The Sales Tax Tribunal at Mumbai held that the turnover of charter hire in respect of the Rig Greadrill Chetna be calculated @ 4%.
The appellants applied for and obtained registration under the provisions of the Maharashtra Value Added Tax (MVAT)Act, 2002 with effect from 9/6/2008. This registration was stated to be obtained on account of sales of machinery parts effected by the appellant.
The appellants provide range of specialized services starting from exploration and production activities, which includes carrying of men and material between offshore rigs and installation and the share using their own Platform Supply Vessels (PSV) to wing and Anchor Handling Services using their own Anchor Handling Tug Supply Vessels Services (AHTSV) and mining services using its Rigs etc.
These vessels and Rig are provided on a time charter basis to the customers. The Assistant Commissioner of Sales Tax (D-104), URD Assessment and Follow Up Cell, issued a notice under the provisions of Section 23(5) of the MVAT Act 2002.
The Notice was issued for the period 9/6/2008 to 31/3/2009. By the aforesaid notice, the appellant was asked to show cause as to why his turnover of sales in respect of providing vessels on charter hire basis should not be taxed under the Maharashtra Value Added Tax Act-2002 (MVAT Act).
By virtue of the provision contained under section 2 (24) (b) (iv) of the MVAT Act, which reads as, ‘the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration’.
After hearing the Appellant/ Assessee, the Assistant Commissioner of Sales Tax D-104 passed the assessment order on 29/6/2013. The assessment order resulted in a demand for Rs.83,51,75,349/- including tax, interest, and penalty.
The appellant aggrieved by the order passed by the assessing authority the appellant filed an appeal before the Deputy Commissioner of Sales Tax (The First Appellate Authority).
The First Appellate Authority said that deemed sales of transfer of right to use goods within the State of Maharashtra as the agreements have been signed-in the State of Maharashtra and they are not sales in the course of import under the CST Act-1956 as they are back to back two separate transactions ( of import and local sale) and inextricable link among foreign exporters, the appellant, and its customer is absent.
The First Appellate Authority decided the appeal vide order in which the certain reliefs were granted to the appellant penalty was reduced to Rs.7,78,57,128/- as against Rs.83, 51,75,349/- raised by the Assessing Authority. Not satisfied with the order passed by the First Appellate Authority the appellant filed appeal.
The Authority comprising of President, P. H. Mali and Member, V. U. Borse pronounced the order based on an appeal filed by Greatship (India) Limited.
While allowing the appeal the Tribunal said that the levy of tax on the turnover of sales in respect of the charter hire of Vessels is confirmed and be calculated @ 4% and be subjected to tax accordingly.Subscribe Taxscan AdFree to view the Judgment