TMI Blog2016 (4) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the use in the electricity generation and distribution. Consequently, there was no valid ground to deny the Appellant ‘C’ Forms in relation to the lease transactions undertaken with RASL during the years 2002-03 and 2003-04. Therefore, the VAT Officer is directed to issue ‘C’ Forms as requested by the Appellant for the transactions of the years 2002-03 and 2003-04. - Appeal disposed of - ST. APPL. 16/2008 - - - Dated:- 11-3-2016 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mr. M.P. Devnath, Mr. Abhishek Anand and Mr. Yogendra Aldak, Advocates For the Respondent : Mr. Siddharth Dutta, Advocate for R-1/CST, Mr. Sudhir Kumar, Advocate for R-2/GNCTD. Ms. Rama Ahluwalia, Advocate ORDER Dr. S. Muralidhar, J. 1. This appeal by the Tata Power Distribution Limited ( TPDL ) [earlier known as North Delhi Power Limited ( NDPL )] under Section 9 (2) of the Central Sales Tax Act, 1956 ( CST Act ) read with Section 81 of the Delhi Value Added Tax Act, 2004 ( DVAT Act ) is directed against the impugned order dated 14th July 2008 passed by the Appellate Tribunal ( AT ) dismissing the appeal of the Appellant. The AT upheld the order dated 30th November 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no movement of goods from Maharashtra to Delhi during the relevant tax period, and that the ownership rights in the equipment still vested in RASL. As far as years 2002-03 and 2003-04 were concerned, the appeal filed by the Appellant was rejected by the OHA i.e., the Deputy Commissioner on the same ground. The further appeal by the Assessee was dismissed by the AT by the impugned order primarily on the ground that the transaction was not an inter-state sale. In coming to the said conclusion the AT referred to the decisions of the Supreme Court in 20th Century Finance Corporation Limited v. State of Maharashtra (2000) 6 SCC 12 and Bharat Sanchar Nigam Limited v. Union of India (2006) 3 SCC 1. The AT came to the conclusion that since the situs of the sale was Delhi and the agreement transferring the right to use the equipment was executed at New Delhi on 25th May 2000 between RASL and DVB, the said transaction could not be said to be an inter-state sale. Consequently, the AT held that the Appellant could not seek for issuance of C Forms under the CST Act. 6. This Court has heard the submissions of Mr. M.P. Devnath, learned counsel for the Appellant, Mr. Siddharth Dutta, learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is transferred to a lessee by a lessor. It is deemed to be a sale by the lessor in favour of the lessee. Where such sale partakes character of inter-state sale then it is the Parliament which alone has the competence to collect sales tax to the exclusion of the States. Section 2 (g) (iv) of the CST Act defines sale to include 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. 12. Section 3 of the CST Act which defines 'inter-state sale' reads thus: When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce:- A sale or purchase of goods shall be deemed to take place in the course of inter-State or commerce if the sale or purchase (a) occasions the movement of goods from one State to another; or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another. Explanation I where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the state at the time of the transfer of the right to use the goods was the subject matter of the decision of the Constitution Bench of the Supreme Court in 20th Century Finance Corporation Limited v. State of Maharashtra (supra). The question arose in the context of dealers registered under the various State Sales Tax Legislations, for e.g., Maharashtra, Uttar Pradesh, Rajasthan, Andhra Pradesh, Haryana, Karnataka and Tamil Nadu, who had entered into master lease agreements for leasing diverse machinery/equipment in terms of which, the dealers would place purchase orders on the suppliers or manufacturers for supply of individual items or equipment. The dealers disbursed the value of equipment to the suppliers, who at their instance, delivered the equipment to the lessees at specified locations for use. After the equipment was delivered and put to use, a supplementary lease schedule was executed by the lessee acknowledging due receipt of the lease equipment. Such supplementary lease deeds formed an integral part of the master lease agreement. Several States amended their respective sales tax legislation to levy tax on the transactions of transfer of the right to use goods on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use has taken place in another State. Therefore, the contention, on behalf of the respondents that there would be no completed transfer of right to use goods till the goods are delivered is to prevail, then the respondents are further required to show that the contract of transfer of right to use goods is also entered into in the said State in which the goods are located or delivered for use. The State cannot levy a tax on the basis that one of the events in the chain of events has taken place within the State. The delivery of goods may be one of the elements of transfer of right to use, but the same would not be the condition precedent for a contract of transfer of right to use goods. Where a party has entered into a formal contract and the goods are available for delivery irrespective of the place where they are located the situs of such sale would be where the property in goods passes, namely, where the contract is entered into. 15.5 It further held as under: 28........where the goods are in existence, the taxable event on the transfer of the right to use goods occurs when a contract is executed between the lessor and the lessee and situs of sale of such a deemed sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation or delivery of the goods would not determine the situs of sale. Where the property in the goods passed from the seller to the purchaser would differ from case to case. Where the lease agreement occasioned the movement of goods from one State to another then, clearly it would partake of an inter-state sale within the meaning of Section 3 (a) of the CST Act. The observation in para 25 of 20th Century Finance Corporation Limited v. State of Maharashtra (supra) has to be read as a whole. It is only when the goods are available in the State and the agreement for transfer of the property in goods from the seller to the buyer is executed at that place it can be said that the situs of the sale is where the agreement is entered into. However, as far as the present case is concerned, there is a clear finding in the order of the AT itself that there is also no doubt about the facts, the goods did move from Maharashtra to Delhi and were used in the distribution of electricity. The equipment was in fact sent from Maharashtra to Delhi for use by the Appellant (Lessee) in Delhi and this movement was occasioned by the lease agreement which was entered into in Delhi. Even going by the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the meaning of that expression in Section 3 (a) of the CST Act. Consequently, question No. 1 is answered in the negative, i.e., in favour of the Appellant and against the Department. It is held that the AT was not correct in law in holding to the contrary. 19. As far as question No. 2 is concerned, it is not the case of the Department that the Appellant does not satisfy the pre-conditions for issuance of C Forms. The Appellant is a registered dealer and the goods in question find mention in the registration certificate as required for the use in the electricity generation and distribution. Consequently, there was no valid ground to deny the Appellant C Forms in relation to the lease transactions undertaken with RASL during the years 2002-03 and 2003-04. The order dated 30th November 2006 of the OHA and the order dated 14th July 2008 of the AT are hereby set aside. The VAT Officer is directed to issue C Forms as requested by the Appellant for the transactions of the years 2002-03 and 2003-04, not later than two weeks from today. The Appellant will in turn provide those C Forms to RASL forthwith without unnecessary delay. This takes care of the grievance of Respondent No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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