TMI Blog2022 (11) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... commerce, the State of Orissa has no jurisdiction to levy tax on the lease rent received. The taxable event is the transfer of right to use goods and not the right to use goods or the use of goods. Therefore, the right to use goods or the use of goods is not the relevant factor to justify the levy of tax. Thus, the entire assessment made by the Assessing Officer and the acceptance of the same by the Revisional Authority is per se bad and illegal. This Court is of the firm view that the Order passed by this Court does not seem to be proper, legal and justified and a strong case for allowing the Review Petition accordingly has been made out - Review Petition is allowed. - Review Petition No. 14 of 2018 - - - Dated:- 4-11-2022 - Hon ble Shri Justice P. Sam Koshy For the Petitioner : Mr. Neelabh Dubey, Advocate For the Respondents : Mr. Tarkeshwar Nande, Panel Lawyer. C A V Order 1. The instant Review Petition has been filed by the Petitioner Company seeking review of the Order/Judgment dated 5.12.2017 passed by this Court in W.P.(T) No.128/2015. 2. Challenge in the aforesaid Writ Petition was to the Order dated 30.5.2015 whereby the Revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o use which has to be looked into by this Court while deciding the veracity of the assessment and the levy of tax on the said transfer or right to use is not a relevant factor to be considered. It is strictly the element of transfer of right to use and the point at which the transfer of right to use has been made which is paramount while deciding the issue under Section 2(s)(vi) of the VAT Act. In view of the same, learned Counsel for Review Petitioner has sought for the review of the Order passed by this Court in W.P.(T) No.128/2015 on 5.12.2017. 6. It was the further contention of learned Counsel for Review Petitioner that certain sales which are not leviable to tax are provided under Section 38 of the VAT Act. In the instant case also since the sale has taken place outside the State of Chhattisgarh, the transactions would not be leviable to tax. Thus, the Orders of the Assessing Officer and the Revisional Authority both were erroneous and which has not been properly considered by this Court, particularly keeping in view the decision of the Hon'ble Supreme Court in the case of 20th Century Finance Corpn. Ltd. (supra) and also in the case of M/s Raymond Ltd. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guously laid down that where situs of sale has not been fixed or covered by any legal fiction created by the appropriate legislature, the location of sale would be place where the property in goods passes. The Constitution Bench held, that it was the passing of the property within the State that was intended to be fastened on for the purpose of determining whether the sale was inside or outside the State. 25. It was then urged on behalf of respondents that, it is the location of goods where they are put to use would furnish the situs of sale. According to them, there would be no completed transfer of right to use goods until the goods are delivered. We have traced the legislative history of sales tax in this country only to show that, excepting where the appropriate legislature by creating legal fiction fixed the situs of sale on location or delivery of goods for consumption like omitted Explanation to Article 286(1)(a), there is no authority to show that mere location or delivery of goods would be the situs of sale. Here, we would like to cite an appropriate illustration given in the decision in Bengal Immunitys case (supra) only to resolve the controversy before us. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods by the handing over of the delivery order took place in Gurgaon in the State of Punjab. We, therefore, find that the location or delivery of goods within the State cannot be made a basis for levy of tax on sales of goods. Under general law, merely because the goods are located or delivery of which has been effected for use within the State would not be the situs of deemed sale for levy of tax if the transfer of right to use has taken place in another State. Therefore, the contention, on behalf of the respondents that there would be no completed transfer of right to use goods till the goods are delivered is to prevail, then the respondents are further required to show that the contract of transfer of right to use goods is also entered into in the said State in which the goods are located or delivered for use. The State cannot levy a tax on the basis that one of the events in the chain of events has taken place within the State. The delivery of goods may be one of the elements of transfer of right to use, but the same would not be the condition precedent for a contract of transfer of right to use goods. Where a party has entered into a formal contract and the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect thereof is also required to be executed. Given that, the locus of the deemed sale is the place where the right to use the goods is transferred. Where the goods are when the right to use them is transferred is of no relevance to the locus of the deemed sale. Also of no relevance to the deemed sale is where the goods are delivered for use pursuant to the transfer of the right to use them, though it may be that in the case of an oral or implied transfer of the right to use goods, it is effected by the delivery of the goods. 27. Article 366(29A)(d) further shows that levy of tax is not on use of goods but on the transfer of the right to use goods. The right to use goods accrues only on account of the transfer of right. In other words, right to use arises only 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. Thus, the situs of taxable eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be placed where the written agreement transferring the right to use any goods was executed and it is only that State where the written agreement was executed which is empowered to levy tax. 13. The lease agreement in the instant case was signed in 1996 on 19.3.1996 to be precise. The agreement was signed in Calcutta (now Kolkata). The Petitioner is a Company with its Registered Office at Mumbai. The High Court of Orrisa in M/s Shrei International Finance Ltd. Vs. State of Orissa Ors. [ 2008 (Supp.-l) OLR-764 ] in somewhat identical set of facts has held that since the sale or purchase was in the course inter-state trade and commerce, the State of Orissa has no jurisdiction to levy tax on the lease rent received. The taxable event is the transfer of right to use goods and not the right to use goods or the use of goods. Therefore, the right to use goods or the use of goods is not the relevant factor to justify the levy of tax. Thus, the entire assessment made by the Assessing Officer and the acceptance of the same by the Revisional Authority is per se bad and illegal. 14. The High Court of Chhattisgarh also in M/s Raymond Ltd. (supra) relying upon the ob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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