Crane Services To Transport Department Does Not Constitute Sale: Rajasthan High Court

The Rajasthan High Court, Jaipur Bench has held that crane services to the transport department does not constitute sale.

The bench of Justice Sameer Jain has observed that the crane services provided by the respondent-assessee do not constitute sale as provided under Section 2(35)(iv) of the Rajasthan Value Added Tax Act, 2003 and hence, the order of the Tax Board does not call for any interference.

The matter pertains to the assessment years, 2006/2007 to 2010/2011. A survey was conducted at the premises of the respondent-assessee. The Assessing Officer found that the respondent-assessee indulged in providing crane services to various customers, inadvertently giving them the right to use and therefore, transferring goods from one person to another i.e. a transfer of right to use goods for any purpose for valuable consideration and assessment. Therefore, it ought to have been deemed a 'sale' in terms of Article 366(29A) of the Constitution of India and the definition of 'sale' under Section 2(35)(iv) of The Rajasthan Value Added Tax Act, 2003.

The department submitted that the sale had not been disclosed/shown by the respondent-assessee and therefore, in such circumstances, the Assessing Officer imposed tax, interest and penalty upon the respondent-assessee. Being aggrieved by the order, the assessee preferred an appeal.

The Appellate Authority upheld the levy of tax with regard to the Transport Department. Whereas, for the other stakeholders/parties, the matter was remanded back to the Assessing Authority for certain verification(s) subject to the directions contained in the order dated 06.07.2012. Subsequently, in compliance of the order of the Appellate Authority qua the remand and the direction contained therein, the Assessment Officer passed an order, in favour of the department.

The respondent-assessee preferred an appeal before the Appellate Authority, by which it was decided in favour of the respondent-assessee.

The department preferred appeal before the Rajasthan Tax Board. However, the appeal preferred by the Revenue was dismissed and the issue was adjudicated in favour of the assessee. As a result, the department has approached the High Court by way of the Sales Tax Revision.

The issue raised was whether the Rajasthan Tax Board was justified in law in holding that the crane services given by the assessee to the Govt./Private institution will not fall within the ambit of Section 2(36)(iv) of the RVAT Act-2003 and will not fall within the ambit of transfer of right to use goods.

The department contended that the order passed by the Rajasthan Tax Board is bad-in-law and perverse to the settled position of the law, as the Tax Board, did not apply its own mind in consonance with the relevant documents highlighting the correct legal position qua the connotations of a 'sale', as provided under The Rajasthan Value Added Tax Act, 2003. The tax has to be charged in all circumstances encapsulating the transfer of right to use goods, as the definition of 'sale' as provided under Section 2(35)(iv) is in consonance with Article 366(29A) of the Constitution of India. The assessee was involved in giving the cranes for the purpose of using the same, for monetary consideration, as contemplated under Section 2(35)(iv) and the Assessing Officer has given detailed findings both the times i.e. in the first round as well as in the remand order. For a fixed period of time, the crane services were absolutely under the control and disposal of the Transport Department and other private institutions/bodies, as given to by the respondent-assessee. Therefore, the Tax Board's holding is without any cogent and legally sustainable justification.

The assessee contended that the contract as entered between the respondent-assessee and the Transport Department does not constitute a 'sale' as provided under the law and therefore, the order of the Tax Board does not call for any interference.

The court has held that the effective control of the crane, even while the same was in the use of the consumer for the tasks so contracted for, was that of the respondent-assessee. The consumer-Transport Department was not free to make use of the crane for the works other than those contracted for with the respondent-assessee or even take the said crane out from a specific area during the period of the contract when the crane was in his use. Therefore, the control and possession of the crane, as evidenced by the requirements imposed under Condition Nos. 17 and 28, lay with the respondent- assessee only. Hence, there were no mitigating circumstances warranting the contract dated 13.10.2008 to encapsulate a sale as provided under Section 2(35)(iv) of the Act of 2003 read with Article 366(29A) of the Constitution of India.

Counsel For Appellant: Punit Singhvi with Akshay Singh

Counsel For Respondent: Alkesh Sharma with Ayush Sharma

Himanshu Morwal, Mukesh Bhardwaj, Dinesh Kumar

Case Title: Assistant Commercial Taxes Officer Versus M/s Agarwal Carriers And Lifters

Case No.: S.B. Sales Tax Revision / Reference No. 132/2020

Click Here To Read The Order