OF INDIA) spells out that where even access or physical control of machinery or such like goods are made over, such a transaction by itself would not be transfer of the right to use if effective control is maintained by the owner. In the present case, the owner bears responsibility for any mishappening or accident. It commits to be the bus owner at all times; the registration and licenses are in its favour and most importantly, the DTC has limited use for these buses, i.e. to ply them (of course through driver provided by the owner) at the scheduled routes in terms of the contract. In these circumstances, this Court is of the opinion that the Tribunal could not have distinguished the decision of the Division Bench of this Court in International Travel House (2009 (9) TMI 879 - DELHI HIGH COURT). Tribunal has fallen into error by declining to apply the ratio of International Travel House Ltd.(supra) and by concluding that the contract in question has resulted in transfer of the effective control and possession of the two vehicles (goods for purposes at hand) unto DTC. On the contrary, the various terms of the contract, summarized above, make it vividly clear that the possession has always remained with the owner. Undoubtedly, it is the obligation of the registered owner to make the vehicles available, with their respective drivers, for being deployed on routes, and as per schedule, specified by DTC. - The transaction has been wrongly treated as “sale of goods” by the authorities below - Decided in favour of assessee.
|