The High Court · 2025

Counsel for the Petitioner in all TREVCs : SC FOR COMMERCIAL TAX Counsel for the Respondent in all TREVCs : SRI B+IASKAR REDDY VEMIREDDY The Court made the following: COMMON ORDER '"r;i: 1:.' a.= ::!tE:-nt-l :1- _. ,') --r- THE HON'BLE SRI JUSTICE T. VINOD KUI4AR AND THE HON'BLE SRI JUSTICE NAMAVARAPU RA'EStIWAR RAO TREVC Nos.10, 11, 12. 14 and 26 of 2019 and 4i, of 2022 COMMON ORDER i (per the Honble SriJustice T.Vinod Kumar) Since all these Tax Revision Cases arise out of tlrr common order dt.29.0i.2018 passed by the Telangana Value Addec Tax Appellate Tribunal, Hyderabad (for short, 'the Tribunal') in TA.NI,.4B9 to 495 of 2011 and 107 of 2012, and the assessee being one ancl I .re same, all the revision cases are being disposed of by this common ordt:

2. The F.evenue-State is the petitioner in all the rev s;ion cases filed being aggrieved by the order of the Tribunal, wherety the Tribunal following its order rendered in earlier years 2002-03 to 2()rl4-05 under the Andhra Pradesh General Sales Tax Act, 2005 (for short, :re ApGST Act,) and years 2005-06 in T.A.Nos.BBB, BB9, 890 and 891 c,' 2008 by order d1.25.04,2017, had held that supply of items, such eis utensils, sofas, chairs, wash basins etc., by the petitioner therein to its (:ustomers does not constitur:e "transfer of right to use,,, so as to brinq them under the ambit of taxation under Section 5E of the APGST Act or rrr cler Section 4(B) of the Telangana Value Added Tax Act (for short, .the VAI ,\ct,). 2

3. In the present revision, the assessment years involved are 2006-07 - tax and 2007-08,2008-09 and 2009-10 - penalty proceedings of the concerned years as detailed in the tabie below: \ Sl.No. TREVC No. T.A,No. Assessment Year Nature of levy 1 rtlt9 12199 !4119 26119 451t9 2 3 4 5 L_1 49tltl 494ltt r07ltz 2007-08 2008-09 2009-10 4931lt 2008-09 2006-07 492111 2007-08 Tax Penalty Penalty Tax Penalty Pcnalty

4. Heard learned Standing Counsel appearing for Commercial Taxes for the petitioner-State and learned counsel appearing on behalf of the respondent-assessee in all these revisions and perused the record.

5. The facts in all the cases are the respondent-assessee is engaged in the business of supply of items, such as furniture, carpets, tables, pandals, utensils, chairs, sofas and wash basins etc., to customers for use by them in Functions organized/celebrated by them; and that the premises of the respondent-assessee was inspected by the officials oF Regional Vigilance & Enforcement Officer on 24.05-2007, who during such visit/inspection noted that the supply of above goods by the respondent-assessee for a specific period and receipt of hire charges from its customers would be liable to t5i Grder Section 4(B) of the VAT Act, for the aforesaid period' 3 The Assessing Authority, by rejecting the claim of th I respondent- assessee that there is no transfer of eFfective control ov{ r these goods and as such receipt of hire charges by it would not be :xigible to tax under the provisions of the VAT Act, had held that hiring r,,' the aforesaid items to its customers would amount to "transfer of rigit to use goods" and accordingly, subjected hire charge receipts to tax.

6. The Assessing Authority in addition to levying tax r - hlrs charges by holding that there was "transfer of right to use" in ite rs supplied by the responderlt-assessee also invoked the provisions of S,t,:tion 53(3) of the VAT Act, and levied penalty for under-declaration of ta>

7. Aggrieved by the aforesaid order of the Assessir-g; Authority in subjecting the turnover of the respondent-assessee Llating to hire charges to tax Lrnder the provisions of Section 4(g) of tl-: VAT Act, the respondent-assessee had flled appeals before the First Ao1.: llate Authority i.e. Appellate Deputy Commissioner (CT), punjagutta Divis tn, Hyderabad, who by dism,ssing the appeals, however, had upheld the i,rvy as well as the penalty by holding that it was a case of willful neglecl on the part of the respondetnt-assessee in not showing the correct :r rnovers in the returns. B. Aggrieved by the aforesaid order of the First Apc:.ilate Authoriry, the respondi:nt1urr.rr"" had filed separate appeals befor.ir the Tribunal. 4 .r, ,3h v,; .n,tr: !

9. The Tribunal by considering the appeals filed by the respondent- .{ assessee and taking note of the fact that the Tribunal in respondent_ assessee's own case for earlier years having held that supply of items, such as utensils, sofas, chairs, and wash basins etc., on hire and collecting hire charges would not amount to "transfer of right to use goods,,being exigible under the provisions of the APGST Act and the VAT Act and was pleased to set aside the order oF the First Appellate Authority, as affirmed by the Appellate Authority imposing tax as well as penalty.

10. Aggrieved by the aforesaid order of the Tribunal, the petitioner- State has filed the present revisions.

11. On behalf of the petitioner-State it is contended that the Tribunal had erred in holding that supplying of items Iike carpets, tables, pandals, utensils, chairs, sofas, wash basins etc. by the respondent-assessee to its customers and collecting hire charges as not amounting to "right to use goods" under the provisions of Section 4(8) of the VAT Act, is not correct; that on account of supply of the above-mentioned items by the respondent-assessee to its customers for a specific period and collecting hire charges would come within the purview of 'deemed sale' and as such, the hire charge receipts would be exigible to tax. ---7it..F.' -,\'.i1v'r'\.?:t'. ' J : *r''.- j.,{i:,. : _:*' 5

12. On behalf of the petitioner-State, it is contei: r:d that the respondent-assessee cannot claim that during the per ld when the respondent-assessee had given the subject items on hire, I,he customers have exclusive riqhts over such goods to use the same ar(l as such there is a transfer oi right in the said items in favour of its custor rt:rs during the said period and as such the hire charge receipts would b: r:xigible to tax under the pro'risions of the VAT Act.

13. In support of its contention, the petitioner-State ha placed on the decisions of rhe Apex Couft in the case of Viceroy H tt,tels Limited Hyderabad v,/s. the Commercial Tax Officer, Genera I Bazar Circle, Hyderabad, wherein it was held that the onus is c,n the petitioner therein i.e. assessee to esiablish that the transaction is nol one of deemed sale involving "transfer of right to use goods" and tha' the petitioner (assesse) should produce an agreement in support of his r.ontention that the effective control rests with the hirer. 1,4. On be,half of the petitioner, it is also contended tlr,:t the Tribunal had wrongly' applied the decision of the Apex Courl- ir the case of Rashtriya .fspat Nigam Limited v/s. State of Anahra Pradeslf , since, in the said case, the hirer supplied machinery on l'i': basis to hirees ' 52 srJ 747 ' l-26 src 1t4 6 for execution of its own project and in the facts of the present, the respondent-assessee is carrying on the business in supprying items on hire basis, reliance is placed on the said decision is misplaced.

15. Per contra, learned counsel appearing on behalf of the respondent- assesse would submit that since, the same issue has fallen for consideration before the Tribunar for years 2002-03 onwards under the APGST Act as well as VAT Act and in the aforesaid cases, the Tribunal having held that such supply of items by the respondent_assessee shall n.t amount to "transfer of right to use goods", which order had attained finality, as no revision is filed thereagainst by the petitioner_State, and as such, the petitionerstate cannot craim that hire charge receipts wourd be exigible to tax during the assessment years involved in the present revtsrons.

16. On behalf of the respondent-assessee, it is further contended that since, the orders passed for the earrier years have attained finarity and the respondent-assessee having arranged its affairs on the basis of the aforesaid order, the petitionerstate cannot seek to revisit by raising similar such issue for the subsequent years, more particularly when there is no change in the enabling provision or factual position.

17. on behalf of the respondent-assessee, it is arso contended that the decision relied upon on beharf of the petitioner-state in the case of .f;dFrd,r'?€r -ar-t-- l,r* i . _ -:..1 ,/, . 7 Viceroy Hotels Limited, Hyderabad (1 supra) does r'(,t apply to the facts of the case, as in the said case, various equipnrr, r-rts were berng provided by the hotel to its customers along with premisr s and thus, this Court held that the burden is on the petitioner-asse ;r;ee therein to establish that the transaction is not one of deemed sale i ,rolving transfer of right to use goods.

18. On behalf of the respondent-assessee, it is Furthei. ..,ntended that it only supplie:; various items to its customers for being r- itd at functions and ceremorries, for specific period and on completior tl the aforesaid function/cert:mony, collects back the said items supplie(. from the place where it hacl supplied and collects hire charges for allovr rq its custorners used the aforesaid goods during the period of hire.

19. On behatf of the respondent-assessee, it is alsc :.ontended that since, the T'ibunal for earlier assessment years having ir :ld that the trire charge receipts would not exigible to tax under Section I ti) of the ApVAT Act not being a 'deemed sale', the imposition of tax and i1 ,,y of penalty b,y the Assessing Authority invoking the provisions of Sect.,n 53(3) of the vAT Act which requires wirfur negrect on the part of thr, assessee in not declaring th,i tax due, is not only wholly unjustified but i, also contrary to the purport and intent behind Section 53(3) of the Act. 8 s i"? ..,:l '

20. In support of the aforesaid contention, reliance is placed on the decision of the Apex Court in tJnion of fndia v/s. Kaumudini Narayan Dalal and anothef and Commissioner of fncome_Tax v/s. J.K.Charitable Trus(. 2L. We have taken note of the above submissions made.

22. This Court had admitted the aforesaid revision cases fired against the order of assessment revying tax and penarty on the foilowing question of law: "Whether the movabte item like furniture, wash basins, utensils on hire is exigible to tax under Section 4(8) of the APVAT Act, 2005 or not?,,

23. Firstly, it is to be noted that it is by way of an expanded definition of sale, certain transactions, which were not exigible to tax prior to Constitutional 46th Amendment have been brought under the ambit of levy of tax by treating the same as deemed sale.

24. In order to be exiglble to tax under the expanded definition of 'sale', vrz,'deemed sale', there should be ',transfer of right to use goods,, in favour of the customer to the exclusion of the owner. Mere supplying of various items on hire to customers to use the goods taken on hire by them '1zoot; zas ttn zrs o 1zoosl :oo+rr te r .-,_ ';.'-€F,:T*F"iF', 9 for a particular period would not amount to the owner losir ; his right over the goods, r,,rhen the same are supplied by the owrrr - at customer location, for h m to use the same for the specified period.

25. In one of the earliest decision when the petitioner-::t ate sought to levy tax on hire charges received on provision of lockers lrcvided by the bank to its customers by invoking the concept of 'deemec r;rle', this Court had held thal provision of lockers by the bank to its cr.r, tomers, firstly, such lockers being embedded to earth cannot be subject.,J to levy of tax by considerinq that there is an effective transfer of use of l.(.kers in favour of customers to the exclusion of the owner.

26. Thus, in order to attract the expanded definition c,f s,ale. there has to be a tran:;fer of right in the goods from the owner () its customer during which period, the customer would have exclusive rirlht to use the goods as he :hooses without any effectirre control by the _^wner over the

27. In the facts of the present case, the respondent-it,, jessee supplies various items like, chairs, sofas, utensils for being usecl ,l a function or ceremony, b/ supplying them to a particular place as lesired by its customer ancl collects hire charges and for a period and (rr compretion of the said period while collecting back the items would als(, ,tollects certain 10 i> amount as hire charges for allowing the customer to use the said goods during the said period.

28. Though on behalf of the petitioner-State it is contended that during the period of hire, the customer would have exclusive control over the goods, it is to be noted that though the subject goods being movable goods and the respondent-assessee delivering the goods at a location to be used by him is only a licence to use the goods without there being 'transfer of right to use' (see BSNL v,/s. tlnion of fndif). Thus, the collection or receipt of hire charges by itself would not result in transfer of right in favour of the customer during the period of hire for such receipts to become exigible to tax.

29. The customer during the period of hire from the respondent- assessee of various items only gets a licence to make use of the goods for the purpose of it is intended to, viz., for allowing the guests to sit in the chairs and sofas and utensils for preparing food and allowing such usage cannot be termed as resulting in "transfer of right to use goods" in favour of customer thereby attracting the provisions of Section 4(B) of the VAT Act and thus, the receipts being exigible to tax.

30. Further, it is also to be noted that the petitionerstate having accepted the order of the Tribunal for the year 2002-03 till 2005-06 '(zooe) : scc r --l$,'f-+r '/. ;'r --7 11 cannot seek to take a different view for the subsequent year-s wrthout there being a1y change in law or factual position.

31. Futhe-, in relation to tax matters though the rrnciple of /es judlcata would not apply as each assessment year is sel), fate and cause of action is different, however, the principle of consistenc z is required to be followed (see Radhasoami Satsang, Saomi Banh, Agra v/s. Commissioner Of Income fafi. tt is also equaily s:lt ed position of law that a t,rx payer would arrange its affairs based :, r a decision or treatment given in the earlier years.

32. Since, in the facts of the present case, the petitior €rr-State having allowed the order of assessment of the Tribunal for th, year 2002-03, 2005-06 boti under APGST Act and APVAT Act to at1 I n finality, the petitioner carrnot be said having changed business modei r,receiving hire charges for i: to be exigible to tax or the petitioner wilfr i./ neglecting to disclose the said receipts, thereby, attracting the provr i,tns oF Section 53(3) of the Act for being fastened with levy oF penalty.

33. Since, the petitioner had only been supplying var )us items to its customers and collecting for specifled period and collecli rg charges for such supply cf items as in the earlier years, this Court i:; ;l the view that the Assessing Authority was not justified in bringing the: ;.,rid hire charge '(1e92) 1 scc 3s9 72 receipt to tax under the provisions of Section 4(8) of the VAT Act at the first instance which order has been upheld by the Appellate Authority in the first appeal.

34. Thus, the Tribunal by considering the aforesaid aspect and also taking note of the order passed by it for the earlier period, having allowed the appeal filed by the respondent-assessee both in relation to assessment as well as penalty, this Court is of the view that the Tribunal had only followed doctrine of consistency and for the said reason, the order of the Tribunal in allowing the appeals of the respondent-assessee cannot be said to be either being erroneous or suffering with perversity for being interfered with in the present revisions.

35. Accordingly, the Tax Revision Cases as filed by the petitioner-State are devoid of any merit and are accordingly dismissed. No order as to costs.

36. Miscellaneous petitions, if any, pending shall stand closed. SD/-MOHD. ISMAIL DEPUTY REGISTRAR ,TRUE COPY// SECTION OFFICER To,

1. The Telangana VAT Appellate Tribunat, Hyderabad, Telangana ? 9nu CC to Standing Counset for Commerciat Tax, [OpUC] 3. One CC to Sri Bhaskar Reddy Vemireddy, Advocate tOpUCl 4. Two CD Copies r\DK/l']St- ?+- HIGH COURT DATED:13t0612025 -- ' :_=_-_-=:\ .S_ jl,l;^\ u.{. \ ti. 2 { SEP mzt COMMON ORDER TREVC.Nos.10, 11, 12, 14 and 26 ol20,ig and 45 of 2022 D|SMlSSlt{G ALL THE TREVCs WITHOUT COSTS ?t ,N\\;' {