TMI Blog2009 (3) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... ition has been admitted on the following questions of law: (i) Whether in the facts and circumstances of the case the learned Sales Tax Tribunal is justified in holding that there was no transfer of right to use of the dredgers within the meaning of section 2(g)(iv) of the Orissa Sales Tax Act, 1947? (ii) Whether in the facts and circumstances of the case the learned Sales Tax Tribunal was justified in deciding the second appeals on merit without remitting back the matter to the Sales Tax Officer for adjudication? Bereft of unnecessary details, the facts and circumstances giving rise to this case are that the opposite party-M/s Dredging Corporation of India Ltd., Paradeep, Jagatsinghpur (hereinafter called the Corporation ) is a Government of India undertaking. During the relevant time, it had its branch office and business at Paradeep Port 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 1990-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of his contention, Mr. Kar relied upon the decision of this court in Krushna Chandra Behera v. State of Orissa [1991] 83 STC 325. It is also argued that the learned Tribunal should have remitted the matter back to the assessing officer for fresh adjudication as had been done by the learned Tribunal for the previous years. Mr. S. Ray, learned counsel appearing for the opposite party-Corporation submitted that dredgers were engaged by the opposite party along with its men as a unit to dredge soil under seawater against consideration. The right of possession and effective control of the dredgers in course of dredging remained with the opposite party and therefore there was no transfer of right in favour of the PPT for use of the dredgers. Mr. Ray further submitted that had it been a case of transfer of right to use the dredgers there would have been 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A plain reading of the above provisions, makes it amply clear that transfer of right to use any goods for any purpose (whether or not for any specified period) for cash, deferred payment or other valuable consideration comes within the purview of sale and sale price means the amount payable to a dealer as consideration for sale or supply of any goods. Transfer means passage of a right from one person to another. Transfer includes every transaction whereby a party divests himself of his interest, which subsequently vests in another party. Right is a claim to a thing. It is the liberty of doing or possessing something consistently with law. In absence of satisfying, the essential requirements of section 2(g)(iv) of the OST Act, no tax can be leviable on amount received by a transferor from transferee on transaction of transfer of right to use the goods. The honourable 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 othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006] 145 STC 91, held that goods do not include electromagnetic waves or radio frequencies for the purpose of article 366(29A)(d) of the Constitution of India. The goods in telecommunication are limited to the handsets supplied by the service provider. There are two reasons: (i) Electromagnetic waves are neither abstracted nor consumed in the sense that they are not extinguished by their user. They are not delivered, stored or possessed. Nor are they marketable. They are the medium of communication. What is transmitted is not an electromagnetic wave but the signal through such means. The signals are generated by the subscribers themselves. In telecommunication what is transmitted is the message itself by means of the telegraph. No part of the telegraph itself is transferable or deliverable to the subscriber. (ii) The second reason is more basic: a subscriber to a telephone service 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 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been held that the delivery of goods may be one of the elements of transfer of right to use, but the same would not be condition precedent for a contract of transfer of right to use goods. It is explicit that the transfer of right to use any goods involves both passing of right in as well as domain of the goods in which right to use the goods is transferred. Transfer is one of the widest terms that can be used (per James L.J. in Gathercole v. Smith 17 Ch. D. 1). Transfer includes every transaction whereby a party divests himself or is divested of a portion of his interest, that portion subsequently vesting or being vested in another party. Transfer means passage of a right from one person to another. According to Murray's Oxford Dictionary, Volume II, page 257, it means to convey or make over title, right or possession by deed or legal process. The first meaning assigned to use 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act. So what is determinative as to whether or not there was a transfer of right to use the chattel (the dredger) is the stipulation in the agreement made between the Board and the appellant. Nothing is to be inferred, for such inference will be made, taking it as, or with a preconceived notion of, a bailment. In a bailment, possession of and control over, the goods by transferee is a necessary condition but in a sale under section 2(g)(iv) of the OST Act, a transaction of transfer of right to use any goods alone is the necessary condition. The agreement provides as follows: '. . . the Corporation hereby agrees to deploy its cutter Auction Dredger MOT Dredge-II in the dredging work. . .' There are stipulation to do a work to dredge the sea-bed, with men and machine deployed for the purpose, against a valuable consideration. So we find it a works contract, without transfer of property in 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. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lough and bullock over a period of time, and demands a daily wages for his work, and also refrains at times from work at the direction of the land-lord for passage of other ploughs and bullocks of other cultivators through the field. Then is it correct for some one to infer that because the labourer takes a daily wage, and refrains from work at times at the direction of land-lord, takes certain charges to bring home the bullock and the plough situated at a distance of, say, 10 kms., the right to use the bullock and plough has been transferred to the landlord, even without such an understanding between them even if one thinks it in the lines of a bailment? The answer is always in the negative. So we find that the learned ACST is not justified in confirming imposition of tax on the appellant in this case. His order, therefore, fails. 16.. In the result, appeals filed by the dealer-assessee are allowed in full. 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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