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2017 (3) TMI 1708 - AAR - VAT and Sales TaxWorks contract or sale - Supply of Printed Materials - whether transaction is related to works contract or sale? - What is the rate of tax on printed flex/vinyl advertising material supplied to customers? - Held that:- The Applicant has received orders for the supply of printed vinyl / flex with advertisement. The advertisement text / content is as per specification and governed by Copyright Act (being art work /design).This is very typical nature of transaction in which goods belongs to the customers, when they came into existence. The view taken by Hon. Apex Court in the case of Sarvodaya Printing Press [1998 (8) TMI 512 - SUPREME COURT OF INDIA] is to be accepted and it is held that the transaction is works contract. The applicant has used vinyl / flex and printing ink which are incorporated while executing the works contract is to be held taxable at prescribed rate of tax as per provision of law. Mounting charges - Whether the mounting charges collected form the part of sale price - Held that:- The customers pay for sale of printed vinyl / flex banners and mounting charges for mounting activities. The applicant also received consideration for the precise size and specific period of hoarding. The sale is completed when applicant put the material on hoarding as per direction given by customer. The mounting of vinyl on hoarding cannot be treated as installation and thus cannot be excluded from sale price. Hoardings - Whether activity of leasing out the hoarding to the customer for specific period for remuneration is 'a sale' within the meaning of Section 2(24) of the Act? - Held that:- The transactions of leasing of the hoarding for a particular fixed period and for valuable consideration thus constitute a transfer of right to use goods and the transaction between the applicant and its customer is a 'lease' transaction is exigible to VAT under MVAT Act. The customers have enjoyed the right to use hoardings of definite size for definite period. The transaction of transfer of hoarding by the applicant to his clients is liable to be treated as transaction involving transfer of right to use goods. Hence, it is covered by the definition of "sale" as provided in section 2(24) Maharashtra Value Added Tax, 2002 i.e. sub clause "(iv) the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration." The jurisdictional facts, as to whether the items in question constitute "goods" or "immoveable property", are required to be examined by the assessing authority in the light of the principles, and the judgments. Prospective effect - Held that:- The applicant is very well aware about the tax liability on said transactions. The applicant is well aware of the pros and cons of litigations. The applicant has preferred the path of litigation in spite of the clear legal position - The applicant cannot prove existence of circumstances which warrant us to use the discretionary power. In fact use of such discretionary powers in the absence of compelling circumstances would be detrimental to legitimate government revenue and would wipe out the legitimate tax liability. In these circumstances, we do not allow the use of prospective effect as a tool to protect or to wipe of legitimate tax liability. Ruling:- The transaction of supplying printed material on flex/ vinyl as per the order of customers is held to be works contract - Since, the transaction held as works contract, it shall liable to tax accordingly. The Mounting charges received by applicant form the part of sale price and liable to tax under MVAT ACT, 2002 - The factual aspect, whether goods in question are movable or immovable is to be decided by assessing officer / jurisdictional authority/investigating authority in view of principles and test applied as indicated above with respect to said subject matter in this order. On the verification, if concerned officer comes to conclusion that "goods are movable" then the transaction related to lease of hoarding is to be held taxable. If the transaction related to lease of hoarding is held as taxable then the "charges received from customers" will be the sale price.
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