TMI Blog2013 (5) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of the assessee(s), which were inspected. Even though the Department contends that the assessee(s) have not maintained proper accounts, the assessment was made based on various registers. In Appollo Saline Pharmaceuticals (P) Ltd. Vs. Commercial Tax Officer (FAC) and others, [2001 (10) TMI 1100 - MADRAS HIGH COURT], this Court held where the assessment was based on return and accounts, penalty is not leviable. Applying the ratio of the said decision, in the present case, even though the assessee(s) have not maintained the accounts, the assessment was made based on the registers seized from the premises of the assessee(s) and therefore the penalty cannot be levied. The penalty levied on the assessee(s) are not sustainable and set aside. - T.C.(R) Nos. 10 to 13 and 38 of 2010 - - - Dated:- 1-3-2013 - R. Banumathi And K. Ravichandra Baabu,JJ. For the Petitioner : Mr. K. J. Chandran in all T.Cs For Respondent : Mr. R. Sivaraman, in all T. Cs Spl. Govt. Pleader ORDER Whether hiring of cinematographic equipments would amount to "transfer of right to use the goods" for cash, exigible to sales tax under Section 3-A of the Tamil Nadu General Sales Tax Act, (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to various producers and collected hire charges and they had not returned them for assessment. Hence the Enforcement Wing Officers issued summons to the petitioners/assessee(s) to produce the accounts, but the assessee(s) did not respond. The Assessing Officer served pre-assessment notice(s) calling for objections to the said proposals and the petitioner(s) - assessee(s) in T.C.(R) Nos.10 to 13 of 2010 filed petitions before Tamil Nadu Taxation Special Tribunal challenging the validity of Section 3-A, which treated "transfer of right to use" as a "deemed sale". The same was dismissed, which was challenged by the assessee(s) in Writ Petition No.18315 of 1997. Finally, the constitutional validity of Section 3A of TNGST Act was upheld. Thereafter, as per the directions of Tamil Nadu Taxation Special Tribunal, the petitioner(s)/ assessee(s) responded to the pre-assessment notice issued by the Assessing Officer by filing their objections. After affording opportunity to the assessee(s), the assessing officer rejected the objections of the assessee(s) and assessed the respective turnovers to tax for assessment years 1994-95 and 1995-96 and consequently levied surcharge, additional surcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Sivaraman, Special Government Pleader (Taxes) contended that the right to use cinematographic equipments is transferred to the hirer, who has full right to use the equipments and the possession and effective control of the equipments is with the hirer of the equipment and the original authority, the appellate authority and the Tribunal have concurrently recorded factual finding that the transaction is "transfer of right to use the equipments" and no question of law is involved in these revisions. 8. We have considered the submissions made by the learned counsel appearing on either side and also the Order of the authorities and the Tribunal. 9. Test of Effective Control and possession:- The term Right to Use Goods has not been defined in the Service tax law or the various Vat laws in India. However, generally it has been understood to be transfer of right to use goods by way of lease, license, bailment, exchange etc. Transfer of right to use the goods for cash, deferred payment or valuable consideration is considered as "deemed sales" under Clause (d) of Article 399(29A) of Constitution of India and consequently under Tamil Nadu General Sales Tax Act/VAT Act and CST Act. As p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in 20th century Finance Corporation Limited v State of Maharashtra - (2000) 119 STC 182 = 2000 (6) SCC 12 at held as under:- (c) Where the goods are available for the transfer of right to use the taxable event on the transfer of right to use any goods is on the transfer which results in right to use and the situs of sale would be the place where the contract is executed and not where the goods are located for use. (d) in cases where goods are not in existence or where there is an oral or implied transfer of the right to use goods, such transactions may be effected by the delivery of goods. In such cases the taxable event would be on the delivery of goods . The important attribute constituting Transfer of right to use goods as deemed sales is that there should be transfer of effective control and possession of the goods. If the owner retains effective control over the equipment, it is not a transfer of right to use. A mere contract of hiring, without transfer of control, may be a contract of bailment and not a contract for transfer of right to use goods. 14. Transfer of right to use the goods implies that full control is vested with the transferee to have the right to us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the assessee(s) retained effective control. The original authority extensively referred to the contention of the assessee(s) and recorded only brief reasoning and arrived at the conclusion that the transaction is "transfer of right to use goods" falling within the purview of Section 3-A, but the reasonings are brief. We are of the view that recording of only brief reasonings cannot vitiate the assessment order. The Appellate Assistant Commissioner elaborately referred to the contention of the assessee. The Appellate Authority has recorded clear finding that there was no evidence to put forth for the handling of cameras and other equipments by the assessee(s) themselves. The Assessing Officer as well as the Appellate Authority and the Tribunal concurrently held that there is sufficient evidence to believe that the handling of goods such as cameras, transformers, etc., was by the Producers/Directors alone so as to get light effect and quality films. 17. Learned counsel for petitioner assessee(s) placed reliance upon a decision of Andhra Pradesh High Court in the case of Rashtriya Ispat Nigam Limited Vs. Commercial Tax Officer, (1990) 77 STC 182 (AP), wherein the Andhra Pradesh Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction at a consideration; the transferee is in effective control of the shuttering during the period it remains in his possession (i.e., during the construction) and therefore, it falls within the definition of the extended definition of sale and exigible to sales tax. 20. In Harbans Lal vs. State of Harayan (1993) 88 STC 357 (P H), the Punjab and Haryana High Court held that the transfer of various items such as chairs, tables and crockery would also fall within the meaning of transfer of the right to use. It was further held that "delivery of possession of the goods to the transferee by the transferor is one of the essential ingredients where the transferee is put in effective and general control of the goods as distinguished from a mere custody or licence to use the same. Whether there is transfer of the right to use the goods or not is essentially a question of fact which has to be determined in each case having regard to the terms of the contract. 21. Transfer of right to use the goods - Not exigible to sales tax:- In STATE BANK OF INDIA AND OTHERS VS. STATE OF ANDHRA PRADESH, (1988) 70 STC 215 (AP), hire charges recovered by Bank on Bank lockers is consolidated charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a provision for technical breaches of law it is not open to the authorities to levy penalty. 26. The learned counsel for assessee(s) further submitted that prior to substitution of new Section 3-A by amendment Act No.25 of 1993, Cinematographic and Photographic equipmetns were exempted from levy of tax under right to use goods and therefore the assessee(s) cannot be penalised for not filing returns and therefore penalty is not leviable. 27. Under Section 12(2) of the TNGST Act, if no return is submitted by the dealer under sub-section (1) within the prescribed period, or if the return submitted by him appears to the assessing authority to be incomplete or incorrect, the assessing authority shall, after making such enquiry, as it may consider necessary, assess the dealer to the best of his judgment. Under Section 12(3), in addition to the tax assessed under sub-section (2) or by a separate order direct the dealer to pay by way of penalty. Thus, levy of penalty under TNGST Act is consequential to the assessment order under Section 12(2). 28. In the present case, the assessment order was made based upon the registers seized from the premises of the assessee(s), which were i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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