TMI Blog2017 (3) TMI 1708X X X X Extracts X X X X X X X X Extracts X X X X ..... nyl / flex banners and mounting charges for mounting activities. The applicant also received consideration for the precise size and specific period of hoarding. The sale is completed when applicant put the material on hoarding as per direction given by customer. The mounting of vinyl on hoarding cannot be treated as installation and thus cannot be excluded from sale price. Hoardings - Whether activity of leasing out the hoarding to the customer for specific period for remuneration is 'a sale' within the meaning of Section 2(24) of the Act? - Held that:- The transactions of leasing of the hoarding for a particular fixed period and for valuable consideration thus constitute a transfer of right to use goods and the transaction between the applicant and its customer is a 'lease' transaction is exigible to VAT under MVAT Act. The customers have enjoyed the right to use hoardings of definite size for definite period. The transaction of transfer of hoarding by the applicant to his clients is liable to be treated as transaction involving transfer of right to use goods. Hence, it is covered by the definition of "sale" as provided in section 2(24) Maharashtra Value Added Tax, 2002 i.e. su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The applicant has informed that the investigation unit has visited the place of business. The investigation branch has asked to discharge the tax liability. The applicant did not respond for payment of tax. He has applied for Advance Ruling for determination of specific questions. The applicant has posed the questions related to hoarding charges, mounting charges and rate of tax on printed vinyl/flex used for advertising. The questions for determination in application are not coming out clearly in the application. Hence he has posed the questions during course of hearing with written contention and has amended the application and put specific questions for determination. On the background, fact and circumstances of case the questions are framed as under. A) The Supply of Printed Materials:- He has requested to decide whether transaction is related to works contract or sale? What is the rate of tax on printed flex/vinyl advertising material supplied to customers? B) Mounting charges:- Whether mounting charges which are charged separately forms the part of sale price? C) Hoardings:- Whether activity of leasing out the hoarding to the customer for specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as consideration. The customers wants to display their hoarding at specified points, negotiates and enters into contracts with the applicant for display of the hoarding, accordingly, the rates are agreed upon based upon the location, size and duration, and a period and hoarding fee is paid by the advertiser to the applicant. 2.5 The applicant relied on Hon. Andhra Pradesh High Court judgment in the case of State of Andhra Pradesh Versus Prakash Arts, 18 VST 39 (AP).The Court has considered the judgment of same Court in Rashtriya Ispat case [1990] 77 STC 182, and held that there is no transfer of right to use and it is only for the hire charges, the same cannot be taxed. 2.6. In view of these facts , circumstances and issues raised by applicant the questions arise. The applicant has submitted details along with written submission. The arguments and contention are discussed in order with respect to each question. We have gone through facts, circumstances of case and legal provisions related to tax. 2.7 The applicant has requested to give benefit of prospective effect to this order under section 55(9) of MVAT ACT, 2002. On analysis of fact, circumstances of case an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified period) for cash, deferred payment or other valuable consideration; shall be deemed to be a sale. (25) sale price means the amount of valuable consideration paid or payable to a dealer for any sale made including any sum charged for anything done by the seller in respect of the goods at the time of or before delivery thereof, other than the cost of insurance for transit or of installation, when such cost is separately charged. Explanation I.- Explanation II.- Explanation III.- (33) turnover of sales means the aggregate of the amounts of sale price received and receivable by a dealer in respect of any sale of goods made during a given period after deducting the amount of - (a) sale price, if any, refunded by the seller, to a purchaser, in respect of any goods purchased and returned by the purchaser within the prescribed period; and (b) deposit, if any, refunded in the prescribed period, by the seller to a purchaser in respect of any goods sold by the dealer. With this background, the issues cropped out/raised by applicant are considered separately for determination of specific questions. 5. Whether the supply of printed v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng tax @ 6%. 5.3 He has affirmed that the rate of tax on printed flex/vinyl /advertisement material to be determined at 6% in the two different situations. (a) 6% as per rate applicable to flex /vinyl and ink in respective entries, as works contract OR (b) Under entry C-76 as printed material. 5.4 We have perused the submission. The issue is dealt as under . The Applicant has received orders for the supply of printed vinyl/ flex with advertisement. The advertisement text is as per specification and governed by Copyright Act (being art work/design) . The Applicant used their own paper, ink etc. and manufactures the required materials and sold them to the customers and raised the sale invoice accordingly. The customers, while placing orders did not supply papers, ink etc., for printing. The applicant has received order for printing of content for advertisement on flex or vinyl. This is very typical nature of transaction in which goods (printed material) belong to the customers, when they came into existence . The Hon. Apex Court in the case of Sarvodaya Printing Press held that such type of transaction is works contract. Similarly in DDQ order, Hon. CST in case of GM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounted on hoardings to display advertisement. Applicant gets order for display of advertisement from its customers. He has brought to our notice that the various customers gives purchase order mentioning separate items like, supply of printed materials, mounting and charges for hoarding as per duration/time slab. 7.1 He has stated that the mounting charges are received after supply of printed material. He reiterated that the supply of printed material is works contract. In works contract, the property passes by way of accretion i.e. immediately by use of the material in printing. After such passing of property, the mounting is done with separate charge. The mounting work is done from outside vendor. The vendor charges service charges with service tax. Since we are not doing the activity ourselves, we are not purchasing or using any material by ourselves. To our knowledge the outside vendor uses some negligible material like thin steel wires to tide the printed material. Even such materials also do not get transferred to customers as no control of site is given to customer. The basic charge is for labour for fitting the printed material in the hoarding at given height. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce on the board with photo corners and 3) the print is held into place at points with hinge- mounts. If you choose to mount the photograph to a back board without a window mat, then the print should be attached in such a way that the adhesive does not show (for example, with dry-mount tissue or folded hinges.).The dry-mount process remains a common method of adhering photographs to backing because it is inexpensive, easy, and elegant. The process uses heat activated adhesive tissue sandwiched between the photograph and a stiff backing board. A dry-mounted photograph can be bleed-mounted, that is, can extend to the board's edges or may rest within the spatial border of a larger board. This adhesive technique works well for fiber, RC, and digital prints, regardless of whether the photograph is to be matted or framed or to stand alone with the backing. 7.4 The customer wants displaying their hoarding at specified points, negotiates and enters into contracts with the applicant for display advertisement on the hoarding. The customer pays for sale of printed vinyl/flex banners and mounting charges to mounts them on specifically selected hoarding. It is necessary to see whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said pumping charges invariably form part of the sale transaction which facilitates the delivery of the goods and it would form part of pre-sale expenses. 7.6 The analogous view has been taken by various Courts. The list of judgments is mentioned as under. i) State of Gujarat v. Oil and Natural Gas Corporation Limited (97VST 506), ii) Rawat Brothers (SA No - 599 of 2000, dated 11/11/2004), MSTT, iii) India Meters V. State of Tamil Nadu (34 VST 273) (SC), iv) State of Karnataka v). Modayil Properties (61 VST 478) vi) Commissioner of Trade Tax V. Gulshan Sugar and Chemicals Ltd, (28VST244) vii) Vidyut Metallics Pvt. LTD. V. Commissioner Commercial Tax (2010) (16 STJ 45), (2010)(45 TLD 96)(MP) viii) Orion International Support Services Pvt. Ltd. INDORE, V. Commissioner Commercial Tax (2015)(26 STJ 546), (2015) (54 TLD 296)(MP). 7.7 In view of above discussion , it is safely concluded that the Mounting charges received by applicant form the part of sale price and liable to tax under MVAT ACT, 2002. 8. Whether leasing out the hoarding to the customer for specific period for remuneration is 'a sale' within the meaning of Section 2(24) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. f) Mr. C. B. Thakar, Advocate has contended that- i. In relation to (a) and (b) as stated above, being immovable property, tax cannot be levied. ii. In relation to others, there is only service as no effective control is passed iii. The suppliers of hoardings have charged for services and levied service tax. 8.2 Mr. C. B. Thakar, Advocate has stated that the Applicant's activity of advertisement display on hoarding is not covered by transfer of right to use, due to following factors. (a) As per terms of tender /agreement, Applicant only gets permission to display advertisements. (b) No control, over hoardings nor right to give control of hoardings to customers of applicant. Only display of advertisements. (c) He has not produced details of structures of various types of hoardings, their purchase orders, terms of contract etc. He has made reference to Railway sites only (specimen letter of Acceptance issued by Railway dt. 13.4.2015). He has tried to gather information from some clauses of Terms/Conditions and put them as indicative restrictions in tabular format as under. Terms Sr. No. Indicative restri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not charge any VAT on the charges paid to them by applicant. The applicant displays advertisement of the customer and recovers service charges from them. He has stated that the customer is not getting any right on the structure, nor is the delivery of possession given to them. Thus, he tried to explain that there is no 'transfer of right to use goods'. Under above circumstances, he has made attempt to explain that the transaction is not liable to VAT. To support these arguments, he has explained the legal position of deemed sale and relied on various judgments. a) He has referred to judgment of Hon. Madras High Court in case of TVL Jaylaxmi Enterprises (430 of 2006 dt.7.7.2011) and expressed that the High Court has endorsed view of tribunal and held that the structure is immovable in nature. b) He has also relied on Apex Court judgment in the case of Rashtriya Ispat Nigam Ltd (RINL). (126 STC 114) (SC) and stated that in this case, amongst others, Supreme Court held that, to be a lease transaction, there should be delivery of possession to the lessee. Unless effective control given to party no Lease transaction takes place. c) He has referred to Hon A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or display of advertisement on the hoardings at BA-ROB has been accepted by Railway. c) The Duration of contract is for Three Months or till finalization of tender whichever, is earlier and Value of contract is ₹ 99,66,500/-.The Commencement date is fixed as 15 days from the date of issue of this letter or the actual date of display whichever, is earlier. The Location details are shown as under: Sr. No. Station Structure No. Location Size Nos (In sq. ft.) Area (In sq. ft.) 1 BA-ROB BA-ROB/40A In front of IOC Building 80x40 (1) 3200 80x40 (1) 3200 80x30 (1) 2400 60x60 (1) 3600 TOTAL 12400 d) Terms and Conditions of contract are reproduced as under: I. The licensee and/or his representatives are permitted to display advertisement as per the above details and they shall be allowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous acts and laws of Central/State Governments and various Local Government bodies shall not be displayed. There shall not be any sort of obscenity in the design and matter of advertisement material. The licensee will be fully liable for any contravention in this regard and will be liable under the Law of the Land. 10. Railway Administration reserves the right to advise changes in the pattern /method of displays time to time. 11. The licensee should display media in such a manner that display should enhance the ambience of the surroundings by using good quality and standard material. Display should bring aesthetic looks to the station premises. 12. Railway reserves the right to disallow publicity which in the opinion of Railway have a bearing on safety, aesthetics, security, synchronicity with existing sites and anything which violates the laid down Railway procedures / norms. 13. Railway reserves the right for displaying Railway signages, pictograms, indication boards, other types of electronic media on its own for the sake of Railway System. 14. It will be the obligation on the part of the licensee to keep adequate safety and security arrangement with prior per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersely affect this contract and the licensee will have no right whatsoever. 23. The Licensee shall be liable to be fined for misconduct at the sole discretion of the Railway Administration. 24. During the monsoons, large number of HOARDINGS/BOARDS fixed to the structures get loosened or torn and at times fall down causing hazards to the free movement of trains and passengers, besides resulting in loss of publicity and damages to the advertisements material. Hence, as a precautionary measure, please ensure that the hoarding/boards is in intact condition in order to survive the monsoon wind pressure. Further, strengthening and painting work of these structures may also be undertaken immediately so that the structures do not rust and weaken. 25. The party is liable to the bounded by all the terms and conditions mentioned above and in the acceptance letter given to the party. 26. Station Master is required to maintain update the record of the advertisement contract in the station register for advertisement contract and also advise the actual date of display electrification. e) The written contention submitted by appellant in relation of Railway is perused along wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied period. Then, customers ask the applicant to place advertisement for specific time period. Since, the issue is related to lease of hoarding one must know what is hoarding? b) According to oxford (English dictionary):- The hoarding is a large board in a public place, used to display advertisements. A temporary board fence erected round a building site. It is a temporary board fence erected on unipoles, pillars, buildings, walls etc. According to Cambridge (English dictionary):- A very large board on which advertisements are shown, especially at the side of a road: From perusal of dictionary meaning, it is understood that the hoarding is large board. 8.6 Now we will see the legal provisions and constitutional amendment to analyse the issues:- The 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; and the words sell , buy and purchase , with all their grammatical variations and cognate expressions, shall be construed accordingly; and Section 24 (b)(iv) of MVAT ACT provides that the transfer of the right to use an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... background of the above, the history prevailing at the time of the 46th Amendment and pre-enacting history as seen in the Statement of Objects and Reasons, Article 366(29A) has to be interpreted. Each fiction by which those six transactions which are not otherwise sales are deemed to be sales independently operates only in that sub-clause. 8.10 Regarding the matter of exigibility of the transaction to VAT, it is further required to note that, in the matter of 20th Century Finance Corpn. Ltd. ... vs. State of Maharashtra on 9 May, 2000 [[2000] 119 STC 182: (2000) 6 SCC 12], Hon. Apex Court is pleased to observe: - ....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. (26) Next question that arises for consideration is where is the taxable event on the transfer of the right to use any goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly on the transfer of such a right and unless there is transfer of right the right to use does not arise. Therefore, it is the transfer which is sine qua non for the right to use any goods. If the goods are available, the transfer of the right to use takes place when the contract in respect thereof is executed. As soon as the contract is executed, the right is vested in the lessee. If one examines Article 366(29A) carefully, one finds that clause (29A) provides for an inclusive definition and has two limbs. The first limb says that the tax on sale or purchase of goods includes a tax on transactions specified in sub-clauses (a) to (f). The second limb provides that respective words such transfer, delivery or supply of goods referred to in the first limb shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and purchase of those goods by the person to whom such transfer, delivery or supply is made. Thus, we find from the Statement of Objects and Reasons that the concept of deemed sale is brought in by the Constitution (Forty-sixth Amendment) Act only in the context of imposition of sales tax and that the words transfer, deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oarding (deemed sale u/s 2(24)) and accordingly is exigible to VAT. [a] The Hon. Kerala High Court came across the similar issue in the case of Delta Communications Versus State of Kerala, 2015 (7) TMI 1180 and observed that- 17. But, according to us, so far as leasing out of hoarding in this case are concerned, once it is let out by entering into an agreement or work order, the owner of the goods ceases to have any control over the same for the reason that the advertisements are affixed on the hoarding by putting up and displaying necessary materials in accordance with the directions of the lessee and he has the effective control of the hoarding throughout the contract period entered into by him with the revision petitioner . The revision petitioner is unable to interfere with the nature of the advertisement carried out by the lessee in the hoarding since as per Annexure-D work order, it is his absolute right to finalise the nature of advertisement that is put up on the hoarding. Therefore, according to us, the absolute control of the hoarding is transferred to the lessee by virtue of Annexure-D work order. Therefore, we are of the definite opinion that the control o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible to tax. Hon. Court concluded that there was a transfer of the right to use the leased capacity under the contract of agreement executed by the Department of Space with the customers and the leased space segment capacity in a transponder of a satellite was goods within the meaning of article 366(12) of the Constitution. The transferee had effective control over the goods, i.e., space segment capacity in the transponder of satellite, though its technical operation was handled by the Department of Space. It could not be said that there was no delivery of possession of the leased capacity to the customer. The transaction was a deemed sale within the definition of sale under section 2(29) (d) of the 2003 Act. [e] Hon. High Court of Andhra Pradesh in the case of AP State Electricity Board verses AP Transco Versus State of Andhra Pradesh43 VST 359 (AP), held that:- The rent collected is not construed as part-payment for the cost of the meter. This only means that the Andhra Pradesh State Electricity Board continues to be the owner of the equipment and the consumer who pays the rent can never claim ownership. The ownership of the meter is retained by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t but one of the elements of the transaction; (iv) the effective or general control does not always mean physical control and even if the manner, method, modalities and the time of the use of goods is decided by the lessee or the customer, it would be under the effective or general control over the goods; (v) the approvals, concessions, licenses and permits in relation to the goods would also be available to the user of the goods even if such licenses or permits are in the name of the owner or transferor of the goods; and (vi) During the period of contract, exclusive right to use the goods along with permits, licenses, etc., vests in the lessee. The Court also reiterated the well-settled principle of law that a document or transaction must be taken as a whole and then scrutinized. This is essential to understand the very nature of the transaction and to understand the intention of the parties while contracting. Courts cannot rely only on the wording of the transaction. This is often of no help and could suggest an entirely different nature. After testing the transaction with the facts of the case, the Bench held that the transaction between G and the dealers was a transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would squarely apply to the present case. [i]The Hon. Supreme Court decision in the case of BOC India Limited vs Assistant Commissioner (dated 21 February, 2008) is referred to wherein the Hon. Court has held that: Counsel appearing for the respondent has brought to our notice that the point involved in these cases is concluded by a judgment of this Court in the case of Aggarwal Bros. vs. State of Haryana reported in (1999) 9 SCC 182, the ratio of which was applied in a recent decision in the case of State of Orissa Another vs. Asiatic Gases Ltd. reported in (2007) 5 SCC 766. According to the counsel for the appellant, the decisions in the cases of State of A.P. Anr. vs. Rashtriyalspat Nigam Ltd. reported in (2002) 3 SCC 314 and Bharat Sanchar Niqam Ltd.vs. UOI Ors. reported in (2006) 3 SCC 1 are in conflict with the aforesaid two decisions of Aggarwal Bros and Asiatic Gases Ltd. (supra) and has urged before us to refer the matter to a larger Bench. We do not find any conflict in the two sets of cases. The point in issue is squarely covered by the decision of this Court in case of Asiatic Gases Ltd. (supra). The facts are similar. The provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f display item would be placed on the hoarding; though custody of the goods remain with the petitioner, effective control over them, and the right to use or not to use them during the period such a hoarding is let out, is only with the client during the period of lease; the petitioner had transferred the right to use the hoarding space for a particular period during which the customer has a legal right to put up whatever display material he would like to display, and is responsible for all the legal actions against such display if it affects public decency or morality; the ingredients of section 4(8), i.e., the transfer of the right to use, are satisfied in the instant case ; the hoardings, which are fastened to a steel structure attached to the earth, are to be treated as goods as defined in section 2(16); the letting of such hoardings is a deemed sale in terms of section 4(8) of the Act. I) Mr. C. B. Thakar, advocate relied on judgment of Apex Court in the case of BSNL. However, Hon. Bombay High Court decision in the case of Tata Sons Limited v. State of Maharashtra [2015] (080 VST 0173) is referred to. Wherein the Hon. Bombay High Court has referred to the BSNL case in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to use the goods; (e) having transferred the right to use the goods during the period for which it is to be transferred, the owner cannot again transfer the same rights to others. 50. Para 98 is relied upon by Mr. Chinoy . However, that cannot be read in isolation and out of context. It must be read in the backdrop of the underlying controversy, namely, relationship between a telephone connection service provider and its customer. Such a transaction is essentially of service. 51. It is in relation to such a controversy that the observations, findings and conclusions must be confined. We do not see as to how they can be extended and in the facts and circumstances of the present case to the enactment that we are dealing with. Going by the plain and unambiguous language of the Act of 1985 we cannot read into it the element of exclusivity and a transfer contemplated therein to be unconditional. Therefore the tests in para (d) and (e) cannot be read in the Act of 1985. m)The similar view has been taken by Hon. Bombay High Court in the case of Mahyco Monsanto Biotech (India) Pvt. Ltd. (W.P. No.9175 of 2015) Subway Systems India Pvt. Ltd. (W.P.No.497 of 2015) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c Gases Ltd. (2007)(007 VST 531) and BOC India Limited (dated 21 February, 2008). Hon. Supreme Court in the latest decision in the case of BOC India Limited (21/02/2008) , has followed the ratio in the case of Aggarwal Brothers (1999) (9 SCC 182) and Asiatic Gases Ltd (2007) . Hon. Supreme Court has considered the decisions in the case of Rashtriyalspat Nigam Ltd and BSNL (2006) while doing so. The Hon. Supreme Court said it was argued on behalf of the assessee that in the case of a deemed sale within the meaning of Section 2(l) (iv) there must be a legal transfer of goods.This arguments was rejected by this Court stating that the levy of tax was not on transfer of the goods itself but the levy was on the transfer of the right to use such goods for consideration. In our view, the judgment of this Court in Aggarwal case (supra) would sguarely apply to the present case. From the said decisions, it can be inferred that it is not necessary to have the legal transfer of the goods or the transfer of the goods but merely the transfer of right to use the goods is sufficient condition for levy of tax on such transactions of deemed sale. Moreover, the dominant intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contractor is that of the petitioner-company.The contractor is not free to make use of the same for other works or move it out during the period the machinery is in his use. The condition that he will be responsible for the custody of machinery while the machinery is on the site does not militate against the petitioners' possession and control of the machinery. For these reasons, we are of the opinion that the transaction does not involve transfer of the right to use the machinery in favour of the contractor. As the fundamental requirement of Section 5-E is absent, the hire charges collected by the petitioner from the contractors are not exigible to sales tax. In present case, the applicant has found to be entering into contracts for leasing of the different types of hoarding at different places hence he cannot be called as service provider. The applicant and customer identify the size of hoarding, time of duration and entered into agreement for remunerations. Thus, the hoardings are available and at the disposal of the lessee during the entire period of the contract. The lessee enjoys the right and advertises its material for specific period of time. The lesser ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the precise period of time stipulated in the agreement is vital to Subway's case. At the end of the period of the agreement, or before in case there was any breach of its terms, the right of the franchisee to display the mark 'Subway' and its trade dress, and all other permissions would also end. This is what sets this agreement apart from the case of Monsanto and its sub- licensee. There, the seed companies could do as they pleased with the seeds; they could alienate or even destroy them. In Subway's case, there are set terms provided by the agreement which have to be followed. A breach of these would result in termination of the agreement. We believe that there is no passage of any kind of control or exclusivity to the franchisees. In fact, this agreement is a classic example of permissive use. It can be nothing else. For all the reasons in law and fact that the sub-licensing of technology in Monsanto is held to be a transfer of right to use, this franchising agreement must be held to be permissive use. 70. We do not mean to suggest that every franchise agreement will necessarily fall outside the purview of the amended MVAT Act. There is conceivably a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs ask the applicant to place advertisement for specific time period. Thus, the customers want specific size of hoarding and desire to enjoy it for specific purpose and for exact time period as provided in agreement. Hence, we are in opinion that the ratio of said judgment is not applicable to present case. v) Mr. C.B. Thakar, Advocate has also placed reliance on judgment in case of Tim Delhi Airport Advertising Pvt. Ltd. vs. Special Commissioner-II, Department of Trade Taxes and ors. (W.P.(C)1625/2014 CM 3374/2014 DT.2.5.2016 and stated that the display of advertisements on hoardings. High Court held that control of hoarding is not given to party and hence not liable to VAT. The Hon. High Court held that it would be necessary for the authorities to examine the transactions entered into by the petitioner from the stand point whether there has been any transfer of the right to use the Sites under the agreement entered into by the petitioner with the advertisers. Thus, Hon. High Court has kept the issue open for decision. w) We have perused the written submission . The applicant is engaged in leasing of different types of hoarding as explained above. We have also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified, and precise size of hoarding. Such 'transfer' is the divesting of a right of hoarding from transferor and the investing of the same in the transferee to enjoy it as transferor cannot gives rights to other customers for specific period. This view is supported with observations of Hon. Apex Court and various Hon. High Courts. It was held that the levy of tax was not on transfer of the goods itself but the levy was on the transfer of the right to use such goods for consideration. The Hon. Bombay High Court has also concurred the view expressed by Hon. Andhra Pradesh High Court in case of G.S. Lamba and held that the effective or general control does not always mean physical control and even if the manner, method, modalities and the time of the use of goods is decided by the lessee or the customer, it would be under the effective or general control over the goods. x) Thus, in nutshell, the transactions of leasing of the hoarding for a particular fixed period and for valuable consideration constitute a transfer of right to use goods and the transaction between the applicant and its customer is a 'lease' transaction exigible to VAT under MVAT Act. The custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that even if they are to be removed, they will be only after substantial damage and structure will not be reusable. The dismantling of hoarding structure will require cutting of steel work in pieces and the portion remaining in the foundation will be completely unusable. Therefore, the nature of this hoarding is immovable property. 9.5 He stated that recently , the applicant has erected one hoarding on the Railway site under the Railway agreement, there is scheme of first finder. Applicant can locate suitable place for hoarding and after railway's consent can erect hoarding at the said place. The Applicant is entitled to display advertisement on such hoarding as required by customer for given period. He stated that after completion of time period hoarding is to be handed over to railway. 9.6 He stated that the Applicant has erected hoarding at Goregaon Fly Over site. The Structure Stability Certificate issued by Civil Engineer dated 7.3.2015 is enclosed herewith. The technical details about the structure are mentioned in the said certificate. He has tried to explain the few highlights which he found relevant for deciding nature of hoarding. The Point no. 7 in the certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and shrubs; (b) Imbedded in the earth, as in the case of walls and buildings; (c) Attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached . After considering the aspects of moveable and immoveable goods the Apex Court pleased to decide that------- 19. It is evident from the above that the expression attached to the earth has three distinct dimensions, viz. (a) rooted in the earth as in the case of trees and shrubs (b) imbedded in the earth as in the case of walls or buildings or (c) attached to what is imbedded for the permanent beneficial enjoyment of that to which it is attached. Attachment of the plant in question with the help of nuts and bolts to a foundation not more than 1= feet deep intended to provide stability to the working of the plant and prevent vibration/wobble free operation does not gualify for being described as attached to the earth under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. It is also not synonymous to imbedding in earth of the plant as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that the machine must be treated as a part of the immoveable property of the Company. Just because a plant and machinery are fixed in the earth for better functioning, it does not automatically become an immoveable property. [c] The West Bengal Taxation Tribunal in the case of Selvel Advertising Private Limited Versus Commercial Tax Officer, Alipore Charge, 1992 (5) TMI 182 - came across with similar issue of leasing of Hoarding. In accordance with the opinion of the majority, the Hon. Tribunal has observed that------- 15. --------the hoardings should be treated as goods and the letting out of such hoardings should be deemed to be sale in the facts and circumstances of the case. [d] The Hon. Kerala High Court came across the similar issue in the case of Delta Communications Versus State of Kerala, 2015 (7) TMI 1180 and analysed the nature of immovable property by considering the Sec. 3 of the Transfer of Property Act and observed that- 12----------- If a thing is imbedded in the earth or attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached, then it is part of the immovable property. If the atta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tially a question to be determined on the facts and circumstances of each case and having regard to the terms of the agreement entered into between the parties. In present case, the clause-24 of agreement referred here in above Para 7.4 (d) provided that during the monsoons, large number of HOARDINGS / BOARDS fixed to the structures get loosened or torn and at times fall down causing hazards to the free movement of trains and passengers, besides resulting in loss of publicity and damages to the advertisements material. Hence, as a precautionary measure, please ensure that the hoarding/boards is in intact condition in order to survive the monsoon wind pressure. Further, strengthening and painting work of these structure may also be undertaken immediately so that the structures do not rust and weaken. This clause shows that the hoardings are not permanently fastened to pillars embedded in earth. However, we feel that this aspect is to be decided by assessing officer. With this discussion , we are also in opinion that the assessing/investigating officer shall decide the items in question, (different types of hoardings) as to whether constitute goods or immoveab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be levied and recovered from the citizen. If any Government agency levies the incorrect tax on a particular transaction due to wrong interpretations and the assessee pays the incorrect tax, then it would not militate against the recovering correct and valid tax according to the provisions of law from the assessee. Hence if assessee has paid Service Tax on the transaction erroneously and due to misunderstanding or misleading of provisions of a particular fiscal statute and if it is found that VAT was leviable on the same transaction then there would not be any bar in levying the VAT and recovering the same from the assessee. 10.1 The Hon. Kerala High Court came across the similar issue in the case of Delta Communications Versus State of Kerala, 2015 (7) TMI 1180 and analysed the mutual exclusiveness of VAT and Service Tax and pleased to observe that- 19. On the other hand, the learned Special Government Pleader has invited our attention to the judgments of this Court in 'Saj Flight Service Pvt. Ltd. v. Superintendent of Central Excise' [2006 (1) KLT 128] and 'Kerala Non-Banking Finance Companies Welfare Association v. Union of India' [2009 (1) KLT 599] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Sarvodaya Printing Press is to be accepted and it is held that the transaction is works contract. The applicant has used vinyl / flex and printing ink which are incorporated while executing the works contract is to be held taxable at prescribed rate of tax as per provision of law. 11.2 The customer wants displaying their hoarding at specified points, negotiate and enter into contracts with the applicant for display of the hoarding, accordingly, the rates are agreed upon based upon the location, time period, size and duration. The customers pay for sale of printed vinyl / flex banners and mounting charges for mounting activities. The applicant also received consideration for the precise size and specific period of hoarding. The sale is completed when applicant put the material on hoarding as per direction given by customer. The mounting of vinyl on hoarding cannot be treated as installation and thus cannot be excluded from sale price. 11.3 After Considering the terms in the contracts and works orders placed by the customers, it is seen that there is effective control of the hoarding to enjoy the right for specific period. The Hon Apex Court decided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforementioned. 11.6 The applicant has informed that he is dealing in Number of different types of hoarding placed near about 286 places. Since the question whether the goods are movable or immovable is essentially a question to be determined on the facts and circumstances of each case and having regard to the terms of the agreement entered into between the parties. With this discussion we are also of view that the assessing officer shall decide the items in question constitute goods or immoveable property by applying the test laid by Hon. Apex Court and Hon. Andhra Pradesh High Court in case of Ad Age Outdoor Advertising (P) Ltd as mentioned in above Para No 7.1 of the order. 12. The prospective effect:- Mr. C. B. Thakar, Advocate attended and stated that if Authority arrived to different opinion, and if it is held that the transaction is taxable under transfer of right to use ,then benefit provided in section 55(9) shall be given to him and prospective effect to Advance Ruling order is to be given. 12.1 He stated that the Applicant has relied upon market position and also the tax position adopted by the vendors in both the cases. There is no any advers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.4 He stated that considering above circumstances, the liability of applicant till date of Advance Ruling order is required to be protected for sake of justice. The power under section 55(9) is discretionally and the circumstances narrated above are such rare circumstances requiring use of such power. 12.5 We have perused the submission and written contention of applicant. He has not submitted any supportive evidences so as to use the discretionary power and to grant him the prospective effect. Under these circumstances, it is necessary to consider the provisions of relevant Act. For clarity the provision are reproduced as under. 12.6 Section 55 (9):- The Commissioner or, as the case may be, the Advance Ruling Authority, may direct that the Advance Ruling shall not affect the liability of the applicant or, if the circumstances so warrant of any other person similarly situated, as respects any sale or purchase effected prior to the Advance Ruling. On carefully analysis of the section, it reveals that the Advance Ruling Authority may protect the liability of dealer in two conditions. a. in case of applicant or b. if the circumstances so warrant of any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of doubt, equally its applicability, then, refusal by the Commissioner to exercise the discretion is rightly upheld by the Tribunal. Just as the Commissioner was obliged to assign reasons for not exercising his discretionary power equally the Tribunal was in upholding his order. The Tribunal in paragraph 22 of its order found that the entire process was utilized so as to delay compliance with the mandate of the Act. The Tribunal has also found that the Commissioner refused to grant relief holding that there is no ambiguity in the provisions and there is no scope, for any doubt arising out of the provisions and relevant for the purpose of the determination. The reasons that are assigned by the Commissioner for refusing to give prospective effect to his determination order, have not been found to be suffering from any error of law apparent on the face of the record or perversity warranting interference in the appellate jurisdiction of the Tribunal. The observations of the Hon. High Court as above are equally applicable to the Advance Ruling Authority and the powers delegated to the Advance Ruling Authority must be used in very logical and judicious manner in order to protect th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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