TMI Blog2003 (3) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... of the contract and this has been disputed by the petitioner-company. The petitioner s case is that they are the owners of the high tech equipments used in the above services and the possession thereof was never parted with. The OIL was never permitted to exercise any possession and control over the equipments which were used by technically qualified and experienced professionals of the petitioner-company. The wire line logging and perforation is done by release of high tech equipments deep down into the subterranean region through holes drilled into the oil fields for generating electronic/seismic impulses. The impulses are processed through special software and recorded on magnetic tapes. Hence, according to the petitioner, the services rendered to the OIL cannot be brought within the fold of the definition of sale within the meaning of section 2(33) of the Act of 1993. On this premises, the petitionercompany has challenged the proposed deduction of the sales tax at source by the OIL from the bills/invoices submitted by it. According to the petitioner-company, the contract for deduction of sales tax at source is contrary to law and, therefore, cannot be enforced. 4.. It is u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 27 of the Act. Mr. Sarma, learned Senior Counsel, relied upon the decisions in Food Corporation of India v. Jagannath Dutta AIR 1993 SC 1494, Allied Traders v. State of Assam 2002 (1) GLT 482, Associated Cement Co. Ltd. v. Commissioner of Income-tax [1993] 201 ITR 435 and McDowell Company Limited v. Commercial Tax Officer [1985] 59 STC 277; [1985] 154 ITR 148 of the apex Court as well as of this Court in support of his submission. 7.. The dispute relates to taxability of the services rendered by the petitioner-company. Hence, it would be apposite to deal with the question first. 8.. Sale has been defined in sub-section (33) of section 2 of the Act which reads as follows: "(33) 'Sale' with all the grammatical variations and cognate expressions means any transfer of property in goods by any person for cash, deferred payment or other valuable consideration, and includes- (i) any transfer otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration; (ii) any transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (iii) any de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... logging and the scope of the work. Section III provides the special conditions of contract. Clause 1.1 of section III provides for association of company's (OIL's) personnel for overall coordination and operational management at location. Clause 1.2 provides that company's (OIL's) representatives shall have free access to all the equipments of the contractor during operation for the purpose of observing/inspecting the operations performed by the contractor. Clause (2) provides for engagement of experienced personnel by the petitioner-company, etc. The services rendered is in the form of data processing relatable to prospecting, extraction and production of oil as against which the OIL would provide rental and operational charges to the petitioner-company as per Schedule of rates in section IV of the contract. 11.. To make the position further clear, we may quote hereinbelow the following conditions of the contract: "7.13 The equipments/tools to be furnished by the contractor under this contract is the contractor's property and shall always remain in the possession of the contractor with the exclusive right to use of such equipments/tools by the contractor for providing service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer as defined in section 2(10). Chapter III of the Act of 1993 provides for levy of taxes. Section 8(1)(f) levies the taxes payable in respect of any operating lease as specified in Schedule VII at the rate or rates as specified in the Serial No. 3 of the Schedule VII. 15.. Dr. Todi, learned counsel argued that the contract between the parties can at best be termed as a licence and not a lease as defined in section 2(19) of the Act. The learned counsel relied upon a judgment of the honourable Supreme Court in Khalil Ahmed Bashir Ahmed v. Tufelhussein Samasbhai Sarangpurwala (1998) 1 SCC 155. The decision referred in the aforesaid judgment was with reference to the definition of lease of immovable property under section 105 of the Transfer of Property Act, 1882. In the instant case, the interpretation of the document has to be made with reference to the definition of "lease" as per provisions of section 2(19) of the Act of 1993. The definition in section 2(19) quoted above speaks of an arrangement whereby the right to use any goods for any purpose is transferred by one person to another, and it does not include within its fold the concept of possession. Once it is shown that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich will be deducted by the company while releasing payment against rental invoice and will deposit the same to Government treasury. The contractor shall duly comply with all the statutory requirement as envisaged in the said Assam General Sales Tax Act. In the event of non-compliance of the statutory requirement as per the Assam General Sales Tax Act, consequences arising out of the same will be at the sole responsibility of the contractor. Before claiming the payment against the final invoice, the contractor have to provide documentary evidence to the effect that they have duly complied with the statutory requirements as per the Assam General Sales Tax Act." 18.. In view of the discussion hereinbefore, the clause 7.14 requiring the OIL to deduct Assam general sales tax at source cannot be said to be contrary to the provisions of law, the contract between the parties being lease within the meaning of section 2(19) of the Act. 19.. The decisions relied upon by Shri Sarma, learned counsel, have been taken into consideration. In view of the clear substantive provisions of the Act of 1993 and undisputed factual matrix pertaining to the terms and conditions of the contract, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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