TMI Blog2005 (8) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... the contracted works of the petitioner and received charges for the same. The respondents made a provisional assessment in view of the enlarged definition of sale . Thus, it is clear that for the transfer of right to use the goods and to invoke the provision of section 3F of the Act, it is necessary that there should be transfer of effective control of the goods in favour of the party. On Perusal of the terms of the contracts shows that the effective control of the buses has never been transferred to the aforesaid two companies and it always remain with the assessee. The assessee only provided the buses for transportation of employees of the companies from one place to another place and the price was stipulated only for the purposes of transportation and not for the leasing of the entire bus as such for a definite period. The entire expenses for running of the buses, namely, diesel charges, salary of driver/conductor, road tax, passenger tax, etc., are to be borne by the assessee. In this view of the matter, I am of the opinion that there was no transfer of right to use the vehicles by the assessee to the aforesaid two companies and the provision of section 3F of the Act is not ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies at the material time, the said vehicles were for the use of the companies only and, therefore, the provisions of section 3F of the Act are applicable. 5. Learned counsel for the assessee filed copies of the agreement with the aforesaid two companies that are on record. He submitted that as per the agreement, the assessee has only provided the vehicles to the aforesaid two companies for transportation of their employees from their residence to the factory and from factory to their residence at a stipulated amount. He submitted that at no stage, there was transfer of right to use the buses to the aforesaid two companies. He submitted that the entire expenses relating to the running of the buses, namely, diesel charges, salary of driver/conductors, road tax, passenger tax, etc., have been borne by the assessee and the possession and control of the buses were always with the assessee. He submitted that the entire transit risk was of the assessee and not of the companies. On these facts, he submitted that the effective control of the vehicle has never been with the aforesaid two companies and, therefore, the provisions of section 3F of the Act do not apply. Section 3F of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the project work to contractors. To facilitate the execution of work by the contractors with the use of sophisticated machinery, the petitioner had undertaken to supply the machinery to the contractors for the purpose of being used in the execution of the contracted works of the petitioner and received charges for the same. The respondents made a provisional assessment in view of the enlarged definition of sale . Then the Andhra Pradesh High Court held that under the agreement, the effective control of the machinery, even while the machinery was in the use of the contractor, was that of the petitioner-company. The contractor was not free to make use of the same for other works or move it out during the period the machinery was in his use. Therefore, the contractor was entitled to make use of the machinery for purpose of execution of the works of the petitioner and there was no transfer of the right to use it as such in favour of the contractor. This is how the court held that the hire charges collected by the petitioner from the contractors were not exigible to sales tax. To come to this conclusion, the Andhra Pradesh High Court relied on Corpus Juris Secundum, Vol. 87 page 892 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession and control of the machinery. 10. A similar question came up for consideration before the Division Bench of this court in the case of Ahuja Goods Agency v. State of Uttar Pradesh reported in [1997] 106 STC 540; [1997] 11 NTN 484. Petitioner received transportation charges from a distillery in connection with the transportation of Indian-made Foreign liquor from the distillery to various Government bonded warehouses. The question for consideration was whether the transportation charges were liable to tax under section 3F of the Act. The contention of the petitioner was that the transportation charges were paid for service under the agreement and there was no transfer of right to use the vehicle. The Division Bench examined the agreement and held that the truck to be used for carrying the goods will continue to remain in the custody of the drivers employed by the owners of the trucks. The distillery could have used the vehicle only for the purpose of specified goods and not for any other purpose. The transit risk was of the petitioner and not of the distillery. It was the duty of the transporter to abide by all the laws relating to the motor vehicle and the excise. From the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertime charges for driver after normal duty of 12 hours if officially detained inside or outside the factory premises Rs. . . . per hour. (e) Night halt charges while on official duty Rs.... per night. In the event of upward revision in the price of diesel/petrol oil by Government compensation on the base consumption of one 4/10 Kms. will be payable with effect from July 1, 1987. The entire running and maintenance cost including the cost of diesel/petrol, payment of salary and overtime allowance to driver, insurance, taxes, permits, etc., will be borne by you. Payment will be made only for distance from starting point of bus to plant site and back to termination point. No payment will be made for the distance from or up to garage. IFFCO reserves the right to terminate the contract without assigning any reason whatsoever. In the event of such termination you will not be entitled for any compensation from IFFCO. If any gross shortcomings/defects/negligence is found in the proper running of hired vehicle or its substitute, IFFCO will deduct a fixed amount from your running bills as a penalty. The amount to be fixed will be at the sole discretion of IFFCO and cannot be guaranteed. 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reinbefore. That the transporter shall obtain the route permit, etc., for running these buses and M/s. Bharat Pumps and Compressors Ltd., shall in no way be responsible for obtaining such permit, etc., payment of taxes such as passenger tax, surcharge, insurance charges, to concerned authorities will be the liability of the contractor and Bharat Pumps and Compressors Ltd., will in no way be responsible to pay any part of such taxes. The contractor will have to produce the above documents as and when required by the authorised officer of Bharat Pumps and Compressors Ltd. That the transporter will arrange at his own cost for the parking and garaging of the buses at Allahabad, or any other place the transporter may like to garage and keep the bus. But on the outward journey to the factory site of Bharat Pumps and Compressors Ltd., the bus will be allowed to be parked in the open ground for the period it is necessary to park and some for fulfilment of this contract. That Bharat Pumps and Compressors Ltd., shall not be liable for wear and tear, maintenance or loss or damage to the bus while in use or while garaged or parked. 13. Perusal of the aforesaid terms of the contracts shows that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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