Madras High Court
Sudhir Crane Services Private ... vs The Assistant Commissioner (Ct) on 2 February, 2021
W.P.Nos.14472, 14534 & 15622 of 2015
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 02.02.2021
CORAM
THE HON'BLE MR.JUSTICE C.SARAVANAN
W.P.Nos. 14472, 14534 & 15622 of 2015
and
M.P.Nos.1, 2, 1, & 1 of 2015
(Through Video Conferencing)
W.P.Nos. 14472 & 14534 of 2015
Sudhir Crane Services Private Limited,
Rep. by its Director,
No.5/363, MBT Road,
BHEL Anna Nagar,
Seegarajapuram – 632 515,
Ranipet, Vellore District. ... Petitioner
in both W.Ps.
Vs.
The Assistant Commissioner (CT),
O/o. The Assistant Commissioner (CT),
Ranipet (SIPCOT), Ranipet. ... Respondent
in both W.Ps.
Writ Petitions filed under Article 226 of the Constitution of India,
to issue a Writ of Certiorari, calling for the records relating to the order
passed by the respondent in his proceedings in Rc.B1/1418/2013 dated
05.12.2014 relating to the Assessment Years 2012-2013 and 2013-2014
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W.P.Nos.14472, 14534 & 15622 of 2015
and quash the same as without jurisdiction, illegal, arbitrary and error on
the face of record.
For Petitioner : Mr.A.Thiagarajan, Senior Counsel
for Mr.S.Ramesh Kumar in both W.Ps.
For Respondent : Mr.M.Hariharan,
Additional Government Pleader in both W.Ps.
W.P.No.15622 of 2015
Sudhir Crane Services Private Limited,
(Sudhir Transports)
Rep. by its Director,
No.5/363, MBT Road,
BHEL Anna Nagar,
Seegarajapuram – 632 515,
Ranipet, Vellore District. ... Petitioner
Vs.
1.The Assistant Commissioner (CT),
O/o. The Assistant Commissioner (CT),
Ranipet (SIPCOT), Ranipet.
2.The Additional General Manager,
BAEL, Ranipet – 632 406. ... Respondents
Writ Petition filed under Article 226 of the Constitution of India,
to issue a Writ of Certiorari, calling for the records relating to the order
passed by the 1st respondent in his proceedings in Rc.A3/1418/2013
dated 10.03.2015 and quash the same as illegal, arbitrary and error on the
face of record.
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W.P.Nos.14472, 14534 & 15622 of 2015
For Petitioner : Mr.A.Thiagarajan, Senior Counsel
for Mr.S.Ramesh Kumar
For Respondent : Mr.M.Hariharan,
Additional Government Pleader
COMMON ORDER
By this common order, all the three Writ Petitions are being
disposed of.
2. In these Writ Petitions, the petitioner has challenged the
following impugned orders:-
Sl. Writ Impugned Order Prayer of the Writ Petition
No. Petition No. No.
and Date
To call for the records relating to the
1 14534/2015 Rc.B1/1418/2013 order passed by the respondent in his
dated 05.12.2014 proceedings in Rc.B1/1418/2013 dated
05.12.2014 relating to Assessment
Year 2013-2014 and quash the same as
without jurisdiction, illegal, arbitrary
and error on the face of record.
To call for the records relating to the
2 14472/2015 Rc.B1/1418/2013 order passed by the respondent in his
dated 05.12.2014 proceedings in Rc.B1/1418/2013 dated
05.12.2014 relating to Assessment
Year 2012-2013 and quash the same as
without jurisdiction, illegal, arbitrary
and error on the face of record.
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W.P.Nos.14472, 14534 & 15622 of 2015
Sl. Writ Impugned Order Prayer of the Writ Petition
No. Petition No. No.
and Date
To call for the records relating to the
3 15622/2015 Rc.A3/1418/2013 order passed by the 1st respondent in
dated 10.03.2015 his proceedings in Rc.A3/1418/2013
dated 10.03.2015 and quash the same
as illegal, arbitrary and error on the
face of record.
3. Since the ranks of the respondents vary in these writ petitions,
the names of the respondents are mentioned in this common order to
avoid the confusion.
4. The impugned orders in the first two Writ Petitions pertain to
levy of tax under Section 4 of the Tamil Nadu Value Added Tax Act,
2006 on the ground that the petitioner has effected sale within the
meaning of extended definition of sale under Section 2(33) of the Tamil
Nadu Value Added Tax Act, 2006 of transfer of right to use of goods and
is liable to tax.
5. It is the contention of the learned senior counsel for the
petitioner that the petitioner was supplying cranes under the agreement to
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W.P.Nos.14472, 14534 & 15622 of 2015
the Bharath Heavy Electricals Limited (hereinafter referred to as BHEL
for brevity). A specific reference was drawn to Clauses contained in the
agreement dated 08.12.2011 signed between the petitioner and the said
BHEL, wherein, it has been stated that the petitioner has entered a service
agreement for material handling activities of loading/unloading, stacking
of materials, arrangement and re-arrangement of materials picking of
loads from stacked position in wherever and whatever manner it was
stacked, at shipping yard, fabrication yards, production, stores etc.
6. The petitioner in its reply to the notice dated 10.01.2014 had
stated that the effective control over the material handling equipments
was with it and that it has provided only service to BHEL.
7. The learned senior counsel for the petitioner further referred to
the following conditions contained in the said agreement:-
Condition 4 :- BHEL reserves the right to demand
the contractor to display more than the indicated
number of cranes mentioned to copy up with the
surge loading/unloading requirement.
Condition 6 :- The contractor shall supply the
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W.P.Nos.14472, 14534 & 15622 of 2015
quantum of cranes indicated in TABLE 2 either
through their owned cranes or acquired on valid
lease bares.
Condition 8 :- A crane crew, consisting one trained
operators and two riggers shall be provided for each
crane.
Condition 11 :- Cranes shall be maintained in good
working condition.
Condition 12 :- All the lifting tackles required for
each crane for handling various type loads of BHEL
are to be arranged by contractor and the lifting
tackles are to be approved by BHEL compliant
authority before put into use by BHEL. However for
any special type of jobs/materials handling, BHEL at
their discretion will provide the same under
acknowledgement on returnable basis. Recovery
will be made in case of non-retaining/damages. The
tools and tackles of contractor shall not be mixed
with BHEL tools and tackles.
Condition 17 :- Since the contract is for tonnage
handle basis and the payment is as per MT handled
basis, the contractor may loading in more cranes
during enhanced handling requirement in order to
complete the work faster and handle more tonnage.
Condition 18 :- Tenderers are permitted to deploy
higher capacity cranes without any demand for extra
charges. However, the capacity should not go below
10 tonnes and the requirement of number of cranes
may be maintained as per pare 3 in any one.
Condition 23 :- During the contract period the
contractor shall maintain the crane always in good
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W.P.Nos.14472, 14534 & 15622 of 2015
working condition to the fullest satisfaction of
BHEL. BHEL reserves the right to terminate the
contract in case they are not so maintained to the
satisfaction of BHEL.
Condition 38 :- No crane shall be allowed to be
parked inside BHEL premise after the stipulated
hours.
Condition 39 :- The crane shall be reported in full
readiness for the entire day's operation with
sufficient fuel and other commerce with fitting crew.
The crane and crew should be made available
continuously throughout the contract period
including holidays and Sundays without any break
according to BHEL requirement.
44 (a) Arbitration:-
(IV) The Contractor shall, notwithstanding any
disagreement, disagreement, dispute, protest, request
for arbitration, court or other proceedings, continue
to perform the services in accordance with the
derminations, instructions and clarifications of
BHEL.
8. He further submits that no case was made out for levying tax
under Section 4 of the Tamil Nadu Value Added Tax Act, 2006 as there
was no “transfer of right to use goods” involved in the transaction.
9. On the other hand, defending the impugned orders, the learned
Additional Government Pleader (T) submits that the impugned orders are
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W.P.Nos.14472, 14534 & 15622 of 2015
well reasoned in as much as the effective control of the crane was with
the BHEL and there is transfer of right to use under the extended
definition of sale and therefore the petitioner was liable to tax under
Section 4 of the Tamil Nadu Value Added Tax Act, 2006.
10. The learned Additional Government Pleader (T) placed
reliance on the decision of the Division Bench of this Court in Tvl. M/s.
Vitan Departmental Stores & Industries Limited Vs. The State of
Tamil Nadu, rep. by the Joint Commissioner (CT), 2013 SCC OnLine
Mad 3184 and draw my attention to the following passages:-
26. On a perusal of the above conditions, it is
evidently clear that the petitioner has transferred the
right to use VITAN system, the licensed right of
their names, marks, systems, insignia, symbols and
goodwill. The Hon'ble Supreme Court in the case of
Tata Consultancy Services (supra) held that goods
for the purpose of sales tax may be intangible and
incorporeal. But to qualify as an actionable claim in
terms of the definition contained in Section 3 of the
Transfer of Property Act, it should be only a claim,
and every claim is not an actionable claim but it must
be a claim to a debt or to a beneficial interest in
movable property and such beneficial interest is not
the movable property itself and may be existent,
accruing, conditional, or contingent. The transaction
done by the petitioner is not a claim nor it is a debt
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W.P.Nos.14472, 14534 & 15622 of 2015
or a beneficial interest in the movable property but
the right transferred by the petitioner is a transfer of
a right in the trade mark, a trading style which are
incorporeal rights and are intangible things and
transfer of such incorporeal right is undoubtedly
exigible to tax. Therefore, the decision of the
Hon'ble Supreme Court in the case of Sunrise
Associates (supra) does not lend any support to the
case of the petitioner.
27. Similarly, the decision in the case of
Yasha Overseas also which considered the judgment
in Vikas Sales Corporation observed that the
decision has not been over ruled by the decision of
the Constitution Bench in Sunrise Associates and
pointed out that DEPB has an intrinsic value that
makes it a market commodity and therefore, DEPB
like REP licence qualifies as ‘goods’ within the
meaning of the sales tax laws and its sale is exigible
to tax. We find that this decision is of no assistance
to the case of the petitioner.
29. We have perused the conditions of the
agreement, dated 27.09.2002 entered into by the
petitioner from which we find that the petitioner has
transferred their right to use their trade mark, good
will, reputation exclusively to the franchisee in
respect of a particular outlet and any misuse of such
exclusively licensed right rendered, the franchisee
open to action which meant to include the
termination of agreement in terms of XIV of the said
agreement. Therefore, it is a case where goods which
are in the nature of intangible or incorporeal goods
were available for delivery there were consensus
adidem to the identity of such goods as the transferee
has a legal right to use the goods and during the
period when the agreement was in force, namely for
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W.P.Nos.14472, 14534 & 15622 of 2015
a period of 10 years it was an exclusive right given
to the transferee by the petitioner in respect of a
particular store and consequently a transfer of right
to use and not merely a licence to use the goods and
during the period when the agreement was in force,
the petitioner as the transferor could not transfer
such goods with particular reference to the exclusive
right given in respect of a particular store to any
other party. Thus, all the attributes to constitute
transfer of right to use the goods have been fulfilled
and therefore, we have no hesitation to hold that the
tests laid down by the Hon'ble Supreme Court in
BSNL's stands fully satisfied and the right given by
the petitioner is undoubtedly a transfer of right to use
incorporeal or intangible goods and therefore,
exigible to sales-tax.
30. In S.P.S Jayam and Co., (supra), a
Division Bench of this Court considered an identical
question as in the case on hand. In the said decision,
the assessee allowed an agency to use their trade
mark and the receipts were shown in the books of
accounts as royalty. In the original assessment, the
turn over relating to the transaction was exempted
accepting the claim that it was only royalty.
Subsequently, the assessing authority took the view
that the consideration was received for transfer of
right to use the trade mark and hence, the same is
taxable. Notice was issued to the assessee who failed
to respond and the Assessing Authority proceeded on
the basis that there was transfer in incorporeal goods
which is taxable under the Sales Tax Act and passed
orders revising the assessment. The assessee
preferred appeal and the First Appellate Authority
who accepted the case of the assessee and held that
the reassessment was not proper. The Joint
Commissioner, exercising suo motu revisional power
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W.P.Nos.14472, 14534 & 15622 of 2015
held that transfer of trade mark is a sale of
incorporeal goods for consideration and therefore,
taxable under the TNGST Act. Aggrieved by such
order, the assessee preferred an appeal before the
State Taxation Tribunal which dismissed his appeal
and the assessee filed a writ petition before this
Court challenging the order of the Tribunal. It was
contended before this Court that the agency was
given a mere right to enjoy the trade mark for a
period and the amount received was only towards
royalty and hence, should have been exempted while
calculating the turnover. The Revenue submitted that
the transaction is a sale of incorporeal goods. The
Division Bench after referring to various clauses in
the agreement between the parties therein took note
of the decision of the Hon'ble Supreme Court in the
cases of Rashtriya Ispat Nigam Ltd. v. Commercial
Tax Officer, reported in 77 Sales Tax Cases 182;
Vikas Sales Corporation v. Commissioner of
Commercial Taxes, reported in 102 STC 106,
Commissioner of Sales Tax v. Duke & Sons;
Aggarwal Brothers v. State of Haryana, reported in
113 STC 317; 20th Century Finance Corporation
Limited v. State of Maharashtra and held that the
transfer was right to use and not a mere right to
enjoy. It was pointed out that for transferring the
right to use the trade mark, it is not necessary to hand
over the trade mark to the transferee or give control
or possession of the trade mark to him and it could
be done merely by authorizing the transferree to use
the same in the manner required by law and the right
to use the trade mark could be transferred
simultaneously to any number of persons. It was held
that the assessee in the said case retained the liberty
to use the mark in the event of the licensor started to
manufacture the products equally it retained the
liberty to grant licence to any other individual person
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W.P.Nos.14472, 14534 & 15622 of 2015
or company to use the trade mark and such right
being an intangible or incorporeal goods which can
be merchandised by the registered owner and as
pointed out by the Hon'ble Supreme Court the word
‘goods’ is defined in a very wide terms so as to bring
in both the tangible and intangible objects and trade
mark right is intangible goods which could be
subject matter of transfer. The above decision would
squarely apply to the case on hand. Since the
petitioner has retained the liberty to use the trade
mark at the same time, the transfer right to use the
incorporeal right exclusively in favour of the
transferree in respect of specified outlet for a definite
period of time. Therefore, it is not a mere licence or
transfer of mere right to enjoy but transfer of right to
use intangible goods.
11. Both the counsel placed reliance on the decisions of the
Hon'ble Supreme Court in Bharath Sanchar Nigam Limited and
Another Vs. Union of India and Others, (2006) 145 STC 91 : (2006) 3
SCC 1 and in Aggarwal Brothers Vs. State of Haryanana, (1999) 113
STC 317 (SC) : (1999) 9 SCC 182.
12. Heard the learned counsel for the petitioner and the learned
Additional Government Pleader (T) appearing for the respondents.
13. Though it is the contention of the learned counsel for the
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W.P.Nos.14472, 14534 & 15622 of 2015
petitioner that they have paid the service tax and have registered with the
Service Tax Authority, there are no records to substantiate the same
before the this Court.
14. However, the Hon'ble Supreme Court in Bharath Sanchar
Nigam Limited and Another Vs. Union of India and Others, (2006)
145 STC 91 : (2006) 3 SCC 1, has enumerated the situation, under which,
there would be transfer of right to use. They are as follows:-
(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 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 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.
The lifts were in possession of the petitioner. Thus, there is no
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W.P.Nos.14472, 14534 & 15622 of 2015
transfer of right to use.
15. In the facts of the case, there is no transfer of right to use and
no case was made out for recovery of tax amount from the petitioner
under Section 4 of the Tamil Nadu Value Added Tax Act, 2006.
Therefore, the impugned orders are liable to be quashed and are
accordingly quashed. These Writ Petitions stand allowed. No cost.
Consequently, connected Miscellaneous Petitions are closed.
02.02.2021
(1/2)
Index : Yes / No
Internet : Yes/No
jen
To
1.The Assistant Commissioner (CT),
O/o. The Assistant Commissioner (CT),
Ranipet (SIPCOT), Ranipet.
2.The Additional General Manager,
BAEL, Ranipet – 632 406.
C.SARAVANAN,J.
Jen
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Page No 14 of 15
W.P.Nos.14472, 14534 & 15622 of 2015
W.P.Nos. 14472, 14534
& 15622 of 2015
and
M.P.Nos.1, 2, 1, & 1 of 2015
02.02.2021
(1/2)
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Page No 15 of 15
