TMI Blog2021 (3) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... ingredients of a sale as defined in the Sale of Goods Act, 1930 were absent, within the ambit of the definition of purchase and sales for the purposes of levy of sales tax. The amendment especially allowed specific composite contracts viz. works contracts [Clause (b)], hire purchase contracts [Clause (c)], catering contracts [Clause (e)] by legal fiction to be divisible contracts where the sale element could be isolated and be subjected to sales tax. In the facts and circumstances of the present case, the above test enunciated for transfer of right to use is not satisfied. Therefore, the petitioner cannot be subjected to tax under the provisions of the Tamil Nadu General Sales Tax Act, 1959 and/or under the provisions of the Central Sales Tax Act, 1956. In the transactions entered between the petitioner and the banks, the effective control over to ATM's continued to vest with the petitioner. Since the issue stands fully covered in favour of the petitioner in the above cited decision of the Hon'ble Supreme Court in BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [ 2006 (3) TMI 1 - SUPREME COURT] , these writ petitions deserve to be allowed by quashing the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en rendered by the first respondent in the impugned orders. 5. All these assessment orders precede a notice which called upon the petitioner to pay tax under the provisions of the respective enactments for purported transfer of right to use of goods. 6. The allegations in the about notices issued under Tamil Nadu General Sales Tax Act, 1959 and the Central Sales Tax Act, 1956 state that the activity carried out by the petitioner involved installation and maintenance of ATM and other allied equipments for various banks and provision of 24 hours security at site involving cash management (i.e) collection from the bank, loading the cash in the vault, processing the cash between fit and unfit notes, loading of cash into the ATMs and ensuring that there is no cash out situation and take necessary insurance, payment of rentals in case of, off site locations i.e. where the ATMs are stationed in public places outside the bank premises, general upkeep of the site, providing 24 hours help desk for troubleshooting, Disaster Recovery Management, incidental management etc. 7. It is further alleged that the petitioner was not only purchasing ATMs from outside the state of Tamil Nadu b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , where the supply of services was for cash, deferred payments or other valuable consideration. 12. The petitioner had also earlier obtained registration for Banking and Financial Services under the Provisions of the Finance Act, 1994 during 2002. However, the petitioner was of the view that it was not liable to pay service tax for Banking and Financial Service as per section 65 (11) of the Finance Act, 1994 as it stood during the period between 16.8.2002 and 28.4.2004. The petitioner was also issued with a Show Cause Notice No.4/2004-2005 by the Deputy Commissioner (STC), Office of the Commissioner of Central Excise, Chennai II. Status of the said proceeding has been disclosed on the date of hearing. 13. It is stated that the ATM s facilities are outsourced by the banks and that the petitioner was providing a technology solution to Bank of India and United Bank of India and the terms of the agreement clearly bring the transaction within the meaning of the taxable service of a transaction of transfer of right to use within the meaning of the respective enactments and therefore the petitioner was liable to pay TNGST/CST to the commercial tax departments. 14. Heard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y system of payment by instalments; (d) a tax on 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 ; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made; 19. Explaining the scope of Art.366(29A) of the Constitution of India, the Hon'ble Supreme Court in Bharat Sanchar Nigan Ltd and another Vs. Union of India and Other (2006) 3 SCC 1 ; 2006 (2) STR 2 observed that Clause (a) covers a situation where the consensual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proposition that delivery of possession of the goods is not a necessary concomitant for completing a transaction of sale for the purposes of Article 366(29A)(d) of the Constitution. In that decision the Court had to determine where the taxable event for the purposes of sales tax took place in the context of sub-clause (d) of Article 366(29A). Some States had levied tax on the transfer of the right to use goods on the location of goods at the time of their use irrespective of the place where the agreement for such transfer of right to use such goods was made. Other States levied tax upon delivery of the goods in the State pursuant to agreements of transfer while some other States levied tax on deemed sales on the premise that the agreement for transfer of the right to use had been executed within that State (vide Paragraph 2 of the judgment as reported). This Court upheld the third view namely merely that the transfer of the right to use took place where the agreements were executed. In these circumstances the Court said that: - No authority of this Court has been shown on behalf of respondents that there would be no completed transfer of right to use goods unless the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer of the right to use the goods the transaction must have the following attributes: a. There must be goods available for delivery; b. There must be a consensus ad idem as to the identity of the goods; c. The transferee should have a legal right to use the goods-consequently all legal consequences of such use including any permissions or licenses required therefor should be available to the transferee; d. For the period during which the transferee has such legal right, it has to be the exclusion to the transferor this is the necessary concomitant of the plain language of the statute - viz. a transfer of the right to use and not merely a licence 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. 23. In the facts and circumstances of the present case, the above test enunciated for transfer of right to use is not satisfied. Therefore, the petitioner cannot be subjected to tax under the provisions of the Tamil Nadu General Sales Tax Act, 1959 and/or under the provisions of the Central Sales Tax Act, 1956. In the transactions ..... 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