Commercial Leasing Agreement India - DOC by jwe60818

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									     M P COMMERCIAL TAX APPELLATE BOARD, BHOPAL
          Before: D S Mathur, Chairman and Rajeshwar Prasad, Member
                                                            Appeal No A/337/CTAB/04(State)
                                                             Period 01.04.1998 to 31.03.1999

M/s First Leasing Company of India Ltd                                      Appellant
749, Anna Salai,
Chennai

                                                   Versus

The Commissioner,                                                          Respondent

M P Commercial Tax,
Indore


       Shri R L Akotiya, Counsel for the Appellant
       Shri S H Pithawe, Special Govt. Advocate for Respondent.
                                           ORDER
                                          01.08.2008
       This is an appeal u/s 61(2) of the MP Commercial Tax Act, 1994 (hereinafter referred
to as the Act) against an order of the Dy. Commissioner, Commercial Tax, Appellate, Indore
(henceforth referred to as the First Appellate Authority) passed on 11 November 2003 in first
appeal number 150/2002 (State). The Assessing Officer, Indore, Division-1 had decided that
the Appellant Company was liable to pay tax u/s 9-A of the Act. This was contested before
the First Appellate Authority by the Appellant and having failed there the Company has
come before the Board.

2.     We have heard both the parties and have gone through all the relevant record. The
learned Chartered Accountant for the Company has argued that the Appellant Company has
its registered office at Chennai and it has no branch in Madhya Pradesh. After the insertion
of section 9-A in the Act local lease transactions are liable to tax, but lease transactions that
involved inter-state movement of goods were not taxable in the State. Further lease
transactions that were executed at Chennai, as per the decision of the Supreme Court in 20th
Century Finance

                                                                                        Contd. 2
                                               -2-

                                                        Appeal No A/337/CTAB/04(State)
Corporation Ltd., vs State of Maharastra (2000) 119 STC 182, being inter-State transactions,
were not liable to tax in the State. The learned Chartered Accountant for the Company has
tried to distinguish the Full Bench judgements of this Board and has said that these were not
applicable as they related to whole plant/system whereas the instant case is not covered by
these decisions of the Full bench as it relates only to agreements pertaining to
equipments/goods. Once this is accepted the interest and penalty imposed u/s 26(4)(a) and (b)
of the Act cannot stand and need be quashed. The Appellant Company has raised an
additional ground. It has argued that the Assessing Officer had decided the assessment ex
parte. This matter may be permitted to be raised in this appeal. The Appellant Company has
also raised two more additional grounds. Firstly, since the goods liable to be taxed u/s 9-A
are notified on 1 May 1995, no tax can be imposed under this section between 1.4.1995 and
30.4.1995. Secondly, since the Supreme Court has held in 20th Century Finance Corporation
Ltd., vs State of Maharastra (2000) 119 STC 182 that the taxable event is the transfer of right
to use the goods and not the actual use, therefore the Appellant Company should not be liable
to tax in respect of lease agreements executed before 1 May 1995 even if the lease rent for
the same has been received after this date. This second ground has subsequently been
dropped by the learned counsel for the Company. The learned counsel for the Commissioner,
Commercial Tax, MP has argued at length and has said that the transactions are taxable in the
State and therefore the impugned orders should stand.

3.     We cannot admit the additional ground relating to the order having been passed ex
parte. It is a fact that the Appellant Company had not appeared before the Assessing Officer
despite due and adequate notice, and once an ex parte had been passed it made no effort
before the Assessing Officer to get the order reversed in its favour. The First Appellate
Authority has also taken note of this and has taken a view on it. This issue was not raised in
the grounds of appeal before this Board. There is no justification for putting it up before us at
this late stage. The additional ground relating to recovery of tax between 1.4.1995 and
30.4.1995 is admitted for consideration.

                                                                                        Contd 3
                                              -3-

                                                           Appeal No A/337/CTAB/04(State)
4. Section 9-A of the Act reads as under:

         “Every dealer who transfers the right to use any goods, as the State Government
may specify by notification, for any purpose, (whether or not for a specified period) to any
person for cash, deferred payment or other valuable consideration in the course of his
business, notwithstanding anything contained in the provisions of clause (w) of section 2,
shall on the total amount realized or realizable by him during the year by way of payment in
cash or otherwise on such transfer, pay tax at the rate of four per cent on the aggregate of
such amount.”

5.     The Appellant Company, as is admitted, is a dealer doing business of leasing of
machinery and equipment. They have filed a list of customer wise details of lease rentals for
the year under assessment. In some cases relevant invoice details are not available. In some
other cases the invoices are dated earlier to the concerned agreements. There is nothing to
indicate that there existed agreements pursuant to which the purchase orders were placed.
The remaining invoices of equipment/goods date after the date of the agreements. For each
case Equipment Lease Agreement has been produced before this Board. In no case a Master
Lease Agreement has been produced. In some of these cases the date of invoice is earlier
than the date of the Agreement by one or more years.

6.     In the 20th Century Finance Corporation Ltd., vs State of Maharastra (2000) 119
STC 182 the Supreme Court has held that “where the goods are in existence, the taxable
event on the transfer of the right to use goods occurs when a contract is executed between the
lessor and the lessee and situs of sale of such a deemed sale would be the place where the
contract thereof is executed. Thus, where goods to be transferred are available and a written
contract is executed between the parties, it is at that point situs of taxable event on the
transfer of right to use goods would occur and situs of sale of such a transaction would be the
place where the contract is executed.” The Supreme Court has examined this issue again in
Bharat Sanchar Nigam & Another vs Union of India & Others (2006) 8 STJ 497 (SC). The
Court held that “It may be that

                                                                                      Contd. 4
                                              -4-

                                                           Appeal No A/337/CTAB/04(State)
the actual delivery of the goods is not necessary for effecting the transfer of the right to use
the goods but the goods must be available at the time of transfer, must be deliverable and
delivered at some stage.” A Full Bench of this Board had gone into this issue and in
Infrastructure Leasing & Finance Services Ltd., vs Commissioner of Commercial Tax, MP,
Indore (2008) 41 TLD 90 it has held that for deciding the situs of sale at the time of
execution of agreement to transfer of right to use goods must be in existence and should be in
deliverable state failing which the taxable event would be on the delivery of goods. We can
presume that the goods were available and were in deliverable state when the invoice of the
goods was issued in favour of the Appellant Company. Therefore in such cases of transfer of
right to use the goods where the agreement was signed before the goods were available and
deliverable, the taxable event would correctly be on delivery at the destination in the State.
The Appellant Company would therefore be taxable under section 9-A of the Act.

7. It is not clear as to how the Appellant Company has been supplying equipment/machinery
to the parties when there were no written agreements. As has been stated above there are a
number of invoices that have been dated well before the agreements have been signed. These
invoices have been issued on account of the party with which at a later date agreement has
been executed. Since the Appellant Company has not produced any Master Lease Agreement
documents we can only presume that the equipment, machinery etc. have been supplied on
oral agreement or contract. In the 20th Century Finance case the Supreme Court has said that
“where there is an oral or implied transfer of the right to use goods, such transactions may be
effected by the delivery of the goods. In such cases the taxable event would be on the
delivery of goods.” Hence in such cases too we cannot accept the contention of the learned
Chartered Accountant for the Company that these transactions are beyond the purview of
section 9-A of the Act. The question of interest and penalty u/s 26(4)(a) and (b) being
consequential to above issues is now not being discussed.

                                                                                       Contd. 5
                                              -5-

                                                Appeal No A/337/CTAB/04(State)
8.     We now come to the additional ground that we already have allowed for
consideration. This is relating to the period of one month when section 9-A had already been
inserted but notification specifying goods that were taxable under this section had not been
issued. Clearly, no tax is payable by the Appellant Company during this period for such
goods. This ground is allowed.

09..   In the light of above discussion appeal is allowed partially.




Rajeshwar Prasad                                                       D S Mathur
      Member                                                            Chairman
     M P COMMERCIAL TAX APPELLATE BOARD, BHOPAL
      Before: D S Mathur, Chairman and Rajeshwar Prasad, Member
                                                           Rest. Appli. No 60/CTAB/06(C T)
                                                                  Period 01.04.1997 to 31.03.1998

M/s Askihi Tech Agencies P.Ltd                                           Applicant
Indore

                                                  Versus

The Commissioner,                                                      Non. Applicant

M P Commercial Tax,
Indore


Shri Tarun H Doshi Chartered Counsel for the Applicant
Shri R K Arjaria, Special Govt. Advocate for Non Applicant.

                                    ORDER
                                    01.08.2008
       Second appeal number A-351-CTAB-04 (Central) was dismissed in default on 21
November 2006 by a Division Bench of this Board for non-appearance of the Appellant even
after due notice. The Appellant moved an application under Rule 79(4) of MP Commercial
Tax Rules, 1995 on 23 December 2006. The copy of the order of dismissal had been served
on the Appellant on 5 December 2006. The Rule quoted above permits a period of thirty days
for moving an application for restoration. The application is clearly within time. The
Appellant claims that he had sent an application for adjournment on the fixed date. This
document is not on record obviously not having been received in the office of Registrar when
the appeal had come up for hearing.

2.     The Applicant has been remiss in ensuring that he was duly represented before the
Board. However, we take a lenient view in the matter and order that the appeal may be
restored and taken up for hearing if the Applicant deposits Rs750 towards cost within fifteen
days of knowledge of this order of restoration. Application allowed.




               Rajeshwar Prasad                                     D S Mathur
               Member                                               Chairma
M P COMMERCIAL TAX APPELLATE BOARD, BHOPAL
      Before: D S Mathur, Chairman and Rajeshwar Prasad, Member
                                              Rest. Appli. No 46/CTAB/06(E T)
                                                    Rest. Appli. No 47/CTAB/06(C T)
M/s Askihi Tech Agencies P.Ltd                                          Applicant
Indore

                                                  Versus

The Commissioner,                                                      Non. Applicant

M P Commercial Tax,
Indore

Shri Tarun H Doshi Chartered Counsel for the Applicant
Shri R K Arjaria, Special Govt. Advocate for Non Applicant.
                                      ORDER
                                      01.08.2008
       Second appeal numbers A-278-CTAB-05 ET and A-279-CTAB-05 (Central) u/s
61(2) were dismissed in default on 10 August 2006 by a Single Bench of this Board for non-
appearance of the Appellant even after due notice. The Appellant moved an application under
Rule 79(4) of MP Commercial Tax Rules, 1995 on 4 October 2006. The copy of the order of
dismissal had been served on the Appellant on 7 September 2006. The Rule quoted above
permits a period of thirty days for moving an application for restoration. The application is
clearly within time. The Appellant claims that he had sent an application for adjournment on
the fixed date. This document is on record having been received in the office of Registrar on
11 August 2006 by when the appeal had already been dismissed.

2.      The Applicant has been remiss in ensuring that he was duly represented before the
Board. However, we take a lenient view in the matter and order that the appeal may be
restored and taken up for hearing if the Applicant deposits Rs750 towards cost within fifteen
days of knowledge of this order of restoration. Application allowed.

3.     The facts and legal point involved in the two appeals referred above are similar. This
order would apply to each of them in equal measure.

               Rajeshwar Prasad                                    D S Mathur
               Member                                              Chairman
     M P COMMERCIAL TAX APPELLATE BOARD, BHOPAL
      Before: D S Mathur, Chairman and Rajeshwar Prasad, Member
                                                          Appeal No A/467/CTAB/06(State)
                                                           Period 01.04.1998 to 31.03.1999
M/s L G Electronics (India) Pvt Ltd                                    Appellant
M G Road
Indore
                                                 Versus

The Commissioner,                                                       Respondent

M P Commercial Tax,
Indore

              Shri Manoj Munshi, Counsel for the Appellant
       Shri S H Pitwe, Special Govt. Advocate for Respondent.
                                         ORDER
                                         1.08.2008
       M/s LG Electronics (India) Pvt. Ltd., have presented this appeal u/s 62(4) of the MP
Commercial Tax Act, 1994 (hereinafter referred to as the Act) against an order of the
Additional Commissioner, Commercial Tax, Indore dated 5 July 2005 in revision number
1/2005/State/Indore. The Appellant Dealer had been assessed for the year 1998-99 and had
not been allowed benefit of certain discounts by the Assessing Officer. Later, the matter was
re-examined u/s 71 of the Act by the Assessing Officer and the benefit was allowed on 22
July 2002 in case number 93/1999. This was subsequently taken up in revision by the
Additional Commissioner on his own volition under section 62 of the Act. The Additional
Commissioner has vide his impugned order set aside the order of the Assessing Officer dated
22 July 2002 and has restored the additional demand created by the Assessing Officer vide
his original order dated 19 April 2002.

2.     Aggrieved by this order the learned counsel for the Dealer has argued that though
rectification has been cancelled, reassessment has not been ordered. As the assessment order
had merged with the rectification order, a fresh assessment is called for. He has also stated
that the Additional Commissioner has erred in not deciding the matter relating to discounts.
The learned

                                                                                 Contd. 2
                                              -2-

                                                    Appeal No A/467/CTAB/06(State)
Representative of Commissioner Commercial Tax, MP has argued that the Appellant Dealer
had filed a review petition before the Additional Commissioner on 11 October 2005 for the
review of his impugned order and had pressed for a fresh assessment. This was disallowed.
Since the learned counsel for the Dealer has not come in appeal before the Board against this
order the instant appeal should not be entertained prima facie. Further, the order of the
Assessing Officer u/s 71 of the Act is of the nature of a review of the earlier assessment order
of the Assessing Officer for which he is not competent. Hence there was no need for the
Additional Commissioner to remand the case for a fresh assessment.

3.      The Additional Commissioner, exercising the powers available to the Commissioner
u/s 62(3) has passed an order after he was satisfied that the impugned order was erroneous in
so far as it was prejudicial to the interest of revenue. This issue is not disputed. The
Appellant Dealer has objected to the fact that despite the legal provision in this section, the
Additional Commissioner has not ordered a fresh assessment. The relevant portion of the
section reads as follows:

              “……..he may after giving the dealer or person a reasonable opportunity of
being heard, after making or causing to be made such enquiry as he deems necessary, pass
such order thereon, within one calendar year from the date of initiation of proceeding as the
circumstances of the case justify, including an order enhancing or modifying the assessment
or cancelling the assessment and directing a fresh assessment…..”

       It is clear from a plain reading of the section that the part “including an order
enhancing or modifying the assessment or cancelling the assessment and directing a fresh
assessment…..” of the section is only illustrative and it does not fetter the discretion of the
Additional Commissioner to pass such order as the circumstances of the case justify. This
section confers on the Commissioner very extensive powers to safeguard the interest of the
revenue. He is not bound, in every case of suo motu revision under this section to order a
fresh assessment.

                                                                                       Contd. 3
                                              -3-

                                                            Appeal No A/467/CTAB/06(State)


4.     The Additional Commissioner had taken up the question of acceptance of discounts
for the purpose of fixation of tax liability in this suo motu revision as he had concluded that
the Assessing Officer had passed an order u/s 71 of the Act that was prejudicial to the interest
of revenue. He was not obliged to decide on the admissibility or otherwise of the discounts.

5.     We therefore are unable to accept the arguments of the learned counsel for the Dealer.
We see no reason to interfere in the exercise of discretion by the Additional Commissioner.
The impugned order stands. The appeal is disallowed.



       Rajeshwar Prasad                                      D S Mathur
       Member                                                Chairman
     M P COMMERCIAL TAX APPELLATE BOARD, BHOPAL
      Before: D S Mathur, Chairman and Rajeshwar Prasad, Member
                                                           Appeal No A/203/CTAB/06(E T)
                                                            Period 01.04.2000 to 31.03.2001
M/s Samata Foods Ltd                                                    Appellant
22. Santha Bazar,
Indore
                                                  Versus

The Commissioner,                                                       Respondent

M P Commercial Tax,
Indore


       Shri A K Jain, Counsel for the Appellant
       Shri S H Pitwe, Special Govt. Advocate for Respondent.
                                         ORDER
                                         01.08.2008
       This is a second appeal u/s 61(2) of the MP Commercial Tax Act, 1994 (hereinafter
referred to as the Act) read with section 13 of the MP Entry Tax Act, 1976 (referred to as the
Entry Tax Act in this order). The Assessing Officer had assessed the Appellant Company for
entry tax for the year 2000-01. Aggrieved by this order the Appellant Company preferred an
appeal before the Additional Appellate Dy. Commissioner, Commercial Tax, Indore (referred
to as the First Appellate Authority in this order). The First Appellate Authority has
disallowed the appeal vide his order dated 24 September 2005 passed in case number Indore-
3/48/04/(Entry Tax).

2.     The learned Authorised Representative of the Company has stated that the Company
had invested Rs604.86 lakhs in expansion of their capacity. The Company had set up a new
unit. In the expanded capacity production had commenced from 26 October 2001. Therefore
purchase of plant and machinery prior to commencement of production cannot be taken as in
the course of business. Hence entry tax assessed on purchase of this plant and machinery is
not as per law and should be set aside. The learned Representative of the Commissioner,
Commercial Tax has argued that the Appellant Company has carried out an expansion of
their established capacity for which the above plant and machinery was purchased. The
Appellant Company’s production was

                                                                                     Contd. 2
                                                 -2-

                                                      Appeal No A/203/CTAB/06(E T)
going on from before this expansion. The expansion was carried out while the production
was in progress. Therefore the purchase of plant and machinery should be taken in the course
of business. This Board in ACC Limited, Bhopal vs Commissioner, Commercial Tax, Madhya
Pradesh, Indore (2007) 11 STJ 46 had decided that the Company was liable to pay entry tax.
The facts of this appeal are similar to the facts in the citation.

3.      The Appellant Company has produced a set of documents that has bearing on the
facts of this case. We have perused these papers. They establish that the Appellant Company
had added capacity to their existing unit through expansion by way of investment in plant
and machinery referred to above. The Company has been in production and its maximum
production during the period under assessment has been 29600.80 MT. Its maximum
capacity is 30,000 MT. It is undisputed that when the purchase of plant and machinery took
place the Company was in peak production.

4.      Section 3(1)(a) of the Entry Tax Act says that entry tax would be levied on the entry
in the course of business of a dealer of goods specified in Schedule II, into each local area for
use therein. Plant and machinery are covered under entry 54 of this Schedule.

5.      As has been seen, the purchases of plant and machinery were made by the Appellant
Company while the production was going on apace. It is not true to say that the plant and
machinery were purchased when the Appellant Company was not in production. These
purchases were meant to add to the already existing and functioning capacity for production.
The Appellant Company has not set up a new independent unit but it has enhanced its
existing capacity by this expansion. Therefore it is inescapable to conclude that the purchases
were in the course of business. Hence we agree with the conclusion of the Board in the case
of ACC Limited referred to above. The impugned order of the First Appellate Authority is
therefore maintained. This appeal is disallowed.




        Rajeshwar Prasad                                        D S Mathur
        Member                                                  Chairman
     M P COMMERCIAL TAX APPELLATE BOARD, BHOPAL
          Before: D S Mathur, Chairman and Rajeshwar Prasad, Member
                                                            Appeal No A/336/CTAB/04(State)
                                                             Period 01.04.1995 to 31.03.1996
M/s First Leasing Company of India Ltd                                   Appellant
749, Anna Salai,
Chennai

                                                   Versus

The Commissioner,                                                         Respondent

M P Commercial Tax,
Indore

Shri R L Akotiya, Counsel for the Appellant
Shri S H Pithawe, Special Govt. Advocate for Respondent.
                                           ORDER
                                          01.08.2008
       This is an appeal u/s 61(2) of the MP Commercial Tax Act, 1994 (hereinafter referred
to as the Act) against an order of the Dy. Commissioner, Commercial Tax, Appellate, Indore
(henceforth referred to as the First Appellate Authority) passed on 10 November 2003 in first
appeal number 151/2002 (State). The Assessing Officer, Indore, Division-1 had decided that
the Appellant Company was liable to pay tax u/s 9-A of the Act. This was contested before
the First Appellate Authority by the Appellant and having failed there the Company has
come before the Board.
2.      We have heard both the parties and have gone through all the relevant record. The
learned Chartered Accountant for the Company has argued that the Appellant Company has
its registered office at Chennai and it has no branch in Madhya Pradesh. After the insertion
of section 9-A in the Act local lease transactions are liable to tax, but lease transactions for
Rs1,96,55,636 involved inter-state movement of goods and were not taxable in the State.
Further lease transactions for Rs1,68,52,604 were executed at Chennai and hence as per the
decision of the Supreme Court in 20th Century Finance           Corporation Ltd., vs State of
Maharastra (2000) 119 STC 182, being inter-State transactions, were not liable to tax in the
State. The learned Chartered Accountant for the Company has tried to distinguish the Full
Bench
                                                                                       Contd. 2
                                                          Appeal No A/336/CTAB/04(State)
judgements of this Board and has said that these were not applicable as they related to whole
plant/system whereas the instant case is not covered by these decisions of the Full bench as it
relates only to agreements pertaining to equipments/goods. Once this is accepted the interest
and penalty imposed u/s 26(4)(a) and (b) of the Act cannot stand and need be quashed. The
Appellant Company has raised two additional grounds. Firstly, since the goods liable to be
taxed u/s 9-A are notified on 1 May 1995, no tax can be imposed under this section between
1.4.1995 and 30.4.1995. Secondly, since the Supreme Court has held in 20th Century Finance
Corporation Ltd., vs State of Maharastra (2000) 119 STC 182 that the taxable event is the
transfer of right to use the goods and not the actual use, therefore the Appellant Company
should not be liable to tax in respect of lease agreements executed before 1 May 1995 even if
the lease rent for the same has been received after this date. The learned counsel for the
Commissioner, Commercial Tax, MP has argued at length and has said that the transactions
are taxable in the State and therefore the impugned orders should stand.
3.     We admit both the additional grounds for consideration.
4.     Section 9-A of the Act reads as under:
         “Every dealer who transfers the right to use any goods, as the State Government
may specify by         notification, for any purpose, (whether or not for a specified period) to
any person for cash, deferred payment or other valuable consideration in the course of his
business, notwithstanding     anything contained in the provisions of clause (w) of section 2,
shall on the total amount realized    or realizable by him during the year by way of payment
in cash or otherwise on such transfer, pay    tax at the rate of four per cent on the aggregate
of such amount.”
5.      The Appellant Company, as is admitted, is a dealer doing business of leasing of
machinery and equipment. They have filed a list of customer wise details of lease rentals for
the year under assessment. In two cases invoice details are not available. Most of the
remaining invoices of equipment/goods date after the date of the agreements but in the cases
of Shree Synthetics Ujjain, IPCA Laboratories Ratlam, Johnson & Johnson Indore, Prakash
industries Champa, Varun Cements Indore and Phiroze Sethna Pithampur the invoices date
earlier than the agreements that have been filed before us. For each case Equipment Lease
Agreement has been produced before this Board. In no case a Master Lease Agreement has
been produced. In some of these cases the date of invoice is earlier than the date of the
Agreement by one or more years. In another case, the machinery was already in place since
several years before the agreement was signed.
                                                                                 Contd. 3
                                              -3-
                                                      Appeal No A/336/CTAB/04(State)
6.     In the 20th Century Finance Corporation Ltd., vs State of Maharastra (2000) 119
STC 182 the Supreme Court has held that “where the goods are in existence, the taxable
event on the transfer of the right to use goods occurs when a contract is executed between the
lessor and the lessee and situs of sale of such a deemed sale would be the place where the
contract thereof is executed. Thus, where goods to be transferred are available and a written
contract is executed between the parties, it is at that point situs of taxable event on the
transfer of right to use goods would occur and situs of sale of such a transaction would be the
place where the contract is executed.” The Supreme Court has examined this issue again in
Bharat Sanchar Nigam & Another vs Union of India & Others (2006) 8 STJ 497 (SC). The
Court held that “It may be that the actual delivery of the goods is not necessary for effecting
the transfer of the right to use the goods but the goods must be available at the time of
transfer, must be deliverable and delivered at some stage.” A Full Bench of this Board had
gone into this issue and in Infrastructure Leasing & Finance Services Ltd., vs Commissioner
of Commercial Tax, MP, Indore (2008) 41 TLD 90 it has held that for deciding the situs of
sale at the time of execution of agreement to transfer of right to use goods must be in
existence and should be in deliverable state failing which the taxable event would be on the
delivery of goods. We can presume that the goods were available and were in deliverable
state only when the invoice of the goods was issued in favour of the Appellant Company.
Therefore in such cases of transfer of right to use the goods where the agreement was signed
before the goods were available and deliverable, the taxable event would correctly be on
delivery at the destination in the State. The Appellant Company would therefore be taxable
under section 9-A of the Act.
7.     It is not clear as to how the Appellant Company has been supplying
equipment/machinery to the parties when there were no written agreements. As has been
stated above there are a number of invoices that have been dated well before the agreements
have been signed. These invoices have been issued on account of the party with which at a
later date agreement has been executed. Since the Appellant Company has not produced any
Master Lease Agreement documents we can only presume that the equipment, machinery etc.
have been supplied on oral agreement or contract. In the 20th Century Finance case the
Supreme Court has said that “where there is an oral or implied transfer of the right to use
goods, such transactions may be effected by the delivery of the goods. In such cases the
taxable event would be on the delivery of goods.” Hence in such cases too we cannot accept
the contention of the learned Chartered Accountant for the Company that these transactions
are beyond the purview of section 9-A of the Act. The question of interest and penalty u/s
26(4)(a) and (b) being consequential to above issues is now not being discussed.
Contd. 4
                                              -4-
                                                  Appeal No A/336/CTAB/04(State)
8.     We now come to the two additional grounds that we already have allowed for
consideration. The first is relating to the period of one month when section 9-A had already
been inserted but notification specifying goods that were taxable under this section had not
been issued. Clearly, no tax is payable by the Appellant Company during this period for such
goods. This ground is allowed.
9.     The learned Chartered Accountant for the Company for the Appellant Company has
also argued as the second additional ground that such agreements as had been executed prior
to 1 May 1995 should be beyond the mischief of section 9-A. A Full Bench of this Board has
already gone into this issue in detail in Bajaj Auto Finance Ltd., vs Commissioner
Commercial Tax, MP second appeal number A 663/CCT/03 (State) and has held that tax
would be payable on amounts realized or realizable during the year against agreements that
had been executed before 1 May 1995. We are in agreement with this view.
10.    In the light of above discussion appeal is allowed partially.



              Rajeshwar Prasad                                         D S Mathur
              Member                                                   Chairman

								
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