TMI Blog2014 (5) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... timacy to tax the consideration mentioned in the master lease even before the appellants acquire a right to receive the same - This will be not only an unintended consequence of enacting Sub-clause(d), but also an improper and unjust action having approval of the Court - Referring decision in GANNON DUNKERLEY & CO., v. STATE OF RAJASTHAN [1992 (11) TMI 254 - SUPREME COURT OF INDIA], Apex Court pointed out that in taxing the deemed sale, the restrictions that are available in the case of normal sale also would have relevance. Expression of the words 'In the course of import' - Held That:- The absence of an amendment to the definition of "sale" contained in Section 2(g) of the Central Sales Tax Act, so as to include transfer of property in goods involved in execution of works contract, does not, in any way, affect the applicability of Sections 3, 4 and 5 and Sections 14 and 15 of the Central Sales Tax Act to sales under the Local Act - Relying upon INDURE LIMITED v. CTO. [2010 (9) TMI 883 - SUPREME COURT OF INDIA] - In order that the sale should be one in the course of import, it must occasion the import and to occasion the import there must be integral connection or inextricable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se agreement dated 17.4.1998. Since the master lease agreement made no reference as to the purchase order placed with the foreign manufacturer, the Revenue took the plea that the supplementary agreement is totally unconnected with the master agreement. According to the assessee, Hindustan Power Plant Limited placed a purchase order on 15.04.1998 with the Japanese firm for the supply of the machinery with specifications and details mentioned therein. Based on the said order alone, the Japanese firm supplied the machinery through Bill of Lading dated 28.05.1998. 3. In the light of the above-said fact, the assessee took the plea that the movement of goods was occasioned as a result of the agreement. The assessee further pointed that there were no two independent transactions, one between the assessee and the foreign manufacturer and the other between the assessee and the actual user. The assessee claimed that considering the various clauses in the master agreement and the supplementary agreement which are to be read as forming part of the same transaction, the supplemenmtary agreement did not have an independent existence from that of the master lease agreement. The various clauses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its lease agreement. He further pointed out that it is only under the second agreement entered into between the parties by way of supplementary agreement, that the consideration for the lease by way of the instalment payment was mentioned. In other words, one cannot read the master agreement and the supplementary agreement, as referable to one single transaction relatable to the purchase of machinery for and on behalf of the lessee to lead to a finding that the import of the machinery was for and on behalf of the actual user; that the transaction ultimately ended in an agreement to transfer the right to use goods. Thus the delivery taking place inside the State, the question of the assessee having the benefit to deduction under Section 3-A(2)(a) of the Tamil Nadu General Sales Tax Act does not arise. In this connection, he placed reliance on the decision of the Kerala High Court reported in [2009] 23 VST 264 BPL TELECOM LIMITED v. STATE OF KERALA and [2007] 6 VST 805 FIRST LEASING COMPANY OF INDIA LIMITED v. STATE OF KERALA, to contend that the facts of the case herein fit in with the decision of the Kerala High Court that the import by the assessee and the transfer of right to us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. The correspondence between the lessee and the bank dated 10.4.1998 refers to the approval of lease finance arrangement for the machine to be purchased by the assessee. Confirming that the lessee would enter into lease agreement for financing the import of machines, the lessee requested the assessee to place the purchase order on the overseas supplier in Japan to whom the lessee had already placed Purchase Order. They also enclosed a copy of the purchase order placed with the foreign supplier dated 14th July 1997. Accordingly, on 5.4.1998, the assessee also placed purchase order referring to their lease arrangement with the lessee M/s.Hindustan Power Plus Limited, Hosur. The terms and conditions of placing of the purchase order were also enclosed as annexures. A reading of the same shows that the invoices were to be raised in favour of the assessee's account Hindustan Power Plus Limited. They also requested that the words 'under lease arrangement with the Karnataka Bank Limited, Chennai' be marked in prominent places of equipment. Further, it stipulated that any amendment to the purchase order could be made only with the concurrence of the lessee in writing. The assessee reque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngement between the assessee and the lessee as regards lease agreement got finalised for the purpose of import of machinery, the subsequent documentation is merely a follow up action and it is difficult to read each one of the documents in isolation. When the first of the documents viz., master lease agreement got dovetailed into the purchase order placed by the assessee with the foreign manufacturer/supplier, the subsequent documentation completes the balance of the transaction that the assessee had with the lessee. 12. In the context of the above said facts, one needs to consider the reliance on the decision of the Apex Court reported in [2000] 119 STC 182 20TH CENTURY FINANCE CORPORATION LTD. v. STATE OF MAHARASHTRA. In the said decision, the Apex Court referred to the decision of the Constitution Bench in the case of GANNON DUNKERLEY CO., v. STATE OF RAJASTHAN reported in [1993] 88 STC 204, wherein the Apex Court pointed out that in taxing the deemed sale, the restrictions that are available in the case of normal sale also would have relevance. Thus, confirming the view of the Andhra Pradesh High Court in the decision reported in [1995] 97 STC 330 I.T.C., CLASSIC FINANCE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 and 4 of the Central Sales Tax Act, is untenable. " 14. The said decision has been consistently applied in the decision of the Orissa High Court reported in [2008] 16 VST 193 SREI INTERNATIONAL FINANCE LIMITED v. STATE OF ORISSA as well as the decision of the Uttarkhand High Court reported in [2010] 29 VST 265 TELECOMMUNICATION CONSULTANTS INDIA LIMITED v. CCT, which are also cases of a tripartite agreement, in the sense, that the assessee therein had to comply with the already existing order placed by the actual user for import of goods. Thus, agreeing with the decisions of the Orissa High Court and Uttarkhand High Court, which distinguished the case of the Kerala High Court relied on by the learned standing counsel for the Revenue, we have no hesitation in accepting the submission made by the learned counsel for the assessee. 15. In the decision reported in [2010] 34 VST 509 INDURE LIMITED v. CTO., the Apex Court considered the phrase "in the course of import" in the matter of transfer of right to use. The facts therein related to imported materials for the purpose of using it in a turnkey project. Applying the decision reported in STATE OF MAHARASHTRA v. EMBEE CORPORATION ..... X X X X Extracts X X X X X X X X Extracts X X X X
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