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2022 (5) TMI 1392 - HC - VAT and Sales TaxTerritorial Jurisdiction - situs of sale - whether alleged lease rentals could be brought to tax under the Haryana VAT Act by State of Haryana even though agreements in this regard have been executed at Chandigarh and as such no tax could have been levied? - validity of upholding levy of tax by treating the recovery of outstanding loan amount under One Time Settlement Scheme to be lease rentals? - HELD THAT:- By virtue of the impugned common order dated 29.08.2017 (Annexure A-8), the Tribunal has held that the amount of lease recovered by the appellant is covered by the definition of sale irrespective of the fact whether it is recovered as lease money, rental, higher purchase instalments or by whatever name it be called. With regard to territorial jurisdiction the Tribunal has taken a view that the appellant is an assessee registered at Panchkula under the Haryana VAT Act and has also paid some voluntary tax at Panchkula. Since the equipment/machinery/vehicles were leased out in the State of Haryana, therefore Haryana is the 'situs of sale'. It has further been observed by the Tribunal that if the goods are located within the State at the time of use, the State shall be deemed to be the 'situs of sale' and as such rejected the argument that merely because head office of assessee is at Chandigarh and agreements were entered into at Chandigarh, it would deprive the authorities in Haryana to levy tax on the transactions which have taken place within the State. The location or delivery of goods within the State cannot be made a basis for levy of tax on sales of goods. Under general law, merely because the goods are located or delivery of which has been effected for use within the State would not be the situs of deemed sale for levy of tax if the transfer or right to use has taken place in another State. The State cannot levy a tax on the basis that one of the events in the chain of events has taken place within the State. The delivery of goods may be one of the elements of transfer of right to use, but the same would not be the condition precedent for a contract of transfer of right to use goods. Where a party has entered into a formal contract and the goods are available for delivery irrespective of the place where they are located, the situs of such would be where the property in goods passes, namely, where the contract is entered into. Appeal allowed - issue decided in favor of assessee.
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