TMI Blog2006 (12) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... l Sales Tax Act, 1993 [in W.P.(C) No. 178 of 1999] and Assam Value Added Tax Act, 2003 (in rest of the cases). The State Finance Department, contesting the writ petitions filed the affidavit-in-opposition in [W.P.(C) Nos. 7180, 7587 and 6718 of 2005] and it is submitted by the learned State Standing Counsel that the same is the stand of the Finance Department in all the writ petitions. The ONGC also submitted their counters in W.P. (C) Nos. 6718 , 8040, 8042, 8047, 8062, 8063, 8061, 8852, 7975 and 8379 of 2005 and 109 of 2006. The basic contentions of the State respondents are that the nature of the contract allotted to the petitioners and services rendered by them squarely attract imposition of taxes under the relevant statute. The submissions made on behalf of ONGC, is that the ONGC is a statutory corporation falling within the category of State and is duty-bound to exercise its power in deducting tax at source as per the relevant statute, failure of which may entail other untoward consequences upon it. Regarding the liability of the petitioners, the ONGC has nothing to submit. At this stage it would be relevant to have a cursory view about the subject-matter of contract which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act and such liability to pay taxes under section 7 of the Act would not arise. Contrary to it, the learned Standing Counsel for the Finance Department, submits that as per the agreement dated July 20, 1995 which can be visualised from reading of clause 29.0, OIL reserves its right to use drilling unit and all the contractor's equipment provided in the contract during such time the company or the contractor is engaged in drill oil under its control. Further attention has been drawn to the provisions of clause 21.21 whereby it is reserved that taxes would be deducted at source from the payments released to the contractors at specified rate of income-tax and any other enactment/Rules. All incomes/payments under the contract would be deducted from the contractor's account. Clause 21.8 has also been referred to, wherein it is provided that all local taxes, levies and duties, sales tax, octroi, etc., on purchases and sales made by contractor shall be borne by him. Referring to the various clauses of the contract it is submitted that the transaction amounts to transfer of right to use the drilling equipment in favour of ONGC and as such the petitioners are liable to pay the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently it squarely attracts the provisions of section 7 of the Assam General Sales Tax Act and section 105 of the Assam Value Added Tax Act, 2003, saddling the liability to pay tax to the State. So far as W.P.(C) No. 2416 of 2005 is concerned, this petition has been filed jointly by as many as 14 petitioners, challenging the action of ONGC, proposing to deduct tax at source from the bills of respective petitioners which they raised for the purpose of providing transport services through their vehicles, such as Ambassador car/Tata Indica car/Maruti car, etc. Although separate agreements were executed in respect of each petitioner as submitted by the learned counsel for ONGC, not a single agreement has been annexed with this writ petition. The petitioners have annexed some temporary work orders issued by ONGC. The averments made in these writ petitions disclose separate causes of action for each of the writ petitioners and as such they ought to have filed separate writ petitions challenging the impugned action of ONGC, independently and separately and as such the petition is not maintainable on this count. Be that as it may, the cases of these 14 writ petitioners in W.P.(C) No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax at source from the bills of the petitioners. In W.P.(C) No. 178 of 1999, OIL hired the services of crane for drilling equipment from the petitioners and in other cases ONGC hired services of crane and vehicles of different categories for its use. Such hiring as indicated above is regulated and guided by different terms as contained in the respective agreements entered into between the parties. A search for source of power, relating to imposition of such tax straightway leads us to the provision of article 366(29A) of the Constitution. Parliament has amended the provision of article 366 in the 46th Constitution Amendment Act, 1982 adding a new provision as (29A) in this article which is quoted hereinbelow: Article 366(29A). 'Tax on the sale or purchase of goods' includes (a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (c) a tax on the delivery of goods on hire-purchase or any system of payment by instalments; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to another. The definition of sale given in the Act, included transfer of right to use any goods for any purpose (whether or not for a specific period) for valuable consideration under the AGST (Assam General Sales Tax Act). Thus it is manifest from the measuring of the term lease as defined under section 2(19) that it includes transfer of right to use goods for any purpose and so also sale includes transfer of use of any goods under the operating lease. Section 7 of the AGST Act provides the liability to pay tax by a dealer and dealer as defined under section 2(10) means any person who carries on business of selling or purchasing goods and includes lessee or a lessor. The Assam Value Added Tax Act has also the power to impose tax provided under section 7 whereunder every dealer who is liable to pay tax before the appointed day under the AGST Act, 1993, shall pay tax in accordance with the Act with effect from the appointed day and every dealer whose turnover of sale or purchase exceeds the taxable quantum is also liable to pay such taxes after the coming into operation of the Act. Section 10 provides the provisions relating to levy of taxes on sale whereby the deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or other damages would necessarily entail liability upon the owner in accordance with the different clauses of the agreement and the terms offered. It is clear, that once this machinery/vehicles are placed at the disposal of OIL/ONGC which is the subject-matter of the contract, the owner loses the effective control of use over them. Similar matters also came up for consideration before the apex court in the cases of State of Andhra Pradesh v. Rashtriya Ispat Nigam Ltd. [2002] 126 STC 114; [2002] 3 SCC 314, Aggarwal Brothers v. State of Haryana [1999] 113 STC 317 (SC); [1999] 9 SCC 182 and lastly in Bharat Sanchar Nigam Ltd. [2006] 145 STC 91; [2006] 3 SCC 1. The findings of the apex court having relevance to the issue are quoted below: (paras 84 and 97 in STC Vol. 98) As we have said article 366(29A) has no doubt served to extend the meaning of the word 'sale' to the extent stated but no further. We cannot presume that the constitutional amendment was loosely drawn and must proceed on the basis that the parameters of 'sale' were carefully defined. But having said that, it is sufficient for the purposes of this judgment to find, as we do, that a telephone ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re must be goods available for delivery; (b) There must be a consensus ad idem as to the identity of the goods; (c) The transferee should have a legal right to use the goods consequently all legal consequences of such use including any permissions or licences required therefor should be available to the transferee; (d) For the period during which the transferee has such legal right, it has to be to exclusion to the transferor this is the necessary concomitant of the plain language of the statute, viz., a 'transfer of the right to use' and not merely a licence to use the goods; (e) Having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same right to others. From a survey of the various decisions of the apex court and of this court including those of the division Bench, the legal position relating to the connotation of transfer of right to use any goods has been almost crystallised. In interpreting the clauses of a contract, the real intention of the parties are required to be looked into and mere isolated references to some of the definition of the clauses of the contract wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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