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TMI Blog2023 (12) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent with its customers with specific reference to the discernible and distinguishing contract clauses does not amount to "sale" under the Maharashtra Value Added Tax Act, 2002?" 3. The facts giving rise to the present Appeal are that: Respondent company is engaged in the supply of tangible goods and services and liable for service tax under the Finance Act and is also registered under the Act and the Central Sales Tax Act, 1956 (CST Act). It owns a fleet of 370 cranes of different capacities which are used for erection of industrial plans, refineries, petrochemical complexes, windmills, etc. Respondent lets out its cranes as per work order issued by its client to be deployed at the client's location with the help of skilled employees comprising of crane operators and riggers of Respondent. 4. In pursuance of a work order dated 1st April 2008, Respondent gave on hire and deployed few cranes to its client namely Suzlon Infrastructure Services Ltd. (SISL) on certain terms and conditions. It is the case of Respondent that on 3rd September 2013 the Investigation Officer of Appellant visited place of business of Respondent and a notice in F-603 followed calling for production of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The terms and conditions of the contract reads as thus: Work Order Contract riders(clauses) "1. If the deployed set of cranes of SML fail to meet SISL requirements mentioned in Clause No. 3 of Contract riders (clauses), then SISL is not liable to make any payments to SML and any advance / mobilisation charges paid to SML shall be refunded to SISL. 2. The hiring period shall be applicable from the date on which they are put into operation in totality at our site and is certified by our site in-charge. We shall not certify the set of subject cranes with any shortfall either by means of crane or accessories. In case of discontinuation / renewal, SISL shall inform two months in advance to SML. 3. The cranes shall work for the period from 9 am to 7 pm with one hour lunch break (minimum 260 hours per month). However, shift timings shall be mutually agreed by site incharge of SISL and SML. Any overtime shall be paid proportionately on pro-rata basis. 4. Regarding data of diesel consumption, filling up of the diesel into the crane etc. shall be done by SML representative / members at site while SISL shall provide suitable space required for storing of diesel at site to SML. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and borne by SML. 14. All tools, spanners, slings, slippers and maintenance items required for smooth functioning of the crane shall be arranged by SML. 15. SML shall provide suitable manpower so as to enable SISL to make use of cranes for completing 8-10 towers per month if 100% material is available. 16. As per our standard terms, since contract duration is for more than one year, de-mobilisation charges are not applicable. 17. Insurance of the crane operators/helpers and crane team members of SML shall be arranged & borne by SML. SML shall provide all necessary safety gear like safety shoes, safety helmet etc. for their personnel. Any safety, health & environment requirements implemented by SISL from time to time shall be binding on SML. 18. SML shall make Its own arrangement like watch and ward, etc. towards security of their equipment and SISL shall not accept any responsibility in this regard. 19. A log book is to be maintained on daily basis by crane operator for working hours of the cranes and it should be signed by site incharge/authorised person of SISL. In no case SISL shall sign log book for more than one day together. This is a prime requirement and is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Notes to Vendor' appearing at the foot of the work order, Mr. Sonpal contends that the cranes were given to SISL upon 'delivery' and with a right to reject the cranes if not found to be as per specifications mentioned in the work order. He also refers to the contract riders specifying the period during which the cranes are to be deployed, the exclusive use to be made by SISL and the operators to work as per the instructions of SISL, etc. According to him this clearly indicates that the use of cranes is as per the control of SISL during fixed hours and as per the discretion of SISL. Remuneration for hire of crane is also fixed on an hourly basis. Mr. Sonpal further relies upon decisions of various High Courts including this Court and the Supreme Court to canvas his submission that possession is not a sine qua non for a transaction to be treated as a 'sale'. Mr. Sonpal submitted that: (a) the goods provided to lessee must be in control of use by the lessee; (b) delivery is not a condition precedent to treat a transaction as transfer of right to use goods; (c) it is immaterial if the employees of the lessor are paid salaries by the lessor or the lessor pays for fuel for operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Sons V/s. State of Andhra Pradesh (2011) 43 VST (AP). says to determine the nature of the transaction one has to consider the agreement and having considered the agreement between appellant and HPCL, there can be no doubt that there was a transfer of right to use; (j) The following facts emerge from the agreement between appellant and HPCL: (i) The tankers are identified by registration number and are attached to particular loading location. (ii) Tankers are in exclusive use of Company for transportation of petroleum products to customers and other loading stations. (iii) AHS is not entitled to use the tank truck contracted by oil company for any other product and would operate only for the oil company with whom the agreement is entered into. (iv) AHS cannot assign the rights under the contract, title and interest in tankers during the period of agreement. (v) The tankers are available to oil company at its call at all the times during the period of agreement. (vi) The oil company has full authority to change the base loading location, resitement, as per oil company's own operational convenience/requirement for delivery of petroleum products. (vii) Crew is und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of fitness certificate and load chart of the cranes by Respondent certified by Government approved Agencies and the requirement of compliance by the operating crew of all statutory mandates like PUC, RTO, other licenses, etc. is to ensure the same to be instantly available for inspection by any authorities and does not indicate any transfer of the rights to use to SISL to the exclusion of Respondent. (v) Mobilization of cranes from one site to another as per requirements of SISL is itself the object of deployment, the same being setting up windmills at various sites which are at times more than 100 kms. apart. This does not remotely suggest that Respondent parted with the effective control over the cranes. (vi) The rider that in case of breakdown of any crane during mobilization, SISL shall consider the same as 'hiring period upto the grace period' agreed between the parties does not reflect upon the possession and control of SISL. Similarly, the fact that Respondent was liable to pay entry tax to those States where the cranes were deployed clearly indicate the possession and control of Respondent over the cranes. (vii) The condition that although the ownership of cranes r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Cranes was to supply requisite set of accessories, spares so as to meet the contingencies of breakdown and maintenance. 12. The Tribunal has compared the attributes of transfer of the right to use goods as discussed in General Cranes (supra) with those in the present matter, i.e., the clauses of the contracts in both matters. The Tribunal has observed that the clauses in both the cases are substantially similar. No clause in the contract in this case can be construed so as to conclude that there was intention to transfer the right to use the cranes in favour of SISL. Every clause in contract and in particular the emphasized portion as quoted above, unmistakably lead to the conclusion that the cranes were under effective control and possession of Respondent herein and during the contract period, the same were in the custody of SISL. It indicates there was no transfer at all, let alone transfer of the right to use. It was a clear case of giving on hire of cranes. The Tribunal has also considered the definition of 'sale' in the MVAT Act, which is as follows: " "Sale" means the transfer of the rights to use any goods for any purpose (whether or not for a specified period) for cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of parties that the custody and effective control of the cranes was to remain with Respondent. In these circumstances, it would be incorrect to contend that there was a transfer of right to use the cranes. 16. The judgments relied upon by Mr. Sonpal are of no assistance to him in as much as, as held in Rashtriya Ispat Nigam Limited (Supra) the effective control was with AHS. In Bramhaputra Vally Construction and Suppliers (Supra) also the Gauhati High Court has held that it is the features of the contract which are material and to be looked into. As regards Waltor Buthello of Mumbai (Supra), the facts were entirely different in as much as in that case the buses were handed over by the contractor to PMT and the buses, which were handed over to PMT, were registered with the RTO, Pune in the name of PMT as a lessee. In that case, even the conductor of the bus was provided by PMT and not the owner of the bus. It was the conductor of PMT who was to collect the fare from the passengers. The contractor was also permitted to employ other surplus drivers employed with PMT where the post of drivers has become surplus on PMT's establishment. Those were the factors which weighed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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