V.Rengasamy, J. (Vice Chairman) - (1.) ALL these original petitions have been filed to set aside the orders of assessments for the assessment years 1986 -87 to 1996 -97 against Sundaram Finance Ltd. and for 1993 -94 to 1998 -99 against Ashok Leyland Finance Ltd. The assessment orders against Sundaram Finance Ltd. were passed under Section 3 -A of the Tamil Nadu General Sales Tax Act, 1959 on March 10, 2000 by the assessing authority levying tax for the lease of machineries. Ashok Leyland Ltd. also had leased out the machineries. Assessment order was passed against them on February 29, 2000 on the turnover relating to the transaction of lease. The petitioners would contend that the assessing authority has levied tax on these petitioners following the decision of this Tribunal in Upasana Finance Ltd. v. State of Tamil Nadu [1999] 113 STC 403 on the basis of the location of the machineries given on lease, but the apex Court in Civil Appeal No. 4500 of 1989 dated May 9, 2000 has reversed the decision in 20th Century Finance Corporation Ltd. v. State of Maharashtra [1989] 75 STC 217 (Bom) which was relied upon by this Tribunal to uphold the validity of Section 3 -A of the Tamil Nadu General Sales Tax Act, 1959 and as the apex Court in the recent decision has held that the location of the goods cannot be the ground for levying the tax under Section 3 -A and that the situs of sale on the legal, fiction is referable to the place where the agreement was entered into for transferring the right and if such deemed sale takes place outside the State or in the course of inter -State trade or commerce, such sales are not taxable under Section 3 -A of the Tamil Nadu General Sales Tax Act, the decision of the apex Court is contrary to the view taken by this Tribunal in Upasana Finance Ltd. v. State of Tamil Nadu [1999] 113 STC 403 which was relied upon by the assessing authority to levy tax in these cases and therefore the orders of assessments have to be set aside with a direction to pass fresh orders in the light of the decision of the apex Court.
(2.) THE learned counsel Mr. K.J. Chandran appearing for the petitioners - -Sundaram Finance Ltd. contended that when the validity of Section 3 -A was questioned before this Tribunal, this Tribunal relying upon the decision of the Bombay High Court in 20th Century Finance Corporation Ltd. v. State of Maharashtra [1989] 75 STC 217 has upheld the validity of Section 3 -A which is reported in Upasana Finance Ltd. v. State of Tamil Nadu [1999] 113 STC 403 (TNTST) expressing the view that the location of the goods given for use, under the agreement is the criteria for levying tax under Section 3 -A of the Tamil Nadu General Sales Tax Act, but as this view of the Tribunal has been dissented by the apex Court in the abovesaid Civil Appeal No. 4500 of 1989 (20th Century Finance Corporation Ltd. v. State of Maharashtra) [2000] 119 STC 182 laying down the principle that the situs of sale is not with reference to the place of the goods to be used, but the place where the written agreement transferring the right to use was executed and in the case of oral or implied transfer when the goods were not in existence, the taxable event would be on the delivery of the goods and as these dictums have come from the judgment of the apex Court only on May 9, 2000 subsequent to the order of assessments, the necessity has arisen to direct the assessing authority to pass orders afresh according to the principles laid down by the apex Court and therefore, all these assessment orders are to be set aside. The final conclusion of the apex Court is extracted in the affidavit of the petitioners and the results of the conclusion are as follows : "(a) The States in exercise of power under entry 54 of List II read with Article 466(29A)(d) are not competent to levy sales tax on the transfer of right to use goods, which is a deemed sale, if such sale takes place outside the State or is a sale in the course of inter -State trade or commerce or is a sale in the course of import or export. (b) The appropriate Legislature by creating legal fiction can fix situs of sale. In the absence of any such legal fiction the situs of sale in case of the transaction of transfer of right to use any goods would be the place where the property in goods passes, i.e., where the written agreement transferring the right to use is executed. (c) Where the goods are available for the transfer of right to use the taxable event on the transfer of right to use any goods is on the transfer which results in right to use and the situs of sale would be the place where the contract is executed and not where the goods are located for use. (d) In cases where goods are not in existence or 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. (e) The transaction of transfer of right to use goods cannot be termed as contract of bailment as it is deemed sale within the meaning of legal fiction engrafted in clause (29A)(d) of Article 466 of the Constitution wherein the location or delivery of goods to put to use is immaterial." It is pertinent to mention at this stage that all these petitioners have filed appeals before the Appellate Assistant Commissioner against the orders of assessments. On a reading of the assessment orders against the assessee - -Sundaram Finance Ltd., inner page 4 of the assessment order shows that the assessee had taken three contentions, namely, (1) the lease of the goods were in the course of import from other countries ; (2) the deemed sales were in the course of inter -State sales and (3) the leased goods were purchased prior to April 1, 1986 from outside the State and therefore, Section 3 -A was not applicable for such leases. In the assessment orders against Ashok Leyland Finance also, the contention of the assessee was that the deemed sales, namely, leases were inter -State and the customers directly took delivery of the goods and therefore, the transaction was covered by Section 3(a) of the Central Sales Tax Act, 1956 and it cannot be taxed under Section 3 -A of the Tamil Nadu General Sales Tax Act, 1959. The assessing authority have discussed the claims raised by the assessee and in so far as Sundaram Finance Ltd. is concerned, the assessing authority would observe that the goods said to have been imported from other countries and goods received from outside the State were kept in the stocks of the assessee and let on lease. It is further stated that the assessee had claimed depreciation every year on the assets and as the goods were let out even after the expiry of the agreement and the possession of the goods remained with the lessor, the transaction does not fall under Section 5(2) of the Central Sales Tax Act, 1956. It is also further observed that the goods in the inter -State sales were not taken delivery by the customer and as the goods were in the possession of the lessor, the liability arose under the Tamil Nadu General Sales Tax Act.
(3.) IN so far as the petitioner - -Ashok Leyland Ltd. is concerned, the assessment order reads as follows : "The dealers' contention that the goods were actually delivered direct to the customers from outside the State would be clearly evident and in other words, the goods satisfy the condition of movement as contemplated under Section 3(a) of the Central Sales Tax Act, 1956 and can be characterised only as an inter -State movement and by no stretch of imagination, be treated as local sale, is not acceptable as the goods referred are the property of the dealers and the dealers have collected lease rentals of the goods, purchased from dealers outside the State, have not suffered tax under the Tamil Nadu General Sales Tax Act which is assessable to tax under Section 3 -A". Therefore the assessing authority has taken the view that the petitioners have purchased the goods from outside the State, and while they were owners of the goods, had given lease of the goods to the customers and therefore, it is taxable under Section 3 -A of the Tamil Nadu General Sales Tax Act. The assessment orders referred to above had not anywhere mentioned that the assessee had taken the plea that the agreements were entered into outside the State for transferring the right to use or that the delivery was given effect to outside the State of Tamil Nadu. They contended that the deemed sales were in the course of import or in the course of inter -State trade which has been rejected by the assessing authority from the evidence. Further, the finding of the assessing authority is that the goods were in the possession of the assessee for giving lease of them to the customers. Therefore, when such is the finding of the assessing authority, the assessment orders cannot be set aside for the decision of the apex Court which lays down only the principles. The petitioners are only to establish by evidence that the fictional sales were in the course of import, or inter -State sales. As the points raised by the petitioners are purely on question of fact, which could be considered only by the appellate authority, the relief sought for in these original petitions to set aside the orders of assessments cannot be granted. Therefore, all these original petitions are dismissed. The petitioner contends that appeals have not been filed in O.P. Nos. 804 of 2000 and 805 of 2000. If, as stated by the petitioner, appeals have not been filed, the time taken for these proceedings shall be excluded for computation of the period of limitation for filing appeal. Original documents, if any filed, shall be returned to the petitioner. And this Tribunal doth further order that this order on being produced be punctually observed and carried into execution by all concerned. Issued under my hand and the seal of this Tribunal on the 5th day of July, 2000.;