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TMI Blog2023 (8) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015, Aurobindo Highway Services (hereinafter referred to as "AHS"), is a sole proprietory business of one Jirankalgi. AHS runs a petrol pump and also owns tank trucks (hereinafter referred to as "Tankers"). The tankers were registered with the Regional Transport Authority (RTO) in the name of appellant. AHS also holds Goods Carriage Permit under the Motor Vehicles Act. AHS renders services to oil companies like Hindustan Petroleum Corporation Limited (hereinafter referred to as "HPCL") by giving on hire these tankers. AHS has filed four appeals being MVXA/8/2015, MVXA/12/2015, MVXA/29/2015 and MVXA/15/2015 pertaining to Financial Year 2006-2007, 2008-2009, 2005-2006 and 2007-2008, respectively. MVXA/15/2015 filed by AHS is not listed but by consent is also taken up for final hearing. Facts are identical in as much as issue is the same and agreement was with HPCL on same terms and conditions. Also, common questions of law has been framed in MVXA/8/2015, MVXA/9/2015, MVXA/11/2015, MVXA/12/2015 and MVXA/13/2015. 3. HPCL had issued a notice inviting tender for transportation of bulk petroleum products (white oil) by road Ex Pakni Depot - Tender No. WZ/IND/MH/POL/BULK/2005-08. AHS had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "dealer" in view of Exception III in the definition of dealer in Section 2(8) of the MVAT Act because Exception III provides that a transporter holding permit for transport vehicles (including cranes) granted under the Motor Vehicles Act, 1988 which are used or adopted to be used for hire or reward shall not be deemed to be a dealer in respect of sale or purchase of such transport vehicles or parts, components or accessories thereof. AHS's submissions were rejected and the STO levied tax on the receipts. 6. Being aggrieved, AHS preferred an appeal before the Deputy Commissioner of Sales Tax, Solapur. The appeal was dismissed against which AHS preferred an appeal before the Maharashtra Sales Tax Tribunal at Mumbai (Tribunal). Four appeals were filed by AHS for Financial Year 2005-2006, 2006-2007, 2007-2008 and 2008-2009. The appeals of AHS were dismissed by the Tribunal vide Order dated 9th February 2015. The Tribunal confirmed the action of the STO and the First Appellate Authority. It is against this order of the Tribunal passed on 9th February 2015 the present appeal(s) have been filed. All other appeals were also dismissed based on this impugned order dated 9th February 2015. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akh, be liable to pay tax, with effect from the appointed day, in accordance with the provisions of the Act, till his certificate or licence is duly cancelled under this Act. Explanation - For the purposes of this sub-section, the expressions "turnover of sales", "turnover of purchases" and "importer" shall have the respective meanings assigned to them under the relevant earlier laws. (2) A dealer to whom sub-section (1) does not apply and whose [turnover either of all sales or, as the case may be, purchases] made, during the year commencing on the appointed day or any year subsequent thereto, first exceeds the relevant limit, specified in sub-section (4), shall, until such liability ceases under sub-section (3), be liable to pay tax under this Act with effect from the 1st day of April of the said respective year : Provided that, a dealer shall not be liable to pay tax in respect of [such sales and purchases] as take place during the period commencing on the 1st day of April of the said respective year upto the time when his [turnover of sales or turnover of purchases], as computed from the 1st day of April of the said respective year, does not exceed the relevant limit ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orce, but subject to the provisions of this Act, any person covered by [sub-clause (a), (b) or (c)] of clause (8) of section 2 shall be liable to pay tax under this Act, whether or not the principal is a dealer and whether or not such principal is liable to pay tax under this Act and whether or not the principals are disclosed (7) [xxxxxxxxxxx] (8) Where a dealer liable to pay tax under this Act is succeeded in the business by any person in the manner described in clause (a) of sub-section (1) or sub-section (4) of section 44, then such person shall, notwithstanding anything contained in this section, be liable to pay tax on the sales or purchases of goods effected by him on and after the date of such succession and accordingly nothing contained in the proviso to sub-section (2) shall apply to him in any year. (9) Any person who is not liable to pay tax under the foregoing provisions of this section but has been voluntarily registered under the provisions of this Act shall be liable to pay tax from the date of effect of the certificate of registration duly granted to him and accordingly nothing contained in the proviso to sub-section (2) shall apply to him in any year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s engagement in or in connection with or incidental to or in the course of, the business; (d) any society, club or other association of persons which buys goods from, or sells goods to, its members; Explanation - For the purposes of this clause, each of the following persons, bodies and entities who [sell any goods] whether by auction or otherwise, directly or through an agent 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 under the Indian Railways Act, 1989 (24 of 1989) and Konkan Railway Corporation Limited, (vi) Incorporated or unincorporated societies, clubs or other associations of persons; (vii) Insurance and Financial Corporations, institutions or companies Banks included in the Second Schedule to the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, deferred payment or other valuable consideration; (ii) the transfer of property in goods (whether as goods or in some other form) involved in the execution of a [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 system of payment by installments; (iv) 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; (v) the supply of goods by any association or body of persons incorporated or not, to a member thereof for cash, deferred payment or other valuable consideration; (vi) 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 made or given for cash, deferred payment or other valuable consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have a legal right to use the goods consequently all legal consequences of such use including any permissions or licences required therefor should be available to the transferee; (d) For the period during which the transferee has such legal right, it has to be to 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. 13. Therefore, the Apex Court held that to constitute a transaction for the transfer of the right to use the goods, it is necessary that there must be a consensus ad idem as to the identity of the goods, the transferee should have a legal right to use the goods and consequently all legal consequences of such use including any permissions or licences required therefor should be available to the transferee and for the period during which the transferee has such legal right, it has to be to the exclusion of the transferor. The Apex Court held that this is the necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract entered between the assessee and the owners of the vehicles, the Division Bench held that there was no transfer of right to use to make it taxable under the Act. The Court, therefore, found that show cause notice issued was without jurisdiction and as such, allowed the petition, setting aside the show cause notice. 15. This subject/issue also came up for consideration in the case of Commissioner, VAT, Trade and Taxes Department V/s. International Travel House Ltd.(2009) 25 VST 653 (Delhi) where Delhi High Court has considered as to whether the contract between respondent/assessee and M/s. NDPL for hiring of Maruti Omni cabs amounted to transfer of right to use any goods so as to come within the definition of "Sale" as provided under the Delhi Value Added Tax Act, 2004. After considering the terms and conditions of contract and considering the judgment of the Apex Court in the case of Bharat Sanchar Nigam Ltd. (Supra) the Hon'ble Court has observed thus : 12. That takes us to the question that whether the contract in question is at all a contract of sale of goods as envisaged in Article 366(29-A)(d) inasmuch as there is transfer of the right to use for whatever period by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of right to use the goods is absent, namely, ingredient as stated in para 97(c) of the BSNL's case. The judgments which were cited during the course of arguments, namely, State of A.P. v. Rashtriya Ispat Nigam Ltd., (2002) 3 SCC 314 and Aggarwal Bros. V. State of Haryana, (1999) 9 SCC 182 have been duly explained by the Supreme Court in BSNL's case. The crucial factor in this regard differentiating the two cases was the intention to transfer the right to use. Whereas in the case of Rashtriya Ispat Nigam Ltd., there was no intention to transfer the right to use, in the case of Aggarwal Bros. it was found that there was an intention to transfer the right to use. In the present case, the judgment of Aggarwal Bros. does not help the appellant inasmuch as there is no intention to transfer the right to use the goods because the licences and permissions with respect to the goods, namely, the Maruti Omni Cabs remained always in the effective control and possession of the respondent and not NDPL. It can thus be seen that in the said judgment, the Court took a view that since the permissions and licences with respect to the cabs are not available to the transferee and the cabs remain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar, the Bombay High Court had held that there was an effective transfer. Even in the case of Waltor Buthello of Mumbai (Supra), the driver with uniform was to be provided by the lessor at his cost, the wages had to be paid by the lessor, the fuel and maintenance was to be provided by the lessor and the damages were to be borne by the lessor. The driver was obliged to follow instructions of the authorities of PMT (lessee). The agreement also provided that in no circumstances a hired bus will be diverted by contractor for personal use or gain of any other business and the lessor has to ply on the routes exclusively determined by the PMT. Still the Court held that the buses were deemed to be in effective control of PMT and hence, there was a deemed sale; (g) Twentieth Century Finance Corporation Limited and Anr. V/s. State of Maharashtra (2000) 6 SCC 12 says handing over of physical possession is not required to decide transfer of right to use; (h) In the case of Deepak Nath V/s. ONGC (2010) 31 VST 337 (Gauhati), the Court concluded that the mere fact that after the operation of the crane is over on any given day the crane may come back to the owner/contractor will hardly be materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the context shall include its successors and assigns) of the ONE PART and M/s. Aurobindo Highway Station a Proprietorship firm Private Limited / Limited Company having registered office / place of business at Takli (Dist. Solapur) hereinafter called "THE CARRIER" or Carrier (which expression shall be deemed to include legal heirs and executors of the present constituents in case of firm or official liquidator in case of Company) of the OTHER PART. WHEREAS the company is engaged in refining Crude oil and storing, distributing and selling of the petroleum products and for this purpose require Tank Trucks for Road transportation of bulk petroleum products from their various storage points to customers / other storage points. WHEREAS the Carrier is engaged in the business of operating Tank Trucks and is interested in above transportation job of the Company. Now therefore, it is agreed between the parties as follows :- 1. The Carrier will provide the Company with 3 no. of Tank Trucks for transporting petroleum products as per LOI/Work Order issued by the Oil Company. Carrier has certified that it is the owner and/or sufficiently entitled to operate these Tank Trucks thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Tank Truck for display of Oil Company Brands as specified by Oil Company on regular basis. (c) Conform to the statutory regulations like Indian Petroleum Act, Petroleum Rules, Motor Vehicle Act etc. as applicable from time to time. (d) Properly calibrated / stamped under the Weights & Measures Act. These shall be calibrated for single capacity up to maximum permitted under Motor Vehicles Act. Company would be entitled for insisting for calibration at Company's premises at the cost of Carrier. (e) Have adequately trained Crew (driver and cleaner) for efficient operations. The driving licence of the drivers should be endorsed for transportation of hazardous goods. (f)Have the Crew wearing uniforms, safety shoes and safety helmets. (g) Be equipped with sufficient number of rubber hoses having suitable couplings at both ends, bonding / earthing with heavyduty crocodile clips and dip-rods duly certified by Weights & Measures Department. (h) Covered by Insurance Policy. The officials of the Company would be entitled to inspect at any time, the Tank Trucks and / or the documents of the Carrier / its crew is liable to carry under any statute / regulation or this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyees or employees engaged by the Carrier and Oil Company shall not be responsible for his omission or commission. 6(a) xxxxxxxxxxxxxxxxxx (b) xxxxxxxxxxxxxxxxxx (c)(i) Octroi charges levied on the product would be reimbursed by the Company against production of original receipts. (ii) Entry / Transit / Bridge / Toll (Pathkar) taxes paid by the Carrier for their Tank Trucks while transporting petroleum products under this Contract would be reimbursed by the Company on round-trip basis subject to production of original receipts for payment. Company's decision whether any charge is reimbursable or not would be final and binding on the Carrier. (d) The transport charges payable under this Agreement are based on shortest route approved by the Company on the round trip basis (called RTKM). A list of current RTKMS applicable to storage points where subject Tank Trucks are based are available with concerned storage point. Company would, however, be entitled to revise these RTKMS from time to time, including retrospectively, which would be binding on the Carrier. Difference in transportation charges arising out of this revision will be recoverable / payable from the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (for eg. Global Tracking System) decided by the Company to tract the movement of the Tank Truck will be unconditionally accepted by the Carrier and install the same in the Tank Truck. Cost of modification / modifications of fittings if any on TT will be borne by the Carrier. Carrier shall be responsible for safety / maintenance of the equipment and in case the equipment is lost / damaged due to any reason, the carrier shall replace the same at their own cost. (f)................ (g) ................ (h) ................ (i)................ (j)................ (k) Wherever required by Company, collect cheques / draft / bank-slips etc. from the recipient after ensuring that remittances are correctly drawn. (l)................ (m) ................ 11. In case any of the Tank trucks meets with an accident while it is loaded with Company's product, the Carrier shall : (a) Arrange conveying of information to dispatch storage points as also nearest police station; (b) Guard the Tank Truck and product till arrival of rescue agencies; (c) Arrange another fit Tank Truck to salvage the product from Accident Tank Truck; (d) Bring such transshipped / salv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o other than adjoining states in Paise per KL per KM 118.98 Escalation on account of increase in RSP of HSD after 1-9-2005 will be granted to you from time to time as per the terms and conditions outlined in the Tender Document. NUMBER OF TANK TRUCK/S ALLOCATED: 3 (THREE ONLY) You are requested to submit xerox copy of RC Book, Explosive Licence, Calibration Certificate etc. and get original documents verified at Pune Retail Region for tank trucks offered by you. xxxxxxxxxxxxxx SECURITY DEPOSIT As per the terms and conditions of the contract you are required to furnish the security deposit as under :- 1. @Rs. 100000/- per tank lorry subject to a maximum of Rs.5 lakhs. 2. Minimum Rs. 50,000/- shall be paid in the form of Demand Draft drawn on any nationalised bank in favour of M/s. Hindustan Petroleum Corporation Limited and payable at Pune. Balance may be tendered in the form of Bank Guarantee strictly in specified proforma, valid upto 31-3-2009. 3. For existing dealers/distributors of the Corporation, the Security Deposit will be Rs. 50000/- per contract irrespective of number of tank trucks offered. xxxxxxxxxxxxxxxxxxxxx 19. The agreement read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent would invite action; (xxii) AHS was responsible for all taxes and levies and other costs of running the tankers/transportation business which would include salary, wages and other benefits and claims of crew of tankers, payment of road tax, insurance and any other fees like permit, route fee etc. levied by statutory authorities, cost of fuel, lubricants, tyres, repair etc., calibration fees and other fees payable to weights and measures department, compensation or any other benefit payable to tanker crew and its other staff or third party under any statute or regulation both under regular working and arising from accident etc. and for this, AHS shall keep HPCL indemnified and if HPCL is made liable to pay the same to be recovered from AHS; (xxiii) the tankers shall operate at the sole risk of AHS and in no case, HPCL will be responsible for any loss or damage done to/by the tankers while on HPCL's work or parked in their premises or anywhere else; (xxiv) AHS was to make its own arrangement for parking of its vehicles overnight and/or during holidays; (xxv) AHS was to comply with all statutory provisions relating to his trade/business/profession including his own emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which had been accepted by HPCL, but, in unavoidable circumstances, AHS may provide for alternative tankers. Thus, when the custody and effective control of the vehicles remained with AHS, it would be incorrect to contend that there was transfer of the right to use the vehicles. Further AHS has to bear the entire operational cost of the vehicle which included salary and other emoluments of the driver and cleaner, cost of fuel and lubricating oil, maintenance of vehicles, payment of road tax, insurance etc. It was also the responsibility of AHS to pay such fines as might be imposed for non compliance of any of the rules, which might be applicable to the carriage of petroleum and petroleum products by the tankers. The requirement that the tankers must conform to the design and fittings as might be specified by HPCL or that HPCL had right to change the loading station or tankers cannot be used for carrying other products than oil of HPCL could not be stretched to mean that the right to use the tankers would stand vested in HPCL and/or the effective custody and control of tankers would stand transferred to HPCL because of the fact that petroleum and petroleum products, being highly inf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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