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Waltor Buthello of Mumbai Versus The Commissioner of Sales Tax And Harrold Buthello Versus The Commissioner of Sales Tax

Deemed Sale - Transfer of right to use - buses given on hire - MVAT Act - dealer within the meaning of Section 2(8) of the MVAT Act - transaction between Appellant and PMPTL amounts to sale or not? - whether amounts to sale or provision of service? - Held that: - it is the PMT alone which can use the hired buses. They cannot be put to use by the appellant privately nor he can divert the user in contravention of the directions of the PMT. The exclusive possession is with the PMT. All the licences .....

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MT permit granted by the Regional Transport Office, Pune. The hired buses will be registered with the RTO, Pune in the name of the PMT as lessees and will be operated as stage carriages within the operational area of the PMT. - This is not a case of a sale of transport vehicle or purchase thereof nor a case of sale of parts, components or accessories of such transport vehicles or purchase thereof. This is a case where the legislature has made the transfer of the right to use any goods for an .....

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including it in the sale price, then, all the more we do not think that any relief should be granted based on this alternate plea. We have also noticed that the appellant has obtained a registration under the MVAT Act and so long as that registration is in force, he cannot escape the incidence of tax qua the subject transaction. - It is not just a dealer, but every person who is liable to pay tax under this Act, shall pay the same. That is how taxes are payable within the meaning of section .....

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t with Ms. P.V. Thorat and Mr. A.B. Sheth for the Appellant Mr. V.A. Sonpal, Special Counsel for the Respondents JUDGMENT [ Per S. C. Dharmadhikari, J. ] 1 This appeal challenges the order passed by the Maharashtra Sales Tax Tribunal at Mumbai dated 11th December, 2015 in VAT Appeal No.1130 of 2015. 2 The VAT Appeals before the Tribunal arose from an order of assessment dated 31st March, 2015 and an interim stay order dated 16th September, 2015, passed by the First Appellate Authority. 3 The Sec .....

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e, is right in holding that the Appellant is a dealer within the meaning of Section 2(8) of the MVAT Act ? (2) Whether the Appellate Tribunal, in the facts and circumstances of the case, is right in holding that the transaction between the Appellant and PMPTL is a sale within the meaning of Section 2(24) of MVAT Act read with its explanation (b)(iv) in an appeal against the order of part payment of the first appellate authority and thereby rendering the appeal before the 1st Appellate Authority .....

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on business in the name and style of M/s. Buthello & Sons as sole proprietor thereof and is, inter alia, engaged in providing buses on hire to the private corporations, schools for transporting students and to public transport corporation on contract basis. The respondent No.1 is a Commissioner of Value Added Tax and exercising powers and discharging duties conferred upon him under the provisions of Maharashtra Value Added Tax Act, 2002 (for short MVAT Act ). 6 Prior to 1st April, 2005, the .....

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aking of Pune Municipal Corporation) without transferring the right to use and keeping the possession and control of the buses with the appellant. The appellant submits that providing the buses to the PMC is subjected to service tax under Chapter V of the Finance Act, 1994. 8 Pursuant to the Tender Notice published on 28th April, 2003 by the PMC, vide, inter alia, agreement dated 9th August, 2004, the appellant had provided 25 buses on hire to Pune Municipal Transport [now Pune Mahanagar Parivah .....

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eputy Commissioner ) conducted the business audit of the appellant for the period 1st April, 2005 to 31st March, 2006. 10 Pursuant to the aforesaid audit, the Deputy Commissioner of Sales Tax by his assessment order dated 19th March, 2014, assessed the demand at ₹ 1,07,13,907/- and interest at ₹ 1,28,56,689/-. Further, the Deputy Commissioner also levied penalty of ₹ 1,07,13,907/-. 11 Vide Notice of demand dated 19th March, 2014, the Deputy Commissioner of Sales Tax directed th .....

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ce calling upon the appellant to show cause as to why penalty under section 29(3) should not be levied on the appellant. 15 During the course of assessment, the appellant submitted monthly details of bus hire receipts, special trips and accident claims received. 16 Thereafter, vide Order dated 31st March, 2015, the Deputy Commissioner, based on the reason in the earlier order dated 19th March, 2014, raised the demand of ₹ 3,58,91,589/- on account of tax and interest. The Deputy Commissione .....

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sham transaction and has either concealed or knowingly mis-classified the transaction liable to tax, to defraud the Revenue. Accordingly, the demand notice dated 31th March, 2015, of ₹ 3,58,91,589/- on account of tax, interest and penalty was issued to the appellant. 17 Being aggrieved by the said assessment order dated 31st March, 2015, the appellant preferred an appeal before the Joint Commissioner of Sales Tax (Appeals)-I, Mumbai City Division [hereinafter referred to as the Joint Commi .....

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als), inter alia, held that the action of the Assessing Officer for levy of tax on hire charges received by the appellant as lease transactions is found to be as per the provisions of law. 19 Being aggrieved by the said interim stay order No. JC/APP-I/VAT-222/2015-16/part payment order / B-1190 Mumbai dated 16th September, 2015, the appellant preferred an appeal under Section 26 of the MVAT Act, 2002, before the Appellate Tribunal along with an application for stay. The Tribunal passed the above .....

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would attract service tax by virtue of the amendment to the Finance Act. That is because the Parliament has expanded the scope of rent-a-cab service by defining motor vehicle capable of carrying more than twelve passengers for hire or reward as a cab. That is why the appellants are paying service tax on hire of buses to PMC under this amendment. The present appeal pertains to a period prior to such amendment, but even prior to the said amendment, activities performed by the appellant were undoub .....

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concept and the type of charter party contracts, Mr. Sridharan would submit that a careful perusal of a charter party by demise and a charter party not by demise which is classified into Time Charter and Voyage Charter, it would be apparent that there is no transfer of possession accompanied by effective control over the business by the appellants / owners. This would not attract Article 366(29A)(d) of the Constitution of India. That is because a contract of service is not covered thereunder. 2 .....

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spare parts etc., required for operating / running the bus. Such activities are neither insignificant nor incidental to the contract of providing of motor vehicle on hire basis. Mr. Sridharan seeks to draw support from clause 16(i) of the tender document wherein it has been mentioned that hire charges can be reviewed on the basis of hike and reduction in diesel price in proportionate to the increase or decrease in diesel price. Thus, the appellant has been interested in the function of operation .....

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f buses using own fuel apart from repairs and maintenance. Therefore, there is no transfer of right to use fuel and other consumables. The charge / rate by the appellant is towards composite supply of service and right to use goods. The predominant portion of the consideration is for use of fuel. Thus, a contract, other than those specified in Article 366(29A)(b) and (f), cannot be split up, taxing the deemed sale element in the composite contract. This argument of Mr. Sridharan is built up on a .....

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dharan would submit that in any case, the appellant is not a dealer within the meaning of Section 2(8) of the MVAT Act. He elaborates this contention as under : From the plain reading of Exception 3 to section 2(8) of MVAT Act, 2002, it transpires that a transporter holding permit for transport vehicles is specifically excluded from the definition of a dealer. The Appellant submits that the demand has been raised on motor vehicles for which stage carriage permit has been duly obtained as per Mot .....

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submits that; it is undisputed fact that the Appellant has provided the transport vehicle to PMPML on a reward basis. Accordingly, the Appellant shall be excluded from the definition of Dealer to the extent such vehicles are provided on a reward basis. Suggestion of respondents that for the buses in question, permit has been obtained by the PMPML is irrelevant to the above matter. At this juncture, reference may be drawn to definition of sale price contained in MVAT Act, 2002. Relevant para of t .....

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rson is excluded from the definition of Dealer, turnover of such person shall not be liable to VAT in the state of Maharashtra. 27 To support the above contentions, Mr. Sridharan relies upon the following decisions : (i) Commissioner of Sales Tax vs. Maharashtra State, Mumbai vs. General Cranes (2015) 82 VST 560. (ii) State of A.P. & Anr. vs. Rashtriya Ispat Nigam Limited (2002) 3 SCC 314. (iii) Bharat Sanchar Nigam Limited & Anr. vs. Union of India & Ors. (2006) 3 SCC 1. (iv) Indian .....

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5 VST 522 (Orissa) (ix) Commissioner, Trade Tax, U.P., Lucknow vs. Jamuna Prosad Jaiswal (2008) 13 VST 403 (All) (x) UTI Mutual Fund vs. Income Tax Officer & Ors. (2012) 345 ITR 71 (Bom.) 28 Mr. Sonpal, learned Special Counsel appearing on behalf of the respondents would support the impugned order. Mr. Sonpal has argued that the view taken by the Tribunal cannot be termed as perverse. He would submit that though the matter is brought at the stage of part-payment / interim relief, the Tribuna .....

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thority can reach on the present facts and circumstances. Mr. Sonpal has, during the course of his arguments, submitted that the assessment order correctly records that the factual aspects are already decided and discussed in the order of the Commissioner of Sales Tax on the application seeking determination of the disputed question (DDQ) Nos.29 and 30 of 2011, dated 11th April, 2011, in the case of M/s. Wings Travels and another similar order DBQ-11-2008-3/30 dated 11th April, 2011, in the case .....

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aking established as per the provisions of section 66(2) of the Bombay Provincial Municipal Corporation Act, 1947, to cater to needs of commuters in and around Pune city. There was a resolution passed by the said transport service by the General Body of the Municipal Corporation. That General Body accorded sanction to enter into an agreement for hiring buses to supplement and augment the fleet of PMT. This agreement clearly intends that the buses are to be handed over by the contractor to PMT. T .....

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agreement and are of the number and size as enlisted in Annexure-B, would be handed over from the date of permission to ply on PMT permit granted by the RTO, Pune, then, this is not a case where the view taken on the interpretation of this agreement by reading it as a whole together with attendant circumstances is perverse or vitiated by any error of law apparent on the face of the record. Mr. Sonpal relies upon all the clauses in the agreement to contend that nothing is within the domain of th .....

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operation. It is in these circumstances that the view taken by the Tribunal is in accordance with law. 30 Mr. Sonpal has also relied upon some of the clauses in the agreement and particularly the one where there would be exclusive authority or the General Manager of the PMT. Mr. Sonpal has also brought to our notice, the terms and conditions of the Hindi advertisement and which bind the bidder. Mr. Sonpal has then referred to the order of the Tribunal and submitted that the definition of the ter .....

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. It is in these circumstances the test of effective control and possession is satisfied. The transaction before this Court is not identical to that referred by this Court in the case of Commissioner of Sales Tax, Maharashtra State, Mumbai vs. General Cranes (2015) 82 VST 560. The nature of the transaction in the present case is different. Even if the agreement is with the contractor, it is clear that the colour scheme of the buses, the entire specifications laid down have to be as determined by .....

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elied upon the judgment in the case of General Cranes (supra) as also some other judgments which Mr. Sridharan has relied upon. 32 For properly appreciating the rival contentions, we would first refer to the The Maharashtra Value Added Tax Act, 2002. The Act defines in section 2, clause (8), the term 'dealer' in the following manner: 2. Definitions.- In this Act, unless the context otherwise requires,- (1) … … … (8) dealer means any person who, for the purposes of or .....

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principal or principals whether disclosed or not; (b) an auctioneer who sells or auctions goods whether acting as an agent or otherwise or, who organises the sale of goods or conducts the auction of goods whether or not he has the authority to sell the goods] belonging to any principal whether disclosed or not and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of the principal; (c) a non resident dealer or as the case may be, an agent, residing .....

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t for cash, or for deferred payment, or for any other valuable consideration shall, notwithstanding anything contained in clause (4) or any other provision of this Act, be deemed to be a dealer, namely:- (i) Customs Department of the Government of India administering the Customs Act, 1962 (52 of 1962); (ii) Departments of Union Government and any Department of any State Government; (iii) Local authorities; (iv) Port Trusts; (iv-a) Public Charitable Trust; (v) Railway Administration as defined un .....

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anies, Air Transport Companies, Airlines and Advertising Agencies; (x) any other corporation, company, body or authority owned or constituted by, or subject to administrative control, of the Central Government, any State Government or any local authority: 8[* * *] Exception I.- An agriculturist who sells exclusively agricultural produce grown on land cultivated by him personally, shall not be deemed to be a dealer within the meaning of this clause. Except ion II. - An educational institution car .....

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f such transport vehicles or parts, components or accessories thereof. The other relevant definition for our purpose is that of the term 'sale'. That is to be found in section 2 clause (24) and reads as under : 2. Definitions.- In this Act, unless the context otherwise requires,- (1) … … … (24) sale means a sale of goods made within the State for cash or deferred payment or other valuable consideration but does not include a mortgage, hypothecation, charge or pledge; .....

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le consideration; (ii) the transfer of property in goods (whether as goods or in some other form) involved in the execution of a 13[14[works contract including], an agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property;] (iii) a delivery of goods on hire-purchase or any syste .....

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umption or any drink (whether or not intoxicating), where such supply or service is made or given for cash, deferred payment or other valuable consideration; [(vii) * * *] shall be deemed to be a sale; 33 We are concerned in this case with sub-clause (iv) of clause (b) of section 2(24). What we have is the definition of the term 'sale' and which unless the context otherwise requires means a sale of goods made within the State for cash or deferred payment or other valuable consideration b .....

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ny system of payment by installments and, importantly, 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 together with what is enumerated in sub-clause (v) and sub-clause (vi) of Explanation (b) of clause 24 of section 2 shall be deemed to be a sale. Thus, everything that is appearing in the clauses to the explanation in this definition are deemed to be a sale. 35 The argument before us is .....

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aper-book. These terms and conditions state that the buses will be hired for a period of three years at the first instance, which can be extended further for two years at the discretion of the General Manager of the Undertaking. Then it is stated that the tenderer will offer minimum ten buses on hire basis to the Undertaking with specifications, more particularly described in Annexure A to the said document. However, the General Manager reserves the right to accept lesser number of buses. These .....

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l be given preference. The Undertaking will provide conductors with tickets, waybill and other conductor's equipment. The right of the Undertaking to collect fare and charges is clearly spelt out. The tenderer does not possess any such right. Then, the General Manager of the PMT has sole discretion to identify the routes on which the hired buses shall be deployed. The tenderer shall have no right to claim any particular route for operation. The responsibilities of the tenderer are set out in .....

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ll bear the cost of the driver, including his wages, daily allowance and meet all other statutory obligations. (v) The Tenderer shall keep the buses road worthy in terms of Chapter VII of the Motor Vehicles Act 1988 and Rules made thereunder from time to time. (vi) The Tenderer shall supply Fuel, Lubricants, Oil, Tyres and Tubes, Spare parts etc. required for running of the bus at his own cost. (vii) The Tenderer shall be responsible or damage or loss caused to the hired bus during the period of .....

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to the all concerned. (x) The Tenderer shall abide by all statutory provisions including those made under various Labour enactments and defend the driver in Criminal and/or Civil Court in any Criminal / Civil liability arising out of any action of court on the part of the driver. (xi) The Tenderer shall ensure the insurance of all buses covering third party risk, passengers and other property damage including bus. The insurance should be renewed in time. (xii) The Tenderer shall produce the vehi .....

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is that the tender shall make available the hired buses for minimum 14 hours a day and in case a bus is not available minimum for 14 hours a day, it will not be counted as a day for the purpose of reckoning the number of days operated in a month. Then, how the cancellation of kilometers, trips for any reason shall be made for actual kilometers operated and that would be reckoned for payment of hire charges. Reliance is strongly placed on term and condition No.13 which says that the tenderer shal .....

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ration under the Undertaking. Condition No.16 stipulates the hire charges fixed will be valid for the period of three years. That can be reviewed on the basis of hike and reduction in diesel prices in proportion to the increase and decrease in the diesel price only. It is obligatory on the tenderer to quote purchase rate of diesel on which his kilometer rates are based. 38 It is in the light of these terms and conditions and with full knowledge thereof that the dealer before us forwarded his bid .....

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d between parties is a lease agreement for hire of buses by the PMT. A copy of this lease agreement is to be found at page 50 of the paperbook. The recitals to these agreements and consistent with the tender state that the PMT intends to expand and augment its existing fleet of passenger buses. That is why it decided to hire passenger buses. That is how it published the tender notice. In response to that and for assisting the PMT, which is a Public Transport Undertaking catering to the needs of .....

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this agreement comes into force. The buses must comply with the specifications enumerated in Annexure A and the number and size of buses to be provided shall be as per Annexure B. The tenure will be for a period of five years from the date of permission to ply the buses of the contractor on PMT permit granted by the RTO, Pune. The hired buses would be registered with the RTO, Pune in the name of PMT as a lessee and would be operated as above in terms of and consistent with the tender conditions, .....

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gnated routes. Even the halts or stops are decided in advance by the PMT. A complete chart / table / schedule is prepared for plying these buses within the operational area. The fare to be collected from the passengers is determined by PMT. The bus would have a conductor who shall collect it. He alone can carry out this function and duty and neither the private bus contractor, namely, the appellant or the driver can lay any claim on the fare and luggage charges or any amount so collected. 40 The .....

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driving. Only drivers successful in all this would be approved and appointed. The expenditure of training of the driver by PMT will have to be borne by the contractor. The driver must fulfill the norms prescribed by PMT. He should have knowledge of roads of Pune city. The contractor will be permitted to employ other surplus drivers employed with PMT where the post of drivers has become surplus on PMT's establishment. Then, all the responsibilities of the contractor are set out, including th .....

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the ground of maintenance or repairs. Thus, if any bus is withdrawn for such purpose, a replacement bus would have to be brought by the contractor. The contractor would be liable to pay all the costs, charges and expenses as enumerated therein but importantly he has to produce the vehicle for inspection at the time of deployment and also subsequently whenever required by the PMT. He has to inform the place where he will be parking the vehicles and the place where he will be repairing them and wh .....

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ration under PMT. He would also not be allowed to cancel or change the ownership during the tenure of the contract and any act of this nature would invite the action contemplated in this clause. The contractor has also to deposit the photocopy of the RC Book, insurance policy of the bus, fitness certificate etc. with the PMT duly exhibiting the copy of the above documents in the bus or under the safe custody of the driver in the bus while on duty as per statutory requirement. These documents of .....

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. That is how the order of assessment was passed and the demand raised. Then, the matter was carried to the First Appellate Authority. The First Appellate Authority initially granted an interim stay and passed an order to that effect on 15th September, 2015. 42 While imposing this condition of part-payment and an interim stay, the First Appellate Authority referred to a recent judgment of the Tribunal in the case of M/s. Aurobindo Highway Services vs. State of Maharashtra, VAT Appeal Nos.164 to .....

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ppellant's emphasis and before us is that he is rendering a service. Therefore, this is not a case where any tax under the MVAT Act can be levied, assessed and recovered. Alternately, Mr. Sridharan submits that we must be guided by the principles laid down in Bharat Sanchar (supra) and particularly paragraphs 41, 42 and 44 thereof. He would submit that in this case, the title to the goods remains with the transferor and he transfers the right to use the goods to the purchaser. However, the c .....

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aking the transfer, delivery or supply and a purchase of those goods by the person to whom the sales is made, still, a composite contract can be treated by applying the principle in paragraph 42 of this judgment. He would submit that of all the different kinds of composite transactions, the drafters of the 46th Amendment chose three specific situations, namely, a works contract, a hirepurchase contract and a catering contract to bring them within the fiction of a deemed sale. Of these three, the .....

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s not envisage any splitting up of the contract in the manner permitted with regard to other contacts, we should hold in favour of the appellant. 45 We are unable to agree with Mr. Sridharan. Firstly, we find that the Tribunal has rightly construed the deal / transaction with reference to the tender, its terms and conditions and recitals so also the covenants of the agreement. A harmonious reading of all these has led the Tribunal to conclude that this is a case of a deemed sale. There is a tran .....

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service. It may discharge any of its discretionary functions within the framework of the constitutional provisions and the Maharashtra Provincial Municipal Corporation Act, 1949. However, that is not decisive and conclusive for our purpose. It is during the course of providing such service that the PMT has hired the buses of the appellant. He is not only obliged to, and in terms of the contract, provide these buses but during the subsistence of such contract, these buses exclusively ply for PMT. .....

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appellant. That is the responsibility and obligation in terms of the contract. He has covenanted and in terms of the agreement that the hired buses with the drivers would, at all times, be available to the PMT. They would pick up the passengers and drop them. The route, the fare, the collection of the fare etc. is within the exclusive domain of the PMT. The PMT's directions have to be followed by the appellant and the drivers hired by him. Even the drivers and their deployment is at the disc .....

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body. The public body entered into an agreement with the appellant in exercise of its statutory powers and to fulfill certain obligations. The appellant knowing fully well this backdrop and background voluntarily executed the agreements. He must, therefore, be held as bound by these covenants and obligations so also responsibilities to be discharged by him. Therefore, these three documents read as a whole and harmoniously lead only to one conclusion that in the given facts and circumstances, the .....

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le to see how we can and in the teeth of the constitutional provision and the definition of the term 'sale', rely upon the charter party agreements in relation to sea going vessels. It is true that charter by demise is something by which the ship owner surrenders the possession and control of the vessel to the charterer, whereas in a charter, which is not a charter by demise, the arrangement could be as noted in paragraph 16 of the written submissions tendered by the appellant (page 6). .....

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d in the port to load cargo. It would have to wait for some days before she could be loaded. At the charterers suggestion, the ship-owners took the opportunity to fit the ship with the degauging apparatus. Therefore, after expiry of several days and hours, the ship was ready for being loaded. There was no clause in the charter party providing that in the events which happened the hire should cease. Thus, there had been no breach of contract by the shipowners because during the first period durin .....

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were a provision in the contract by which it was agreed that in certain events there should be no such payment and such a event had happened. That is how the judgment reported in (1942) 1 King's Bench 286 was reversed. 47 We are not dealing with a situation as is projected by Mr. Sridharan and relying upon the observations of Makinen Law Journal, we are not construing a contract and particularly a charter party. We are not dealing with any obligations of the ship owner qua the charterer or v .....

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ntract particularly where the learned author observes that a charterer under a voyage or time charter party (even if of long duration) only has a personal right that the ship-owner should continue to use the ship to perform the services which he has covenanted to perform. The charterer has no proprietary interest in the subject matter of the contract, the ship. We are considering a situation under sub-clause (d) of clause (29A) of Article 366 which is a case of deemed sale and which sub-clause h .....

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els may require the use of some particular chattel for the performance and without creating any proprietary or possessory interest in the chattel; for example, in the case of a contract to carry cargo in a particular ship. Or they may provide for the hire of a chattel, or confer an option to purchase it or to do both things as in the case of hire purchase agreements. Nonetheless, what these works deal with are peculiar or particular contracts and their interpretations. It is concerning interpret .....

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nition of the term 'sale' as appearing in the MVAT Act is the question before us. Hence, while a possessory interest may or may not be exclusive, the protection of the possessory rights as dealt with in Chitty on Contracts (Thirty First Edition) running page 40 of Volume II is once again enumerating the principles for interpretation of contractual obligations and simplicitor. They are not principles necessarily applicable to every contract and even contracts of the present nature may con .....

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lue Added Tax, whereby it held that the respondent before the Delhi High Court was providing only services and there is no transfer of the right to use the goods for levy of tax under the Delhi Value Added Tax Act, 2004. 50 The gist of the contract appearing in paragraph 4 of the judgment of the Division Bench is that the New Delhi Power Limited (NDPL) as also the respondent before the Delhi High Court entered into and executed an agreement for hire of Maruti Omni cabs by the respondent to NDPL. .....

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paragraph 4 of the order, so also the general conditions of the contract enabled the Delhi High Court to conclude that the contract in question is taxed as service under the Finance Act, 1994. It is a composite contract of sale of goods and service. Therefore, the splitting up and bifurcation is not permissible by applying the Delhi Value Added Tax Act, 2004. Pertinently, the Delhi High Court also dealt with the second question. That was whether the Article 366(29A)(d) would be attracted and whe .....

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f the vehicle who keeps in his custody and control, the permissions and licences with respect to the Maruti Omni cabs or the said permissions and licences remained in possession of the respondents. They were never transferred to M/s. NDPL. Therefore, on facts it held that there is no sale of goods nor transfer of right to use goods. The ingredient that is absent is the one noticed in paragraph 97(c) in the judgment of the Hon'ble Supreme Court in the case of BSNL Ltd. (supra). 51 In contrast .....

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al Manager of the Undertaking. The buses will be operated as stage carriages within the operation area. The tenderer having ready vehicles shall submit details of the vehicles in Annexure-B. The Undertaking will provide conductors with tickets, waybill and other conductor's equipment. The Undertaking shall have the right to collect fare and charges. The tenderer shall not have any such right or claim over them for any reason whatsoever. Then, the General Manager of the PMT has the sole discr .....

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ng any bus or hire people who have been removed or dismissed / retired on superannuation from the service of the Undertaking. The tenderer shall be duty bound for payment of motor vehicle tax and other taxes and levies on the operation of the hired buses to all concerned. It is the tenderer who shall ensure the insurance of all buses covering third party risk passenger and to property damage, including buses which had been renewed from time to time. The tenderer should produce the vehicle for in .....

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uly registered with the Regional Transport Office, Pune and permitted by the RTO, Pune to ply the buses on stage carriage permits held by the PMT and no liability will be incurred on the PMT till the agreement comes into force. Thus, it is apparent from all these clauses that the case is not similar to that dealt with by the Delhi High Court. The hired buses would be registered with the Regional Transport Office, Pune in the name of the PMT as lessee and will be operated as stage carriage permit .....

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nguishable on facts. In the IOCL case, the Public Limited Company, engaged in the business of sale and supply of petroleum products inside as well as outside the State of Assam, hired trucks/tankers for delivery of petroleum to its dealers. In the course of such business, it entered into agreement with contractors. As regards its hiring of trucks/tankers, it entered into agreement with contractors on various terms and conditions which are enumerated in paragraph 1 of the judgment. The Indian Oil .....

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ses present in the agreement that the argument that there is no transfer of the right to use the vehicles from the contractor to the Indian Oil Corporation was accepted. The possession and custody of the vehicles remained and for all practical purposes with the contractors and Indian Oil Corporation only paid the hire charges to the contractors for the vehicles hired from them. The lack of above facets enabled the Gauhati High Court to conclude that there is no transfer of the right to use the v .....

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oor of Paradip Port under the Paradip Port Trust ( PPT for short). During the years and relevant for the High Court judgment, it was noticed that the Corporation filed a return disclosing turnover of sale of empty tins, burnt oil 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 parties, arrived at the conclusion that it was a transfer of the right to use the dredgers. .....

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the Port Trust over the unit of the dredger and men taken together. Several aspects of the contract would denote that it is simplicitor works contract without transfer of the property of goods in execution of a contract. There was also no transfer of right to use the dredger. Once again, for the reasons assigned by us to distinguish the judgment of the Delhi High Court, even this case cannot be of any assistance to the petitioners before us. 55 We must also refer to the case before the Allahaba .....

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the factory to the residence and for which charges were stipulated. The possession of the vehicles was always with the said Jamuna Prosad and the entire expenses, including diesel charges, salaries of drivers / conductor, road tax, passenger tax were borne by him. There was no transfer of any right to use the goods / buses in that case. That is how applying the settled tests and in the backdrop of the terms and conditions of the agreement, the High Court found that there is merit in the content .....

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poration from one place to another and the price was stipulated only for the purpose of transportation and not for the leasing of the entire bus as such for a definite period. That is how the order of the Tribunal was upheld. 56 On facts, once again, this decision is distinguishable. 57 In the case of the Division Bench judgment of our Court, namely, Commissioner of Sales Tax, Maharashtra State vs. General Cranes (supra), the Division Bench was not dealing with the MVAT Act, but Maharashtra Sale .....

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r, while dealing with that application, held that the respondent would fall within the definition of the term 'dealer'. The transaction entered into by the dealer with M/s. Offshore Hookup & Construction Services (India) Private Limited would be governed by the provisions of the Act and, as such, taxable. Being aggrieved by this finding, the respondent General Cranes preferred an appeal to the Tribunal and the Tribunal reversed that finding. It held that the transaction cannot be sai .....

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te, the Division Bench naturally reproduced the terms and conditions of the contract between M/s. General Cranes and M/s. Offshore Hookup & Construction Services (India) Private Limited. In paragraph 8 it reproduced the entire deal and after referring to the settled test, namely, whether the effective control of the machinery even when it was in use of the contractor, remained with the company or not and secondly, whether the contractor was free to make use of the machinery for the works oth .....

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available to the transferor and for the period during which the transferee has such legal right, it has to be and to the exclusion of the transferor. The Division Bench held that unless all the requirements are satisfied, the transaction will not come within the purview of the transfer of right to use any goods. The Division Bench, therefore, held that the contract has been extensively referred in the Tribunal's order. A perusal of these terms would reveal that the driver, cleaner, diesel an .....

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t is not on par with M/s. General Cranes. Our extensive reference to the terms and conditions of the contract leaves us in no manner of doubt that it is the PMT alone which can use the hired buses. They cannot be put to use by the appellant privately nor he can divert the user in contravention of the directions of the PMT. The exclusive possession is with the PMT. All the licences, permissions and the benefit thereof is transferred to the PMT. Nothing insofar as the hired bus is concerned remain .....

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which, to our mind, stands covered by application of all the legal principles to the subject contract, in favour of the Revenue. 60 It is in these circumstances that we do not think that reference to any judgments to support the Revenue's stand would be necessary. For the reasons that have pursuaded us to distinguish the judgment of the Delhi High Court and the Division Bench judgment of this Court would be enough to distinguish the other judgments relied upon by Mr. Sridharan. 61 Once we ha .....

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ns for our consideration is an argument which is canvassed by Mr. Sridharan and that is that the appellant is not a dealer within the meaning of section 2(8) of the MVAT Act. His argument is that the third exception to this definition is attracted in the facts and circumstances of the present case. The term 'dealer' is defined in section 2(8) and the first part is inclusive, in the sense it includes those referred to in sub-clause (a) to (d) of clause (8) of section 2. Then, there is an .....

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ents of Union Government and any Department of any State Government, local authorities, port trusts, public charitable trust etc. One of the entities mentioned is the Maharashtra State Road Transport Corporation constituted under the Road Transport Corporation Act, 1950. The exceptions then are set out and the first exception is that an agriculturist who sells exclusively agricultural produce grown on land cultivated by him personally, shall not be deemed to be a dealer within the meaning of thi .....

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appellant is a transporter and he holds permit for transporting vehicles granted under the Motor Vehicles Act, 1988, and which vehicles are used or adopted to be used for hire or reward. Therefore, he shall not be deemed to be a dealer within the meaning of this clause in respect of sale or purchase of such transport vehicles or parts, components or accessories thereof. 63 Mr. Sridharan's arguments overlook the fact that we are not dealing with the first part of the definition of the term & .....

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Appeal No.33 of 2016, denotes that the appellant's advocate submitted that the appellant is not a dealer under the MVAT Act and not liable to pay tax. It was also argued that there is no transfer of right to use the goods. The contention, as above, and in the alternative, does not appear to have been raised before the Tribunal. However, the Tribunal held that the appellant is a dealer as per the provisions of the MVAT Act. The transactions with PMT are a sale, liable to tax under the MVAT A .....

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nto force. This clause in the agreement and other preceding material clauses, namely, the PMT intends to expand and augment its existing fleet of passenger buses; to achieve the same PMT suggested to hire passenger buses and, accordingly, it published a tender notice on 28th April, 2003, in Marathi and English newspapers in response to which the appellant-bidder submitted his bid. However, PMT is a public transport undertaking established as per the provisions of section 66(2) of the Maharashtra .....

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ered with the RTO, Pune in the name of the PMT as lessees and will be operated as stage carriages within the operational area of the PMT. 64 These clear stipulations in the agreement, therefore, would denote that it is not the appellant and who is supplying buses to the PMT who can be said to be independently operating them. He is not holding a permit for transport vehicles, including cranes, granted under the Motor Vehicles Act, 1988, though the vehicles may be used or adopted to be used for hi .....

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ing a permit for transport vehicles granted under the Motor Vehicles Act, 1988, and which are used or adopted to be used for hire or reward, shall not be deemed to be a dealer within the meaning of clause 2(8) of the MVAT Act in respect of sale or purchase of such transport vehicles or parts, components or accessories thereof is not satisfied. We are not concerned with any abstract or wide question. In the facts and circumstances of the present case, the appellant is a dealer and assessed on tha .....

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s and within the meaning of subclause (iv) of the Explanation to clause (24) of section 2 of the MVAT Act. It is in these circumstances that we do not think that given the factual backdrop the appellant can take assistance of the third exception to clause (8) of section 2 of the MVAT Act, 2002 (Maharashtra Act No.IX of 2005). 65 Hence, we do not think that Mr. Sridharan's alternate contentions have any merit. We have no hesitation in rejecting the same. For the reasons that we have assigned, .....

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s that registration is in force, he cannot escape the incidence of tax qua the subject transaction. 66 Lastly, we find that it is not just a dealer, but every person who is liable to pay tax under this Act, shall pay the same. That is how taxes are payable within the meaning of section 4. The tax or taxes thus are leviable on every person who is liable to pay tax under the MVAT Act. It is only those transactions which are covered by section 8 of the Act on which the MVAT is not payable. 67 Since .....

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