IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 07.07.2011 Coram The Honourable Mrs.Justice CHITRA VENKATARAMAN and The Honourable Mr.Justice M.JAICHANDREN TC(R).Nos. 236 and 498 of 2006 The State of Tamilnadu rep. By the Deputy Commissioner (CT) Chennai (North) Division Greams Road, Chennai 600 006 ... Petitioner in both revisions -vs- Tvl. Elcome Surveys Pvt.Ltd No. D- 222/30 TTC Industrial Area MIDC NERVL. Navy, Mumbai ... Respondent in both revisions Revision Petition filed under Section 38 of the Tamil Nadu General Sales Tax Act to revise the orders of the Sales Tax Appellate Tribunal (Additional Bench), Chennai passed in S.T.A. No.1210 of 2000 and 918 of 2001 dated 23.12.2003. against the order of the Appellate Assistant Commissioner (CT), Chennai 1, dated 7.3.2000 and made in Appeal No & year AP.299/97 & AP334/97 against the order of the Deputy Commercial Tax Officer, Harbour 1, Assessment Circle, Chennai dated 12.5.1997 in Asst No. year RC 3132/96/B1/91-92 & RC 3132/96/B1/93-94. For Petitioner : Mr.R.Sivaraman, Special Government Pleader (Taxes) For respondent : Mr.N.Inbarajan ORDER (Order of the Court was made by M.JAICHANDREN,J) The Tax Case Revisions have been filed against the common order of the Sales Tax Appellate Tribunal (Additional Bench), Chennai, dated 23.12.2003, confirming the order of the Appellate Assistant Commissioner (CT), dated 7.3.2000. 2. In Tax Case (Revision) No.236 of 2006, the following substantial questions of law have been framed: https://hcservices.ecourts.gov.in/hcservices/ "Whether the Sales Tax Appellate Tribunal is right in holding that in order to attract the provisions of Section 3-A of the T.N.G.S.T Act, 1959, delivery and possession of the goods by the lessor to the lessee is a sine qua non? 2. Whether the Sales Tax Appellate Tribunal is right in holding that the impugned transactions will not fall under the purview of Section 3-A of the T.N.G.S.T Act, 1959, since the delivery of the equipments stated to have been leased out was not handed over to the lessee, the ONGC?" 3. In Tax Case (Revision) No.498 of 2006, the following substantial question of law has been framed: "Whether the Tribunal is right in concluding that in order to attract the levy of tax under Section 3A of the Tamil Nadu General Sales Tax Act, whether the possession of the goods has to be given to the user of the goods." 4. The order under challenge relates to assessment years 1991- 92 and 1993-94. The respondent is a private limited company engaged in the activity of off-shore oil exploration for Government contractors, viz., O.N.G.C, Shipping Corporation of India and Madras Refineries Limited. For carrying out such activities, the respondent has been deploying equipments required by its customers and it has been collecting the hire charges, by raising separate bills for the leasing of its shore based Radio Positioning Navigation Chains, for determining the position of the drilling rigs and other off shore work sets. The place of business of the sister concern of the respondent firm was inspected by the officers of the Enforcement Wing, on 6.7.1993, and certain records, relating to the Bombay concern were recovered by issue of D-7 acknowledgement. The Assessing Officer determined the taxable turnover as Rs.9,55,430/- for the assessment year 1991-1992 and as Rs.16,52,023/-, for the assessment year 1993-1994, under the Tamil Nadu General Sales Tax Act, 1959. On the disputed turnover for the assessment year 1991-1992 and 1993-1994, apart from surcharge, additional surcharge, and penalty was also levied, under Section 12 (3) of the Tamil Nadu General Sales Tax Act, 1959. Aggrieved by the same, the respondent assessee filed appeals before the Appellate Assistant Commissioner (CT), Chennai. The said appeals was allowed by a common order, dated 7.3.2000. The said order had been challenged by the Revenue before the Sales Tax Appellate Tribunal (Additional Bench), Chennai. By an order, dated 23.12.2003, the Appellate Tribunal had confirmed the order of the Appellate Assistant Commissioner (CT), Chennai, dated 7.3.2000. Challenging the said order of the Tribunal, the present tax appeals have been filed, before this Court, by the Revenue. The Appellate Assistant Commissioner, as well as the Sales Tax Appellate Tribunal had decided the issues in favour of the assessee, based on the records available. https://hcservices.ecourts.gov.in/hcservices/ 5. With regard to question as to whether there was a transfer of the right to use the equipments in question, it had been found that the O.N.G.C. had imported the equipments viz., the R.P. Chain and the radio paging system, from Dubai, and they had been used by the respondent company, by deployment of the equipments, with their specialised personnel, and that no other person had any access to the equipments, except to the staff of the respondent company. As such, the Tribunal held that there was no transfer of the right to use the equipments. Even the O.N.G.C. had no right to use the equipments on their own. However, the physical possession and the effective control of the equipments had been given to O.N.G.C. Even though the possession of the equipments was with O.N.G.C., they had been operated only by the personnel from the respondent company. In such circumstances, Section 3-A of the Tamil Nadu General Sales Tax Act, 1959, does not get attracted. The Sales Tax Appellate Tribunal had found that the transactions cannot be treated as one falling under Section 3-A of the Act, warranting levy of tax, as the transactions were in the nature of services and there was no transfer of the right to use the goods in question. Thus, the Tribunal had confirmed the view of the Appellate Assistant Commissioner. Accordingly, the Sales Tax Appellate Tribunal had dismissed the appeal filed by the Revenue. 6. In view of the findings of fact relating to the question, with regard to the applicability of Section 3-A of the Tamil Nadu General Sales Tax Act, 1959,we find that it is not necessary for this Court to go into the aspect of limitation, at this stage. In such circumstances, the tax case appeals stand dismissed. No costs. csh/bg Sd/- Asst. Registrar //True Copy// Sub Asst. Registrar To 1. The Deputy Commissioner (CT) Chennai (North) Division Greams Road, Chennai 600 006 2. The Sales Tax Appellate Tribunal (Additional Bench), Chennai. https://hcservices.ecourts.gov.in/hcservices/ 3.The Appellate Assistant Commissioner (CT), Chennai 1. 4.The Deputy Commercial Tax Officer, Harbour 1, Assessment Circle, Chennai. + 1 cc to Mr. N. Inbarajan, Advocate SR No.39995 + 1 cc to Spl Government Pleader, SR No.40181 & 40185 GV(CO) SR/5.9.2011 TC(R).Nos. 236 and 498 of 2006 https://hcservices.ecourts.gov.in/hcservices/