TMI Blog2013 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... uipments and accessories in order to execute the works contract and the respondents could not show any material to prove any element of transfer of right to use any of the equipments/accessories by the petitioner to the ONGC. It is, no doubt, that tax is chargeable in the event of transfer of the property in goods or if there is a deemed transfer, and, as it has already been decided by this Court, there was no element of transfer of right to use any goods and therefore, the petitioner was not chargeable to pay sales tax. In favour of assessee - Writ Petition (C) 423 of 2011 - - - Dated:- 29-8-2012 - MR. I.A. ANSARI AND MR. S.C. DAS JJ. For the petitioner: Mr. S.Deb, Sr. Advocate, Mr.Somik Deb, Advocate. For the respondents: Mr. N.C.Paul, Govt. Advocate. JUDGMENT ORDER (S.C. Das.J) By this Writ Petition, made under Article 226 of the Constitution of India, the petitioner has put to challenge the letter No.F.UR/HLS/ST/CH-V/218, dated 20.07.2011 (annexure P-3 to the writ petition), whereby respondent No.3 asked the petitioner to get itself registered as a dealer under the Tripura Value Added Tax Act (for short, TVAT Act ) and the Tripura Value Added Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not bring any taxable goods into the State from any place outside the State for the purpose of sale in the State of Tripura and, hence, the petitioner does not fall in the category of dealer , as provided in the TVAT Act. There is no charge created by Section 4(2) of the TVAT Act compelling the petitioner to pay tax under the TVAT Act. The dominant intention of the petitioner, as per the said agreement, is providing service and, therefore, no tax is leviable on the petitioner. It is further contended, on behalf of the petitioner, that the petitioner has been saddled with taxable liability, under the Tripura Sales Tax Act, 1976, by the respondents and the petitioner, having felt aggrieved, had put to challenge the action by filing a Writ Petition before this Court, which gave rise to WP(C) 127 of 2005, and a Division Bench of this Court, by judgment and order, dated 30.03.2011, clearly held that the petitioner was not exigible under the Tripura Sales Tax Act, 1976, inasmuch as the petitioner was not involved in any transfer of right to use any goods. Consequently the action taken by the respondents, charging tax under the Tripura Sales Tax Act, 1976, was set aside and quashed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n who is a dealer registered under the Act.Undeer TVAT Act Dealer means any person who carries on the business of buying, selling, supplying for commission, remuneration or other valuable consideration, but the company is not a dealere since all the tools/equipments etc. brought in the state are exclusive for its own use and majority of which are imported. The company neither transfers/sells the tools/equipments etc. brought inside the state nor transfers the right to use these equipments/tools to any person. The tools/equipments remain exclusive property and in exclusive possession of the Compnay. Therefore asking the company to register itself as a dealer under the Act is bad in law. 2. No Sales or deemed sales takes place in the state. As stated above the Company never part with the possession of the tools/equipments etc. The tools/equipments etc. are exclusively used by the Company for providing services under the Contract referred to in your captioned letter. It is pertinent to note here that TVAT is not applicable on any goods brought inside the state for personal use. 3. The department have made similar demands for the Company s earlier contract and the Company was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther contended, on behalf of the respondents, that the terms and conditions of the contract clearly indicate that the petitioner had entered into an agreement, whereby the right to use all the equipments for the purpose of Well Logging, Perforating and other Wire Line services for its oil and natural gas exploration and exploitation stood transferred to ONGC Ltd. on payment of rental charges. The equipments, provided by the petitioner, were, as per terms of the agreement, exclusively meant for use of the ONGC Ltd. on payment of charges. The petitioner, having placed the equipments at the work site, was not entitled to use it for any other purpose or to withdraw the equipments in volition of the terms of the agreement, because these machines were meant to be utilized under the total supervision of ONGC experts. Hence, the terms and conditions of the contract implied that the possession over the equipment was with the ONGC Ltd. The contract was, thus, a lease of equipments and the equipments were goods within the meaning of Section 2(10) of TVAT Act, 2004, and, thus, the activities of the petitioner fell within the ambit of the definition of sale , as contained in Section 2(25) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement, could not held to be a transfer of right to use the goods. 6. Since the letter, dated 20.07.2011, aforementioned is the bone of contention in this writ petition, let us reproduce here the same, which reads thus:- No.F.UR/HLS/ST/CH-V/218 GOVERNMENT OF TRIPURA OFFICE OF THE SUPERINTENDENT CHART-V, AGARTALA Dated, Agartala,the 20th July,2011 To M/s. HLS ASIA LTD. CISF Complex, 2nd Gate Siddhiashram ,Agartala Tripura West. Sub:- New registration under the TVAT Act 04 and CST Act 56 ---reg. Ref:- Application in form-XXIV for delivery permit under entry No.41 42/UR/V dated 20/07/2011. Sir, With reference to the above, I am to inform you that your company, not being registered under the Tripura Value Added Tax Act, 2004(TVAT Act 04) and Central Sales Tax Act,1956(CST Act 56), is importing various taxable goods of Oil Field Testing Equipments from outside Tripura for use in providing services to ONGC Ltd, Tripura Asset, Badharghat, Agartala against contract No.MR/MAP/LOG/MM/SCON/L/08/2007-08/9010011215. Whereas, Rule 47 of the TVAT Rules, 2005 provides that No person, other than a registered dealer, shall take delivery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (j) a person engaged in the business of delivery of goods on hire purchase or any other system of payment by installments; (k) a person engaged in the business of transfer of the right ot use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or commission or remuneration or any other valuable consideration; (l) a department of the Central Government or any State Government or a Local Authority by name of any panchayat, Municipality, Development Authority, Cantonment Board or any autonomous or statutory body including a Port Trust and the like, which, whether or not in the course of business, buys, sells, supplies or distributes goods, directly or otherwise, for cash, or for deferred payment, or for commission, remuneration, or other valuable consideration; (m) a Hindu Undivided Family or any other system of joint family which carries on business. The word goods has been defined in Section 2(10) of the TVAT Act thus:- Goods means all kinds of movable property (other than newspapers) and includes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t shall be deemed to be a sale of those goods by the person making the transfer and shall liable to be taxed at the rate specified in the Schedule: Provided that in respect of any such transfer, only so much value of the goods involved in the works contract which has actually been paid to the dealer during the period, shall be taken into account for determining the turnover for the period. Explanation :- For the purpose of this section, Property in goods shall mean the aggregate of the goods for which amounts have been received or receivable by a dealer during such period as valuable consideration, whether or not such amount has been separately shown in the works contract. The amount as received or receivable shall include the value of such goods purchased, manufactured, processed, or procured otherwise by the dealer, and the cost of freight or delivery as may be incurred by such dealer for carrying such goods to the place where these are used in execution of such works contract, but shall not include such portion of the aforesaid amounts as may be prescribed. (2) Tax on transfer of the right to use any goods- Notwithstanding anything contained elsewhere in this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deciding the issue as to whether the petitioner had dealt in transfer of right to use goods, under the agreement, the Division Bench, held in paragraphs 59, 60, 61 and 70 of its decision, thus: 59. From a conjoint reading of the various clauses of the agreement, it appears that the agreement entered into by the petitioner with ONGC is a contract for rendering of services and not a contract for transfer of the right to use any goods. In the performance of the contract, the petitioner has to use, no doubt, the equipments necessary for the execution of works for which rental charges is payable to the petitioner; but there is no transfer of right to use the said equipments from the petitioner to contractee and this becomes clear from clause 1.19 of the agreement, wherein it has been made clear that the equipments shall remain to be the exclusive property and in possession of the contractor and equipments would simply be used by the contractor for providing services under the contract. If the equipments remain the exclusive property and in possession of contractor and the same is used by the contractor for providing services, under the contract, to the petitioner, the question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bour laws of the area of operation. From a reading of clause 15, it will be clear that all rights to the equipments shall, at all times, remain with the contractor. Clause 18 provides that the contractor has to arrange comprehensive insurance to cover all risks assumed by the contractor under the contract. In Clause 22 of the agreement, it has been made clear that contractor has to perform service as requested by the ONGC. Clause 22.7 provides that the contractor shall assume all responsibility for cleaning up and controlling pollution or contamination, which originates with contractor s equipments and facilities above the surface. Similarly, Clause 25 provides that all expenses incurred including, but not limited to procurement of spares, down time, etc., in respect of repairs arising out of damage caused by gross negligence of the contractor, shall be borne exclusively by the contractor. 61. Thus, from a combined reading of the various clauses of the agreement, in question, it is clear that the contract, in the case at hand, is for rendering services and not for transfer of right to use equipments. Not only the operational, but even control of equipments remains with the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eable to pay sales tax. 11. Though it is contended by the respondents that the contract between the petitioner and the ONGC was also for supplying of materials, such as, spares, explosives, logging cables, etc., no such element is found in the contract agreement. Controverting the petitioner s stand, it is also contended by the respondents that as the equipments had been transferred to the ONGC by the petitioner and ONGC was given the exclusive right of possession over the equipments, it amounted to release of equipments and, therefore, the petitioner was/is liable to be taxed under the TVAT Act, it may be pointed out that no material is discernible from record in support of the contention of the respondents. The judgment, passed, in WP(C) 127 of 2005, by a Division Bench of this Court is exhaustive and covers all the issues involved in the present writ petition, including the issue of exigibility of taxes, and, therefore, this Court is of the firm view that any further discussion on the point is redundant. Since the petitioner was service provider, under the agreement, in question, the petitioner cannot be compelled to be registered as a dealer under the TVAT Act and the Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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