M/s Century Cement (Prop. Century Textiles And Industries Ltd.) Vs Commissioner Commercial Tax

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1

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2025:CGHC:18326-DB

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NAFR

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HIGH COURT OF CHHATTISGARH AT BILASPUR

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TAXC No. 44 of 2023

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1 - M/s Century Cement (Prop. Century Textiles And Industrues Ltd.) Having Its Head Office At Industry House 59 Churchgate Reclamation, Mumabi 400020 Maharashtra And Cement Manufacturing Unit At Post Office Baikunth 493116, District : Raipur, Chhattisgarh

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--- Petitioner(s)

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versus

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1 - Commissioner, Commercial Tax, Chhattisgarh Devendra Nagar, Raipur, Chhattisgarh.

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--- Respondent(s)

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TAXC No. 42 of 2023

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1 - M/s Century Cement (Prop. Century Textiles And Industries Ltd.) Having Its Head Office At Industry House 59 Churchgate Reclamation, Mumbai 400020 (Maharashtra) And Cement Manufacturing Unit At P.O. Baikunth 493116, District Raipur, Chhattisgarh

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--- Petitioner(s)

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Versus

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1 - Commissioner, Commercial Tax, Chhattisgarh, Devendra Nagar, Raipur (Chhattisgarh) .

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--- Respondent(s)

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TAXC No. 43 of 2023

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1 - M/s Grasim Cement (Now Known As M/s Ultra Tech Cement Ltd.) Ravan Industrial Area, Raipur District- Raipur Chhattisgarh.

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--- Petitioner(s)

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KRISHNA KUMAR BARVE

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Digitally signed by KRISHNA KUMAR BARVE Date: 2025.05.02 18:48:29 +0530

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2

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Versus

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1 - Commissioner, Commercial Tax, Raipur District - Raipur, Chhattisgarh.

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--- Respondent(s)

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TAXC No. 47 of 2023

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1 - M/s Ultra Tech Cement Ltd. R/o. Ravi Nagar, Raipur, District- Raipur, Chhattisgarh.

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--- Petitioner(s)

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Versus

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1 - Commissioner Commercial Tax Raipur, District- Raipur, Chhattisgarh

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--- Respondent(s)

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TAXC No. 65 of 2023

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1 - M/s Grasim Cement (Now Known As M/s Ultra Tech Cement Ltd.) Ravan Industrial Area, Raipur, District Raipur Chhattisgarh

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--- Petitioner(s)

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Versus

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1 - Commissioner, Commercial Tax, Raipur District Raipur Chhattisgarh

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--- Respondent(s)

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TAXC No. 66 of 2023

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1 - M/s Grasim Cement (Now Known As M/s Ultra Tech Cement Ltd.) Ravan Industrial Area, Raipur, District - Raipur, Chhattisgarh

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-- Petitioner(s)

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Versus

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1 - Commissioner Commercial Tax, Raipur,Chhattisgarh

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--- Respondent(s)

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TAXC No. 67 of 2023

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1 - M/s Ultra Tech Cement Ltd. Ravi Nagar, Raipur, District Raipur, Chhattisgarh

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--- Petitioner(s)

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Versus

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1 - Commissioner Commercial Tax, Raipur, District Raipur, Chhattisgarh

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--- Respondent(s)

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3

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TAXC No. 41 of 2023

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1 - M/s Century Cement (Prop. Century Textiles And Industries Ltd.) Having Its Head Office At Industry House 59 Churchgate Reclamation, Mumbai 400020 (Maharashtra) And Cement Manufacturing Unit At P.O. Baikunth 493116, District -Raipur, Chhattisgarh

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--- Petitioner(s)

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Versus

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1 - Commissioner Commercial Tax Chhattisgarh Devendra Nagar Raipur Chhattisgarh

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--- Respondent(s)

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TAXC No. 49 of 2023

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1 - M/s Century Cement (Prop. Century Textiles And Industries Ltd.) Having Its Head Office At Industry House 59 Churchgate Reclamation, Mumbai 400020, Maharashtra And Cement Manufacturing Unit At Post Office Baikunth, 493116 District - Raipur, Chhattisgarh

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--- Petitioner(s)

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Versus

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1 - Commissioner, Commercial Tax Chhattisgarh Devendra Nagar, Raipur, Chhattisgarh

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--- Respondent(s)

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TAXC No. 45 of 2023

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1 - M/s Century Cement (Prop. Century Textiles And Industries Ltd.) Having Its Head Office At Industry House 59 Churchgate Reclamation, Mumbai 400020 (Maharashtra) And Cement Manufacturing Unit Of P.O. Baikunth 493116 District Raipur Chhattisgarh

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--- Petitioner(s)

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Versus

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1 - Commissioner, Commercial Tax Tax, Chhattisgarh, Devendra Nagar, Raipur (Chhattisgarh)

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--- Respondent(s)

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For Petitioner (s)	: Shri Ashish Shrivastava, Sr. Advocate with
in TAXC Nos.44, 41, 42, 45 & 49 of 2023	Shri Rahul Ambast, Miss Hiya Sonchhatra and Shri Ashutosh Shrivastava, Advocates.

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4

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For Petitioner(s) in TAXC Nos.43, 47,	: Shri Neelabh Dubey with Ms. Smiti Sharma, Advocates.
65, 66 & 67 of 2023
For Respondent/	: Shri Rahul Tamaskar, Govt. Advocate.
State

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Hon'ble Shri Sanjay K. Agrawal &

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Hon'ble Shri Deepak Kumar Tiwari, JJ

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Judgment on Board (23/04/2025)

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Sanjay K. Agrawal, J

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In all these cases, this Court by order dated 14.12.2022, in exercise of power conferred under Section 55 (2) of the Chhattisgarh Value Added Tax Act, 2005 (for short ‘the Act, 2005’) has directed the Tribunal to refer the questions of law to this Court, and in compliance of which the Tribunal has referred the following questions of law to this Court vide order dated 13.3.2023:-

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“(1) Whether the Ld. Tribunal erred in concluding that the judgment of Hon’ble Supreme Court in the case of 20^th Century Finance Corporation 119 STC page-182 do not apply to the facts of the appellant case. Whereas the agreement under right to use between the appellant and the Railways has been entered into in the light of the scheme of the Central Govt. “own your wagon scheme’. This scheme has been referred in agreement between appellant and the Railways.

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(2) Whether the Ld. Tribunal erred in concluding that the judgment in Goa Carbon (Supra) (2008) 13 VST page-456 applies to the facts of the appellant case.

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(3) Whether the Ld. Tribunal erred in not following the judgment dated 05.05.2011 and that of 21.10.2009 passed by

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the Hon’ble High Court of CG in the case of Raymond Ltd. Vs. Addl. Commissioner under the similar facts.

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(4) whether the finding of the Ld. Tribunal is perverse as it failed to consider the relevant decisions relied upon by the applicant/assessee which dealt with identical issue and deliberated and interpreted the provisions of section-79 of CG CT act-38 of the CG vat act in regard to no power of the state to tax the transaction which is an interstate sales or a transaction in other state. The judgment of Orissa High Court in Telecommunication Consultant India Ltd. (2010) 29 VST page-265 not appreciated.

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(5) Whether the Ld. Tribunal has erred in concluding that, since form-C has been used by the appellant from CG, it means that the lease agreement for the state of CG liable to tax in CG. Here the Ld. Tribunal failed to appreciate the proviso to the para in Form-C added from 01.02.1997. Its provides that Form-C can be issued for purchase of goods to be delivered in a state where the purchases is not registered.”

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We have heard learned counsel for parties, considered their rival submissions and also gone through the records with utmost circumspection.

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For answering the aforesaid questions of law, we deem it appropriate to deal with some legal provisions.

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Section 2(s)(vi) of the Act, 2005 deals with transfer of the right to

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use any goods which reads thus:-

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“2(s). Sale with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or for other valuable consideration and includes -

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xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx

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(vi) a transfer of the right to use any goods including leasing thereof for any purpose (whether or not for a specified period) for cash,

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deferred payment or other valuable consideration.”

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It is also profitable to refer and reproduce Section 22 of the Act,

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2005, which deals with assessment/reassessment of tax in certain circumstances:-

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“ 22. Assessment/reassessment of tax in certain circumstances .-(1)Where an assessment or reassessment of a dealer has been made under this Act or the Act repealed by this Act and for any reason any sale or purchase of goods liable to tax under this Act or the Act repealed by this Act during any period,-

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(a)has been under assessed or has escaped assessment; or

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(b)has been assessed at a lower rate, or

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(c)any wrong deduction has been made while making the assessment, or

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(d)a rebate of input tax has incorrectly been allowed while making the assessment,

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(e)is rendered erroneous and prejudicial to the interest of revenue consequent to or in the light of any judgment or order of any Court or [Tribunal], which has become final,

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the Commissioner may, at any time within a period of [five calendar years]from the date of order of assessment, [or from the date of judgment or order of any Court or Tribunal], proceed in such manner as may be prescribed, to assess or re-assess, as the case may be, the tax payable by such dealer after making such enquiry as he considers necessary, and assess or re-assess to tax.

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(2)The Commissioner shall, where the omission leading to assessment or re-assessment made under sub-section (1) is attributable to the dealer, [in addition to interest at the rate specified in sub-clause (iii) of clause (a) of sub-section (4) of Section 19, impose upon him a penalty not exceeding twice the amount of tax so assessed or re-assessed but not less than one and half times of the amount of tax assessed].

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(3)The assessment or re-assessment under sub-section (1) shall be made within a period of two calendar

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years from the date of commencement of the proceedings under the said sub-section.”

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The provision contained under Section 2(s)(vi) of the Act, 2005 is pari materia to the constitutional provision under Article 366 (29A)(d) of the Constitution of India. Article 366 (29-A) (d) deals with tax on the sale or purchase of goods which includes a tax on 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, which reads thus:-

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“ 366. Definitions .-xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx (29A) “tax on the sale or purchase of goods” includesxxxx xxxx xxxx xxxx xxxx xxxx

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(d) a tax on 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.”

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The provisions contained under Article 366 (29-A)(d) of the Constitution of India came for consideration before the Constitution Bench of the Supreme Court in the matter of 20^th Century Finance Corpn. Ltd and Another Vs. State of Maharashtra¹ , wherein their Lordships have held in paragraphs 27

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& 28 as under:-

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“ (27) Article 366 (29A)(d) further shows that levy of tax is not on use of goods but on the transfer of the right to use goods. The right to use goods

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1 (2000) 6 SCC 12

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accrues only on account of the transfer of right. In other words, right to use arises only on the transfer of such a right and unless there is transfer of right, the right to use does not arise. Therefore, it is the transfer which is sine qua non for the right to use any goods. If the goods are available, the transfer of the right to use takes place when the contract in respect thereof is executed. As soon as the contract is executed, the right is vested in the lessee. Thus, the situs of taxable event of such a tax would be the transfer which legally transfers the right to use goods. In other words, if the goods are available irrespective of the fact where the goods are located and a written contract is entered into between the parties, the taxable event on such a deemed sale would be the execution of the contract for the transfer of right to use goods. But in case of an oral or implied transfer of the right to use goods it may be effected by the delivery of the goods.

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(28) No authority of this Court has been shown on behalf of respondents that there would be no completed transfer of right to use goods unless the goods are delivered. Thus, the delivery of goods cannot constitute a basis for levy of tax on the transfer of right to use any goods. We are, therefore, of the view 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 in respect 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.”

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8. Finally, their Lordships concluded in para-35 thus:-

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(35) As a result of the aforesaid discussion our conclusions are these:

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xxx xxx xxx

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(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.

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(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.

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(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.

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(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 366 of the Constitution wherein the location or delivery of goods to put to use is immaterial.”

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The principle of law laid down in the matter of 20^th Century Finance Corpn. Ltd (Supra) has been followed by their Lordships of the Supreme Court in the matter of Great Eastern Shipping Company Limited Vs. State of Karnataka and Others² . In the said matter, their Lordships have considered the transfer of the right to use the goods regardless of when or whether the goods are delivered for use for the purpose of levy of tax under Article 366 (29-A)(d) of the Constitution. It was held that the location of the

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2 (2020) 3 SCC 354

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delivery of goods cannot be made basis for the levy of tax on the sale of goods. Where a party has entered into a formal contract, and the goods are available for delivery irrespective of the place where they are located, the situs of sale where the property or goods passes, would be at the place where the contract has been entered into.

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10.Furthermore, the said principle of law has been recently followed in the matter of K.P. Mozika Vs. Oil and Natural Gas Corporation

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Ltd and Others³ wherein relying upon the aforesaid decisions, their Lordships have held that when the goods are in existence, the taxable event for the transfer of the right to use goods occurs when a contract is executed between the lessor and the lessee, and the situs of sale of such a deemed sale would be where the agreement in respect thereof is executed. It would be profitable to reproduce para-29 of the said judgment:-

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“ 29 . This Court has interpreted sub-clause (d) of Clause (29A) in various decisions. The first important decision on this aspect is a decision of the Constitution Bench in the case of 20th Century Finance Corporation Ltd, (Supra). This was a case where the appellant had entered into a master-lease agreement with the lessee. The lessee was a party that desired to take equipment for use on hire. Under the agreement, the appellant agreed to give diverse machinery/equipment listed in the schedule to the master-lease agreement. The master-lease agreement provided that the appellants would place the orders for individual equipment on the request made by the lessee, and the equipment to be leased would be dispatched by the manufacturer

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3 2024 SCC OnLine SC 28

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or supplier concerned to the location specified in the lease agreement. At the instance of the lessee, the appellant used to place purchase orders to the suppliers or manufacturers for the supply of individual items or equipment. After the equipment was delivered and put to use, the lessee used to execute supplementary lease schedules acknowledging the receipt of the leased equipment. Such supplementary lease agreements used to form an integral part of the master-lease agreements. The controversy arose because some States started levying tax merely because the goods were found to be located in their States at the time of executing the master contract. The States where the goods were delivered started levying taxes on the said goods. In particular, the challenge was to the validity of legislations of various States on the ground that one transaction of transfer of the right to use goods was subjected to tax in different States. In the facts of the case, the issue considered by the Constitution Bench was “Where is the situs of the taxable event on the transfer of right to use goods under Article 366(29A)(d) of the Constitution.” In paragraph 27 of the aforesaid decision, the Constitution Bench held that the levy of tax in accordance with Clause 29A(d) is not on the use of goods but on the transfer of the right to use goods. In other words, it was held that the right to use goods accrues only because of the transfer of the right to use goods. It was held that the transfer is sine qua non for the right to use any goods. It was held that if the goods are available, the transfer of the right to use goods occurs when the contract for the goods is executed. In other words, if the goods are available, irrespective of whether the goods are delivered and the written agreement is entered into between the parties, a taxable event on such a deemed sale would be executing a contract to transfer the right to use goods. However, when there is no written agreement but an oral or implied transfer of the right to use goods, it may be effected by the delivery of goods. Only in such cases the taxable event would be the delivery of goods. In this context, in paragraph 28, the Constitution Bench held that it cannot be said that there would be no

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complete transfer of the right to use goods unless the goods are delivered. When the goods are in existence, the taxable event for the transfer of the right to use goods occurs when a contract is executed between the lessor and the lessee, and the situs of sale of such a deemed sale would be where the agreement in respect thereof is executed.”

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In view of the aforesaid settled legal position, we are of the opinion that the principle of law laid down by the Supreme Court in the matter of 20^th Century Finance Corpn. Ltd (Supra) squarely applies in the present case. We accordingly hold that the lease rent paid by the Railways to the petitioner/company cannot be accepted to be taxable income and the provisions contained under Section 2(s)(vi) read with Section 22 of the Act, 2005 will not be attracted.

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12.The questions of law referred to this Court are answered accordingly.

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13.With the aforesaid observations, the References are disposed of.

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Sd/Sd/( Sanjay K. Agrawal ) Deepak Kumar Tiwari ) Judge Judge

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Barve

M/s Century Cement (Prop. Century Textiles And Industries Ltd.) v. Commissioner Commercial Tax

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M/s Century Cement (Prop. Century Textiles And Industries Ltd.) v. Commissioner Commercial Tax

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