Supreme Court to examine whether supplying crane for loading, unloading, lifting and shifting services is transfer of "right to use"

Last updated: 23 May 2024

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The Supreme Court is examining a case where the Rajasthan High Court ruled that providing a crane for loading, unloading, lifting, and shifting services is a contract of service, not a sale. This decision was based on the finding that the customer does not have exclusive control over the crane, as the supplier retains responsibility for maintenance and provides a driver and helper. The Revenue Department has appealed this ruling.

Court :
Supreme Court of India

Brief :
The Revenue Department challenged the decision of Rajasthan High Court before the Hon'ble Supreme Court of India of holding that services of loading, unloading, lifting and shifting, by way of the crane provided by the assessee to transport department/other institutions constitute contract of service and not 'sale' as provided u/s 2(35)(iv) of the Rajasthan VAT Act, 2003in the case of Assistant Commercial Taxes Officer, Anti- Evasion-Iii, Ward -I,Rajasthan v. Agarwal Carriers And Lifters [S.B. Sales Tax Revision / Reference No. 132/2020 dated April 13, 2023].

Citation :
S.B. Sales Tax Revision / Reference No. 132/2020 dated April 13, 2023

The Revenue Department challenged the decision of Rajasthan High Court before the Hon'ble Supreme Court of India of holding that services of loading, unloading, lifting and shifting, by way of the crane provided by the assessee to transport department/other institutions constitute contract of service and not 'sale' as provided u/s 2(35)(iv) of the Rajasthan VAT Act, 2003in the case of Assistant Commercial Taxes Officer, Anti- Evasion-Iii, Ward -I,Rajasthan v. Agarwal Carriers And Lifters [S.B. Sales Tax Revision / Reference No. 132/2020 dated April 13, 2023].

The Rajasthan High Court after applying the test of what is the 'substance of the contract' and discerning the true nature of the contract, held that consumer does not have exclusive control and possession of the crane as the conditions in the contract provided for the assessee to undertake the care and maintenance of the cranes during the sustenance of the contract and also supply the services of a driver and helper alongside the crane.

The matter is placed before Division Bench comprising of Justice B.V. Nagarathna and Justice Augustine George Masih.

FAQ :

The Supreme Court is deciding whether supplying a crane for services like loading, unloading, lifting, and shifting constitutes a 'transfer of the right to use' goods for tax purposes.

The Rajasthan High Court held that providing a crane for such services is a contract of service, not a sale, meaning it's not subject to sales tax under the relevant act.

The High Court found that the customer did not have exclusive control and possession of the crane. The supplier remained responsible for the crane's care and maintenance and provided a driver and helper.

The Revenue Department has challenged the Rajasthan High Court's decision and appealed to the Supreme Court of India.

The case refers to section 2(35)(iv) of the Rajasthan VAT Act, 2003, concerning the definition of 'sale'.

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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