TMI Blog2018 (7) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... rit Petition No.5175/2015, Writ Petition No.1925/2017, Writ Petition No.4189/2017 - - - Dated:- 28-6-2018 - Hon ble Shri Justice Sanjay Yadav And Hon'ble Shri Justice Ashok Kumar Joshi Shri Rakesh Khanna, Senior Advocate with Shri Puneet Agrawal, Shri Deepak Thackur, Shri Sameer Kumar Shrivastava and Shri Aditya Khanna, Advocates for the petitioner in all three petitions Shri Praveen Newaskar, learned Govt. Advocate for respondents/State. Shri Praveen Surange and Shri Harshwardhan Topre, Advocates for respondent ORDER Per Sanjay Yadav, J. (1) These petitions are directed against the assessment order pertaining to assessment year 2012-2013, 2013-2014 and 2014- 2015 whereby the petitioner has been assessed to and levied Sales Tax on lease rent on Plant and Machinery forming part of Composite lease of Brewery at the rate of 13%. (2) The facts not in dispute are that the petitioner is a Private Limited Company having its manufacturing Unit situated at Village Mahatoli, Banmore 476444, District Morena, Madhya Pradesh. The petitioner is registered under VAT Act, 2002 and bears TIN Registration No.230 25305515. The petitioner inter-alia is engaged in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t shown against the 'lease rent'. (5) It is the case of the petitioner that since renting of an immovable property is not goods, the Finance Act, 1994 has defined the transaction under the lease deed as Service , which led the petitioner to pay service tax under the Contract Act. The grievance raised by the petitioner that though VAT is not leviable on the lease rent; the Assessing Officer vide assessment order levied the VAT @ 13 % on renting of plant and machinery under the lease deed, treating it to the renting of goods. It is contended that though in common parlance, the plant and machinery are goods, as they are not immovable property, but their characteristic changes once they are embedded to earth, metamorphosing as an immovable property. It is urged that the assessing authority in purported exercise of his powers under section 20 of the VAT Act encroached the exclusive domain and jurisdiction of the Central Govt. to impose service tax, under the garb of VAT on the transaction which otherwise is not sale, thus has committed a jurisdictional error. It is urged that the assessing authority by vivisecting plant and machinery from the land and imposing tax @ 13% tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of Madhya Pradesh has filed the return and has contradicted the stand of the petitioner that the State lacks competency in imposing the VAT on the goods under entry 54 of list II of Seventh Schedule on that, the Sales Tax/Value Added Tax is mutually excluded on the goods alleged to be indivisible from the lease of land taxed as service under the Finance Act, 1994. It is urged that the petitioner is a private limited company having its manufacturing unit at village Mahatoli; Banmore, District Morena. It is registered under VAT Act and bears TIN registration No.23025305315. The petitioner is engaged in manufacturing of Beer and possesses a B-3 license for manufacturing issued by the Commissioner, Excise, State of Madhya Pradesh. It is urged that during period 2012-2013, 2013-2017 and 2014-2015, the petitioner entered into a lease agreement with the SKOL Breweries Limited (SAB Miller India Ltd.) and received following lease rent: 2012-13: ₹ 2,07,00,000/- 2013-14: ₹ 2,07,00,000/- 2014-15: ₹ 2,37,33,333/-. The petitioner paid service tax thereon @ 12.30%. It is urged that in the audit report submitted by the petitioner, the fixed asset valued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been left open. On these contention, respondents no.1 to 4 seeks dismissal of petition. (13) Considered the rival submissions. (14) At the outset, it needs a mention that against the impugned order of assessment petitioner has a remedy of appeal under Section 46 of the VAT Act, 2002. But since the petitioner has raised a jurisdictional issue that it is beyond the competence of the State to levy VAT on the plant and machinery by vivisecting composite transaction we intend to examine the same. (15) Evidently, the Assessing Officer has construed the plaint and machinery as goods as defined under Section 2(m) of the VAT Act, 2002 and its transfer on lease as Sale defined under Section 2(u)(vi) thereof. (16) Power of the State to impose tax on sale or purchase of goods, other than newspaper, emanates from Entry 54 of List II of Schedule VII of the Constitution. Whereas, the power of Union of India to tax can be traced to Entry 92C and 97 of list I of Schedule VII of the Constitution. (17) Parliament amended the Constitution to insert Clause (29-A) in Article 366 of the Constitution, sub-clauses (a) to (f) were added, which read thus: 366 (29-A) tax on the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject-matter of sale or purchase. The Court would have to arrive at the conclusions as to what the parties had intended when they entered into a particular transaction of sale, as being the subject matter of sale or purchase. In arriving at a conclusion the Court would have to approach the matter from the point of view of a reasonable person of average intelligence. 75. In our opinion, the essence of the right under Article 366 (29-A)(d) is that it relates to 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. It is assumed, at the time of execution of any agreement to transfer the right to use, that the goods are available and deliverable...... (Please see Aggarwal Bros. Vs. State of Haryana (1999) 9 SCC 182: for an authority that there was intention to transfer, the right to use ; as in the case at hand, wherein the lessor transferred the right in land, building, brewery including plant and machinery with right to use Plant and Machinery.) (19) Furthermore, in concurring view Dr. A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Madras Vs. Gannon Dunkerley Co. (1958) 9 STC 353 (SC), Fortis Health Care Limited Vs. State of Punjab, 2015 SCC Online P H 2018 and Tata Main Hospital Vs. State of Jharkhand and others, 2008 (2) JCR 174 (Jhr.), Commissioner, VAT, Trade and Taxes Department Vs. International Travel House Ltd, 2010 (16) STJ 129 relied on by the petitioner are thus of no assistance to the petitioner. (23) The petitioner has also placed reliance on the decision in Triveni Engineering Industries Ltd. Vs. Commissioner of Central Excise and another, (2000) 7 SCC 29; C.T.O. Sriganganagar Vs. M/s Sadulshahar Krai Vikrai Sahakari Samiti; 2003 SCC Online Rajasthan 374; Mohammed Ibrahim Vs. Northern Circars Fibre Trading Co., AIR 1944 Madras 492; M/s Kranti Steel Pvt. Ltd Vs. Chief Controlling Revenue Authority, 2014 SCC Online All 6017; Commissioner of Sales Tax Vs. Bombay Sound Service, 1999 STC (112) 290; Deputy Commissioner of Sales Tax Vs. Bobby Rubber Industries, 1998 STC (108) 410 to bring home the submissions that when the object of annexation is for permanent enjoyment of property; then the plant and machinery is immovable property. (24) Evidently, in Duncans Industries Ltd. (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable claims etc., not otherwise includible in the definition of goods there was no need for excluding them. In other words, actionable claims are goods but not for the purposes of the Sales Tax Acts and but for this statutory exclusion, an actionable claim would be goods or the subject- matter of ownership. Consequently, an actionable claim is movable property and goods in the wider sense of the term but a sale of an actionable claim would not be subject to the sales tax laws. (27) In view whereof even the decisions in M/s Kranti Steel Pvt. Ltd. (supra), Bombay Sound Service (supra) and Bobby Rubber Industries (supra) are also of no assistance to the petitioner. As these decisions treat property in question therein as subject matter of ownership and a lesser rights in goods . The decision in these cases apparently, gloss over the caution in BSNL(supra) that the word property may denote the nature of the interest in goods and when used in this sense means title or ownership in a thing. The word may also be used to describe the thing itself. The two concepts are distinct, a distinction which must be kept in mind when considering the use of the word in connecti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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