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TMI Blog2009 (3) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Jagatsinghpur district. It is a registered dealer under the Orissa Sales Tax Act, 1947 (hereinafter called, "the OST Act") bearing registration No. CUII-J-872. The opposite partyCorporation engaged its dredgers for dredging the floor of Paradeep Port under the Paradeep Port Trust (hereinafter called "PPT"). During the years 1990-91, 1991-92 and 1992-93, the opposite party-Corporation filed its return disclosing turnover of sale of empty tins, burnt oil, tender paper, etc., without including the amount received towards hire charges of dredgers to PPT. The assessing officer on consideration of certain clauses of the agreement entered into between the opposite party-Corporation and the PPT came to a finding that the Corporation had transferred the right to use the dredgers belonging to it to the PPT against the agreed payment. He, therefore, did not accept the return filed by the Corporation and levied tax on consideration money/hire charges received by the Corporation from PPT treating the same as sale within the extended definition of "sale" under section 2(g)(iv) of the OST Act. The assessment orders were challenged in the first appeal. In first appeal, the assessment orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n no deployment of the dredgers and no work would have been assigned to the Corporation and no rate would have been prescribed per unit of work. Since it was not a case of transfer of right to use the dredgers, the PPT deployed its Licensing Officer on board to read and record the units of work done by the Corporation. It was contended that pursuant to earlier direction of this honourable court, statements of the Officer in-charge of Administration of PPT were taken by the officers of the Revenue Department wherein they have stated that the PPT had no possession or control over the dredgers during the period of dredging and labour and technical know-how were supplied by the Corporation during the relevant period. It was further contended that the payment received by the opposite party towards mobilisation charge, demobilisation, idle time charge, dredging charge were only received against the service and not the hire charge for transfer of right to use the dredgers to be taxed under the OST Act treating it to be a sale according to the definition of sale as provided under section 2(g)(iv) of the OST Act. Mr. Ray relied on judgments of the honourable Supreme Court in State of Andhra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble apex court in Aggarwal Brothers v. State of Haryana [1999] 113 STC 317 held that the definition of "sale" in section 2(l) of the Haryana General Sales Tax Act, 1973 includes the "transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration". Such transfer of the right to use goods for consideration is "deemed" to be a sale. The provision expressly speaks of "transfer of the right to use goods" and not of transfer of goods. It is, therefore, not correct to say that to be a deemed sale within the meaning of the provision of the Act there must be a legal transfer of goods or that the transaction must be like a lease. In that case, the appellants owned shuttering which they transferred for consideration to builders and building contractors for use in the construction of building. Accordingly, the honourable apex court held that requirements of deemed sale within the meaning of section 2(l) of the Haryana General Sales Tax Act, 1973 were satisfied and the hire charges were taxable under the Act. In State of Andhra Pradesh v. Rashtriya Ispat Nigam Ltd. [2002] 126 STC 114 (SC), the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce cannot reasonably be taken to have intended to purchase or obtain any right to use electromagnetic waves or radio frequencies when a telephone connection is given. Nor does the subscriber intend to use any portion of the wiring, the cable, the satellite, the telephone exchange, etc. At the most the concept of sale in the subscriber's mind would be limited to the handset that may be purchased. As far as the subscriber is concerned, no right to the use of any other goods, incorporeal or corporeal, is given to him or her with the telephone connection. Electromagnetic wave (or radio frequencies) do not fulfil the parameters applied for determining whether they are goods, the right to use of which would be sale for the purposes of article 366(29A)(d). The essence of the right under article 366(29A)(d) is that it relates to the user of goods. It may be that the actual delivery of the goods is not necessary for effecting the transfer of the right to use the goods but the goods must be available at the time of transfer, must be deliverable and delivered at some stage. If the goods or what are claimed to be goods are not deliverable at all by the service providers to the subscribers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se" is to employ to any purpose. (See Johnson's Dictionary). A mere contract of hiring, without more, is a species of the contract of bailment. In Commissioner of Income-tax, Bombay City I v. National Storage Pvt. Ltd. [1967] 66 ITR 596 (SC), the observations of Viscount Finlay in Coman v. Governors of the Rotunda Hospital, Dublin [1920] 7 TC 517 (HL); [1921] AC 1 (HL) that "the subject which is hired out is a complex one were applied. 'Right' is a claim to a thing. It is the liberty of doing or possessing something consistently with law. A right is interest recognised and protected by law. Transfer of right implies that full liberty is vested on the transferee to have the right to use the goods at the exclusion of all others including the owner of the goods". (see Kandoi Transport v. Sales Tax Officer, Assessment Unit, Barbil (OJC Nos. 576, 577 and 578 of 1988 decided on December 4, 1991-Orissa High Court). Various clauses of the agreement entered into between the Corporation and the PPT were brought to the notice of the Tribunal and after taking into consideration the provisions of the agreement and various case laws, the learned Tribunal, which is the final fact-fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n goods in execution of such a contract. There is nothing in the agreement to prove that there was a transfer of right to use the dredger. The clauses in the agreement brought to our notice by Mr. Ray amply prove that there was no transfer of right to use the dredger in this case. 12.. Mr. S.K. Paul, the learned State Representative, disputes the agreement, stating that this agreement was not made for the purpose of work/sale which is currently in dispute. Even if this contention is accepted, things will not take a different shape. The learned STO had taxed the appellant on mobilization charge, and demobilization charge. There was such charges, even if it is held that the agreement was an oral one. This proves that the dredger moved from non-Orissa State to Paradeep on the basis of or as a direct result of the oral agreement, and even if it is held (erroneously, of course) that it is the transfer of possession of goods that make it a sale within the meaning of the provisions of section 2(g)(iv) of the OST Act, the State Act can not tax it, as it would be a sale in course of inter-State trade or commerce, under section 3(a) of the CST Act. The decision of the honourable Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Tax paid, if any, qualifies for refund in accordance with law." Moreover, it was brought to our notice that the assessments for the years under consideration have been made on the same ground the assessments for previous years, i.e., 1984-85 to 1989-90 were made. The matter relating to previous years was carried to this court and this court remanded the matter to the Tribunal and the learned Tribunal thereafter remitted the matter back to the Sales Tax Officer for fresh assessment with certain directions. Finally, the stand of the opposite party that there was no transfer of right to use the dredgers by them to the PPT had been accepted by the first appellate authority. Against this, the State preferred second appeal before the Sales Tax Tribunal and the same has been dismissed on April 25, 2008. Mr. Ray, learned counsel for the opposite party submitted that no tax revision has been filed by the State before this court against the order of the learned Tribunal. In that view of the matter, we do not find any infirmity in the order of the learned Tribunal holding that there is no transfer of right to use the dredgers by the Corporation to the PPT in terms of the provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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