TMI Blog1991 (12) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... ustrial gases such as oxygen, acetylene, etc. It fills the gases produced by it in cylinders and sells to the customers. The terms and conditions subject to which the gases were sold by the petitioner establish that the gas cylinders in which the gas was sold were given on loan to customers for their use on a rent-free basis for a limited period only; after that stipulated period, rent per cylinder per day was charged by the petitioner. The petitioner contends that the said rent collected for use of the cylinder beyond the stipulated period, though described as "rent" in the terms and conditions, is not really rent chargeable under section 5-E of the Act and that the authorities below erred in subjecting the same to sales tax under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld, transferred, refilled or used for any purpose other than storage of the gas compressed therein by the company". Condition No. 3 states that the cylinders are supplied on free loan basis for a limited period and that after the said period a nominal rent per cylinder per day will be charged and that the rent will be charged in the case of lost or misplaced cylinders till their return or till the company is paid the full replacement value. Condition No. 7 states that further supplies (of gases) in company's cylinders will not be made until the empties are received back. Condition No. 13 states that gases may be supplied in customer's own cylinders provided the cylinders conform to the provision of the Gas Cylinder Rule, 1981 and that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner that is material. So far as the petitioner is concerned, the amount that was collected was treated as rental charges for the use of the cylinders beyond the stipulated period till they were returned. The learned counsel for the petitioner relies on the decision of this Court in State Bank of India v. State of Andhra Pradesh [1988] 70 STC 215, wherein the question that arose was whether hire charges recovered by the bank on its lockers were attracted by section 5-E of the Act. This Court held that no power was conferred on the sales tax authorities to levy sales tax in respect of hire charges collected by banks for providing safe deposit lockers under section 5-E of the Act. Three considerations persuaded this Court to take that v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cylinders were goods and they were actually being handed over to the customers by the petitioner, and the customers were having physical possession of the cylinders. The learned counsel for the petitioner also seeks support from the decision of this Court in Rashtriya Ispat Nigam Ltd. v. Commercial Tax Officer [1990] 77 STC 182. The question which fell for consideration in that case was whether sales tax was exigible under section 5-E of the Act on the hire charges collected by Rashtriya Ispat Nigam Limited (the assessee) for the use of the sophisticated machinery supplied by it to its contractors engaged by it for execution of the work entrusted to them. Dealing with the scope of the expression "transfer of the right to use" in section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein; possession of the cylinders was delivered to the customers. These facts satisfy the requirement of section 5-E. As already held by us, on the facts of this case, we are satisfied that the charges collected by the petitioner were charges for the use of the cylinders by its customers who were given full possession of the cylinders. There was transfer of the right to use the cylinders as containers of the gases purchased by the customers. Therefore all the requirements of section 5-E are satisfied in the present case and the hire charges were validly subjected to tax. We also notice that out of a total turnover of Rs. 1.09 crores, the rental charges are Rs. 5.27 lakhs which is a substantial amount. In the circumstances, we find no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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