M/S. Goa Carbon Ltd vs Commissioner Of Trade Tax

7. On remand, the A.O. held that in the lease agreement dated 24.3.92 there was a warranty clause which indicated that M/s. Kesar Enterprises Limited had selected the equipments which were leased out to it prior to its purchase by the assessee. A.O. came to the conclusion that the equipment was purchased prior to the execution of the lease dated 24.3.92. According to A.O., in view of the said clause in the said lease the assessee was called upon to produce the agreement/arrangement either oral or written pursuant to which the equipment stood purchased by the assessee. According to A.O., despite opportunity the assessee failed to produce such agreement/arrangement. Further, the A.O. also relied upon an invoice dated 26.2.92 under which the assessee had purchased boilers and turbines from Punjab Chemicals and Pharmaceuticals Ltd., Dist. Patiala, Punjab, in which there was reference to the Purchase Order dated 28.11.91 which indicated that the equipment was purchased under an agreement/arrangement prior to lease agreement dated 24.3.92 which lease has shown to have been executed at Mumbai as an afterthought and in order to earmark the transaction as an outside sale. This finding of the A.O. was confirmed once again by the Deputy Commissioner (A). It was held that since the equipment was purchased on 26.2.92 (as indicated by the invoice at page No.36 of the S.L.P. Paper Book), the movement of the said equipment cannot be said to have taken place from ex-U.P. place to Baheri in U.P. in pursuance of the lease dated 24.3.92. It was further held that the Letter of Intent dated 29.10.91 was not a part of the lease. Consequently, the appeal filed by the assessee stood dismissed. The concurrent findings, above-mentioned, were affirmed by the Tribunal vide its order dated 6.5.06. The Tribunal further held that there was no merit in the argument of the assessee that lease agreement was executed pursuant to Letter of Intent dated 29.10.91, particularly, when there was no indication to that effect in the lease. According to the Tribunal, had the lease been executed in continuation of the Letter of Intent, there would have been reference to such letter in the lease and in the absence of such reference it cannot be said that the lease stood executed pursuant to the Letter of Intent. Consequently, the appeal filed by the assessee before the Tribunal stood dismissed. The Tax Revisions, filed by the assessee before the High Court, have also been dismissed, hence this civil appeal.

11. For the aforestated reasons, we are in agreement with the view expressed by the Tribunal that the entire arrangement was got up in order to project the impugned transaction as an outside sale so that the said transaction does not come within the ambit of Section 3F of the 1948 Act. The High Court has given reasons with which we do not agree in entirety though we agree with the operative part of its judgment dismissing the appeal of the assessee.

12. For the aforestated reasons, in the facts of the present case, we do not wish to interfere with the finding of fact recorded by the Tribunal in the present case. Accordingly, the civil appeal is dismissed with no order as to costs.