Madras High Court
M/S.Edutech India (P)Ltd vs The State Of Tamil Nadu on 25 November, 2024
Author: C.Saravanan
Bench: R.Suresh Kumar, C.Saravanan
T.C.(R)Nos.38 & 39 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved On 29.10.2024
Pronounced On 25.11.2024
CORAM:
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR
and
THE HONOURABLE MR.JUSTICE C.SARAVANAN
T.C.(Revision) Nos.38 & 39 of 2021
and
C.M.P.Nos.20339 & 20344 of 2021
M/s.Edutech India (P)Ltd.
Rep.by R.Natarajan
Manager -Finance & Accounts ... Petitioner in both TCs.
vs.
The State of Tamil Nadu
Rep.by the Deputy Commissioner (CT)
Now Known as Joint Commissioner ( CT)
Chennai (Central) Division
Chennai 600 006. ... Respondent in both T.Cs.
Prayer in both T.Cs.: These petitions have been filed to revise the order
of the Sales Tax Appellate Tribunal (Additional Bench) Chennai in
S.T.A.No.175 of 2007 dated 02.08.2014.
https://www.mhc.tn.gov.in/judis
1/43
T.C.(R)Nos.38 & 39 of 2021
For Petitioner : Mr.P.V.Ravikumar
(in both TCs.)
For Respondent : Mr.V.Prashanth Kiran
(in both TCs.) Government Advocate
COMMON ORDER
(Judgment of the Court was delivered by C.SARAVANAN,J.) These Tax Revision Cases are directed to against the impugned Common order dated 02.08.2014 passed by the Sales Tax Appellate Tribunal, Additional Bench, Chennai in S.T.A.Nos.175 and 317 of 2007.
2. By the common impugned orders dated 02.08.2014, the Appellate Tribunal has allowed Sales Tax Appeal in STA.Nos.175 & 317 of 2007 filed by the State of Tamil Nadu against the orders dated 16.02.2006 of the Appellate Assistant Commissioner in A.P.Nos.285 & 284 of 2005 dated 16.02.2006 relating to the Assessment years 2001- 02 and 2002-03.
3. These Tax Case Revisions were admitted on the following substantial questions of law were framed for being answered by this Court :-
https://www.mhc.tn.gov.in/judis 2/43 T.C.(R)Nos.38 & 39 of 2021
i) Whether the impugned order passed by the Sales Tax Appellate Tribunal (Additional Bench) Chennai in STA 317/2014 dated 02/08/2014 is in accordance with the provisions of the Act?
ii) Whether the tribunal had properly considered the findings given by the Fist Appellate Authority, while passing the impugned order?OTJ.TV his finding that "the software Development and Computer?
iii)Whether the tribunal was justified in allowing a disputed turnover of Rs.2,59,34,647/- at 4% when the First Appellate Authority had given Consultancy Service is not taxable and it does not fall under the category of goods. It is service contract not involving transfer of property in goods or intellectual property. Supply of technical skill and expertise which is not a licensed software either within the State or in inter-state is not a sale liable to tax, as no sale of goods is involved. The impugned transactions are only service in nature and the appellants have only collected subscription or licensing fee for accessing the web sites developed by foreigners and accordingly there is no transfer of property in goods not intellectual property involved in these transactions on there is no transfer of copy right or trade mark is involved."?
iv) Whether the tribunal was justified in allowing a turnover of Rs. 2,59,34,647/- at 4% under TNGST Act 1959 without appraising the nature of receipts, type of business in which the petitioners are involved and whether there is any transfer of right in any intellectual property?
https://www.mhc.tn.gov.in/judis 3/43 T.C.(R)Nos.38 & 39 of 2021
4. Earlier, the petitioner had suffered assessment Orders dated 31.03.2005 for the respective assessment years whereby Sales Tax was confirmed on the consideration received by the petitioner from educational institutions like IITS, IIMS etc and major corporates like GE, Wipro etc. For the use of on-line Education materials of the petitioner's principal. The petitioner was appointed as a distributor of the online content under an Agent Agreement dated 01.08.2005 with its principal M/s.Elsevier B.V Netherland Company. The role of the petitioner was to assist its Principal sell the online service to various education institutions and corporates.
5. The preamble to the aforesaid Agreement dated 01.08.2005 itself makes it clear that the business was outsourced by M/s.Elsevier B.V in Netherland Company to Edutech India from the petitioner who acted as its agent under the said Agreement. Clause 2 and 3 of the Agent Agreement, dated 01.08.2005 under read as under :-
Agent Agreement Clause 2 Clause 3 2.1 To act towards Elsevier 3.1 Agent shall (subject to Agent conscientiously and in good faith and not performing its obligations under this to allow its interests to conflict with the Agreement) be entitled to withhold or duties that it owes to Elsevier under this receive a commission equal to the https://www.mhc.tn.gov.in/judis 4/43 T.C.(R)Nos.38 & 39 of 2021 Agent Agreement Agreement and the general law. percentages set forth on Exhibit C ("Commission Rate") of the Net Price, 2.2 Except as authorized by Elsevier, not which shall be defined as the price to act in a way that will incur any actually charged to the customer less any liabilities on behalf of Elsevier or to value added or other sales tax thereon pledge the credit of Elsevier included in the price of all the Elsevier Products for which Agent concludes a 2.3 To comply with all reasonable and sale resulting in a duly signed and lawful instructions of Elsevier from time executed customer license on behalf of to time concerning the marketing and Elsevier pursuant to and during the term sale of the Elsevier Products in the of this Agreement Territory. and generally to carry out its agency in such manner as it thinks best to promote the interest of Elsevier.
2.4 To use its best endeavors to promote, solicit, obtain orders, and submit orders for the Services in the Territory with all due care and diligence, subject to Elsevier's acceptance, in its sole discretion, of such orders.
2.5 To act in accordance with sound commercial principles in its relations with customers and potential customers in the Torritory (including as to assessing and where appropriate obtaining independent assessments of their creditworthiness) and to do nothing which Elsevier considers could be prejudicial to its goodwill or commercial interests.
2.6 To describe itself in all dealings with the Elsevier Products and in all associated advertising and promotional material and (if any description is provided there) at its premises as "sales agent" or "selling agent" of Elsevier.
27 To keep Elsevier fully and promptly informed of conditions and developments in the market for and use https://www.mhc.tn.gov.in/judis 5/43 T.C.(R)Nos.38 & 39 of 2021 Agent Agreement of the Elsevier Products in the Territory (whether advantageous or disadvantageous to Elsevier), of competing products and the activities of Elsevier's competitors in the Territory.
28 To inform Elsevier promptly of any order or enquiry concerning orders for the Elsevier Products ruccived outside the Territory.
2.9 To inform Elsevier promptly of any complaint or after-sales enquiry concerning the Elsevier Products received by Agent.
2.10 If Agent becomes aware of the possibility of any potential consortia or national deals for the Elsevier Products in the Territory, Agent shall immediately notify Elsevier. Both parties agree that the structure and pricing of any such deals will be negotiated in conjunction with Elsevier's sales management on a case-by-case basis. Elsevier shall have ultimate control over the pricing and terms on such deals.
2.11 It is recognized that Elsevier's databases and publications are proprietary and copyrighted, users may not copy them in machine-readable form, print out multiple copies or copy printouts, and use must be consistent with the laws applicable to copyrighted materials. Agent will make diligent effort to prevent misuse or illegal use of database or printed information by customers.
2.12 Agent shall inform Elsevier at all times in writing, of customers who have purchased Elsevier Products. This https://www.mhc.tn.gov.in/judis 6/43 T.C.(R)Nos.38 & 39 of 2021 Agent Agreement notification will include customers' name and full address, telephone and fax numbers, contact person and e-mail address if available. Elsevier shall execute a customer license with the customer directly. Any request from customer to amend such customer license shall be handled by Elsevier.
Agent shall not without Elsevier's prior written consent make or give any representations, warranties or other promises concerning the Elsevier Products beyond those contained in Elsevier's customer license. Such requests shall be directed to the responsible sales manager at the address as mentioned below.
2.13.Agent will draft a sales plan for the Territory on an annual basis. The sales plan will include sales goals and be reviewed and perhaps modified by mutual agreement at mid-year or as needed given market conditions.
2.14 Agent agrees to comply with all applicable laws pertaining to data protection and privacy when collecting any personal data in the course of this Agreement 2.15 The agent is responsible for securing the License Agreement to and from customers after signature. The agent will forward the signed License Agreement to the New York office for Elsevier authorization. They (Edutech India) will then be responsibic to send customers their signed original. Upon receipt of a signed customer license in the Territory by Elsevier, Agent will invoice the customer for the sale and will collect payment directly from the https://www.mhc.tn.gov.in/judis 7/43 T.C.(R)Nos.38 & 39 of 2021 Agent Agreement customer on Elsevier's behalf Agent shall be financially liable for non-paying customers. Access to the Elsevier Products shall be activated by Elsevier upon receipt of the signed customer license Upon such activation Elsevier will then invoice Agent for the full amount of the sale minus the commission, as described in Section 3 of this Agreement, to be paid by Agent within sixty (60) days of Agent's receipt of the invoice Agent shall inform Elsevier promptly about a customer within the Territory who insists on paying Elsevier directly for the Elsevier Products and shall be compensated a referral commission as described in Section 3 of this Agreement 2.16 Agent shall allow Elsevier's authorized representatives at any reasonable time to have access to Agent's premises (or to arrange for Elsevier's authorized representatives to have access to other relevant premises) for the purpose of inspecting Agent's books and records to ensure compliance with this Agreement
6. The order of the Assessing Officer was reversed by the Assistant Commissioner /Appellate Deputy Commissioner vide orders dated 14.02.2006 placing reliance on the the decision of the Hon'ble Supreme Court in Tata Consultancy Services vs. State of A.P, (2001) 122 STC
198. In Tata Consultancy Services vs. State of A.P, (2001) 122 STC https://www.mhc.tn.gov.in/judis 8/43 T.C.(R)Nos.38 & 39 of 2021 198, the Hon'ble Supreme Court merely referred the issues to be placed before the Larger Bench. In para Nos.6 & 7, the Court held as under :-
6.This debate will be incomplete without considering the decisions in addition to those cited in Associated Cement Co. Ltd. Case [(2001) 4 SCC 593 : JT (2001) 2 SC 141] and those referred to in this order, to the following: Beta Computers (Europe) Ltd. v.Adobe Systems (Europe) Ltd.
(1995); Commerce Union Bankv. Tidwell [56-85 TN- Taxrptr-TB 200-279 (Tennessee SC)] ; State of Alabama v. Central Computer Services, INC [379 So 2nd 1156] ; BOB Bullock, Comptroller v. Statistical Tabulating Corpn.[60-82 Tx-Taxrptr-TB 200-683 (Texas SC)] ; First National Bank of Fort Worth, A National Banking Assn. v. BOB Bullock, Comptroller of Public Accounts, State of Texas [584 Sw 2nd 548] ; First National Bank of Springfield v. Deptt. of Revenue [55-84 IL-Taxrptr-TB 201-165 (Illinois SC)] ; Ray S. James, Director of Revenue, State of Missouri v. Tres Computer Systems, INC. [642 Sw 2nd 347] ; Comptroller of the Treasury v. Equitable Trust Co.[296 Md 459, 464 A 2nd 248] ; Chittenden Trust Co. v. Commr. of Taxes [55-98 VT-Taxrptr-TB 200-193 (Vermont SC)] ; Toby Constructions Products Pty. Ltd. v. Computa Bar (Sales) Pty. Ltd. (1983); University Computing Co. v. Hon. Martha Olsen, Commr. of Revenue for the State of Tennessee [677 Sw 2d 445] ; Hasbro Industries, INC. v. John H. Norberg, Tax Administrator [487 A 2d 124] ; Compuserve, INC. v. Lindley [535 NE 2nd 360] ; Northeast Datacom, INC v. City of Wallingford [55-90 CT-Taxrptr-TB 200-320 (Connecticut SC)] ; South Central Bell Telephone Co. v. Sindney K. Barthelemy [643 So 2d 1240] ; Wal-Mart Stores, INC. v. City of Mobile & County of Mobile [200-622 Supreme Court of Alabama (1996)] ; Kenneth P. Hahn.
as Assessor v. State Board of Equalization; State v. Central Computer Services, Inc. https://www.mhc.tn.gov.in/judis 9/43 T.C.(R)Nos.38 & 39 of 2021 (1977, Ala)[349 So 2d 1160, 91 ALR 3d 274] and Andersen Consulting, LLP v. Gene Gavin, Commr. of Revenue Services [ 2000 Connecticut SC] .
7. Deeper and further consideration is required in view of the importance of the matter having global implications. Therefore, an authoritative pronouncement is required on all these aspects of the matter. In that view of the matter, we think it appropriate to place the papers in these cases before the Hon'ble the Chief Justice of India to be referred to a larger Bench.
7. By the impuged Order Appellate Tribunal reversed the decision of the Appellate Deputy Commissioner, placing reliance on the decision of the larger bench of the Hon'ble Supreme Court in Tata Consultancy Services vs. State of A.P, (2004) 137 SCC 620 and two other decisions of the Hon'ble Supreme Court and High Court including the decision of the Hon'ble Supreme Court in Vikas Sales Corporation and Another vs. Commissioner of Commercial Taxes and Another (1996) 102 STC 106.
8.Ultimately, the Appellate Tribunal has concluded that the respondents have sold intellectual property through OCLC, a consortia of libraries in India in the capacity of distributor on behalf its foreign principal namely M/s.Elsevier B.V. Netherland Company and that the transaction was liable to be taxed in the light of the decisions in Vikas https://www.mhc.tn.gov.in/judis 10/43 T.C.(R)Nos.38 & 39 of 2021 Sales Corporation and Another vs. Commissioner of Commercial Taxes and Another (1996) 102 STC 106 and in Tata Consultancy Services vs. State of A.P, (2001) 122 STC 198.
9. Operative portion of the order of the Appellate Tribunal reads as under:-
As regards intellectual property, it was further observed that incorporated or intangible property can be goods when put in media for transfer or marketing. Computer software packages are goods. The intellectual property, once it is put on to a media, whether it be in the form of books or canvas (in the case of painting) or computer discs or cassettes, and marketed would become goods. There is no difference between a sale of software programme on a CD/floppy disc from and sale of music on a cassette/CD or a sale of film on a video cassette/CD. In all such cases, the intellectual property has been incorporated on a media for purposes of transfer. Sale is not just of the media which by itself has very little value. The software and the media cannot be split up. What the buyer purchases and pays for is not the disc or the CD. As in the case of paintings or books or music or film the buyer is purchasing intellectual property and not the media, ie. The papa or cassette or disc or CD.
In the case of Associated Cement Companies Ltd. Vs. Commissioner of Customers https://www.mhc.tn.gov.in/judis 11/43 T.C.(R)Nos.38 & 39 of 2021 reported in (2001) 124 STC 59, the Hon'ble Apex Court of India has held as follows.
It is true that what the appellants had wanted was technical advice or information technology. Payment was to be made for this intangible asset. But the moment the information or advice is put on a media, whether paper or diskettes or any other thing, then what is supplied becomes chattel. It is in respect of drawings, designs, ect., which are received that payment is made to the foreign collaborators. It is these papers or diskettes etc., containing the technological advice, which are paid for and used. The foreign collaborators part with them in lien of money. It is therefore, sold by them as received are goods on which custom duty could be levied.
Therefore, on consideration of facts of the cases and the judicial decisions referred to above, we are of the view that the sale/purchase of OCLC products involve transfer of property in the form of intellectual property /technology in the form of databases in softwares. Besides the above decisions quoted, the Hon'ble High Court of Madras has decided in the case of Infosys Technologies Ltd., Vs. SC and CCT, Chepauk, Chennai reported in (2008) 17 VST 256 that the customized and non customized software are goods liable to be taxed on their sales. The respondents have sold the intellectual property through OCLC products in India in the capacity of distributor on behalf of a foreign principal, the transactions are liable to be taxed in the light of above decisions. It is not the website access charges, but the subscriptions or prices of OCLC products sold were collected by the respondents from the Indian customers in Indian currency and paid the same to the foreign vendor principal in https://www.mhc.tn.gov.in/judis 12/43 T.C.(R)Nos.38 & 39 of 2021 foreign currency. The claim that the customers have no right to alter/edit/change the contents of the database does not support the respondents since the database sold through online full fill all the criteria of a goods as held in the decisions referred to above.
In view of these facts and judicial decisions, we feel that the orders of Appellate Assistant Commissioner (CT) are rendered without proper appreciation of facts and judicial decisions, hence, in the affirmative, we set aside the appeal orders and restore the orders of Assessing Officer. …
10. In support of these present Tax Case Revisions, the learned counsel for the petitioner relied on the following documents:-
S.No. Documents
1 Elsevier License Agreement
2 Agent Agreement
3 Invoices
11. Defending the Impugned Order, the learned Senior Counsel for the respondent, Commercial Tax Department placed reliance on the following decisions:-
i. Vikas Sales Corporation and Another V. Commissioner of Commercial Taxes and https://www.mhc.tn.gov.in/judis 13/43 T.C.(R)Nos.38 & 39 of 2021 Another. (1996) 4 SCC 433 ii. 20th Century Finance Corpn. Ltd. And Another V. State Of Maharashtra. (2000) 6 SCC 12 iii. Tata Consultancy Services V. State Of Andhra Pradesh. (2004) 137 STC 620 iv. Bharat Sanchar Nigam Ltd. And Another V. Union Of India And Others. (2006) 3 SCC 1 v. Imagic Creative (P) Ltd V. Commissioner of Commercial Taxes and Others. (2008) 2 SCC 614. vi. Infosys Technologies Ltd V. Special Commissioner Of Commercial Taxes. (2008) 17 VST 256.
vii.Infotech Software Dealers Association V. Union Of India and others. (2010) 34 VST 133. viii.Engineering Analysis Centre of Excellence (P) Ltd V. CIT. (2022) 3 SCC 321.
ix. Commissioner Of Service Tax V. Quick Heal Technologies Limited. (2023) 5 SCC 469.
12. Heard the learned counsel for the petitioner and the learned Government Advocate for the respondent, State Commercial Tax Department.
13. A reading of the preamble of the Agreement dated 01.08.2005 between the petitioner and its Principal clearly states that the petitioner was engaged as a service provider. Invoices raised for the services provided to various education institutions by the petitioner's principal https://www.mhc.tn.gov.in/judis 14/43 T.C.(R)Nos.38 & 39 of 2021 namely M/s.Elsevier B.V, Netherland Company indicate that the petitioner provided servces in India in the capacity as an agent of its principal.
14. The issue before the Hon'ble Supreme Court was whether "Canned Software" sold by M/s. Tata Consultancy Services in C.D / media were “goods” within the meaning of Section 2 (h) of the Andhra Pradesh General Sales Tax Act, 1957 and whether the same amounted to "sale" of goods under Section 2 (h) of the said Act.
15. These definitions of both "goods" and "sale" under both the Andhra Pradesh General Sales Tax Act, 1957 and the Tamil Nadu General Sales Tax Act, 1959 are similar. Sections 2 (j) of the Tamil Nadu General Sales Tax Act, 1959 and Section 2(h) of the Andhra Pradesh General Sales Tax Act, 1957 are reproduced below:-
Section 2(j) of Tamil Nadu General Section 2(h) of Andhra Pradesh Sales Tax Act,1959 General Sales Tax Act,1957 “goods” means all kinds of movable 'Goods'means all kinds of movable property (other than newspapers, property other than actionable claims, actionable claims, stocks and shares stocks, shares and securities, and and securities) and includes all includes all materials, articles and https://www.mhc.tn.gov.in/judis 15/43 T.C.(R)Nos.38 & 39 of 2021 Section 2(j) of Tamil Nadu General Section 2(h) of Andhra Pradesh Sales Tax Act,1959 General Sales Tax Act,1957 materials, commodities, and articles commodities 2(including the goods (as including the goods( as goods or in goods or in some other form), some other form) involved in the involved in the execution of a works execution of a works contract or those contract or those goods used or to be goods to be used in the fitting out, used in the construction, fitting out, improvement or repair of movable improvement or repair of movable or property; and all growing crops, grass immovable property) and also includes or things attached to, or forming part all growing crops, grass and things of the land which are agreed to be attached to or forming part of the land severed before sale or under the which are agreed to be served before contract of sale; sale or under the contract of sale 3(and also includes motor spirit;
2. Inserted by Act 18 of 1985 w.e.f.1.7.1985 Explanation:- Motor spirit means any substance which by itself or in admixture with other substances is ordinarily used directly or indirectly, to provide reasonably efficient fuel for automotive or stationary internal combustion engines, and includes petrol diesel oil, and other internal combustion oils, but does not include power alcohol, kerosene, furnace oil, coal or charcoal;
16. Section 5 of the Andhra Pradesh General Sales Tax Act, 1957, Section 3 of the Tamil Nadu General Sales Tax Act, 1959 are similar. They are the charging section. These provisions are reproduced below for the sake of clarity :-
https://www.mhc.tn.gov.in/judis 16/43 T.C.(R)Nos.38 & 39 of 2021 Section 3 of Tamil Nadu General Section 5 of Andhra Pradesh General Sales Tax Act, 1959 Sales Tax Act, 1957 Levy of taxes on sales or purchases Levy of tax on sales or purchases of of goods- goods.-
[(1)(a)(i) Every dealer, other than the (1) Save as otherwise provided in dealer, casual trader or agent of a this Act, every dealer shall pay a tax non-resident dealer referred to in under this Act, for each year on every clause (ii), whose total turnover for a rupee of his turnover of sales or year exceeds three lakhs of rupees ; purchases of goods in each year and irrespective of the quanturn of his tumover at the rates of tax and at the
(ii) every dealer in bullion, gold, points of levy specified in the silver and platinum jewellery Schedules.
including articles thereof and worn-
out or beaten jewellery and precious stones and every casual trader or (2) For the purpose of this section agent of a non-resident dealer, and the other provisions of this Act, whatever be his turnover for the the turnover on which a dealer shall be year, shall pay a tax for each year in liable to pay tax, shall be accordance with the provisions of determined after making such this Act ; deductions from his total turnover, and in such manner as may be
(b) Notwithstanding anything prescribed. contained in clause (a), every dealer (other than[a dealer in bullion, gold, (3) The taxes under this section shall silver and platinum jewellery be assessed, levied and collected in including articles thereof and worn- such manner, as may be prescribed:
out or beaten jewellery and precious stones and] a casual trader or agent Provided that, of a non-resident dealer) whose total turnover for a year exceeds three (i) in respect of the same transaction, lakhs of rupees but does not exceed the buyer or the seller, but not both, as ten lakhs of rupees shall not be determined by such rules as may be liable to pay tax on the first three prescribed, shall be taxed; lakhs of rupees of his total turnover, provided that no amount by way of (i) Where a dealer has been taxed in tax or purporting to be by way of tax respect of the purchase of any goods, has been collected by him under this in accordance with the rules referred Act in respect of that first to in clause (i) of this proviso, he https://www.mhc.tn.gov.in/judis 17/43 T.C.(R)Nos.38 & 39 of 2021 Section 3 of Tamil Nadu General Section 5 of Andhra Pradesh General Sales Tax Act, 1959 Sales Tax Act, 1957 Levy of taxes on sales or purchases Levy of tax on sales or purchases of of goods- goods.-
three lakhs of rupees. shall not be taxed again in respect of any sale of such goods effected by (2) Subject to the provisions of sub- him."
section (1), in the case of goods mentioned in the First Schedule, the tax under this Act shall be payable by a dealer, at the rate and [xxx] at the point specified therein on the turnover in each year relating to such goods :
Provided that all spare parts, components and accessories of such goods shall also be taxed at the same rate as that of the goods if such spare parts, components and accessories are not specifically enumerated in the First Schedule and made liable to tax under that Schedule :
Provided further that in the case of goods mentioned in the First Schedule which are taxable at the point of first sale, the tax under this Act shall be payable by the first or earliest of the successive dealers in the State who is liable to tax under this section.
(2-A) Subject to the provisions of sub-section (1), in the case of goods mentioned in the Fifth Schedule, the tax under this Act shall be payable by a dealer at the rate and at the point specified therein on the https://www.mhc.tn.gov.in/judis 18/43 T.C.(R)Nos.38 & 39 of 2021 Section 3 of Tamil Nadu General Section 5 of Andhra Pradesh General Sales Tax Act, 1959 Sales Tax Act, 1957 Levy of taxes on sales or purchases Levy of tax on sales or purchases of of goods- goods.-
turnover in each year relating to such goods :
[x x x] (2-B) Subject to the provisions of sub-section (1), in the case of goods mentioned in the Sixth Schedule, the tax under this Act shall be payable by a dealer at the first point of sale and the second point of sale, and at the rate specified therein on the turnover in each year relating to such goods :
Provided that at the second point of sale, the turnover of the goods liable to tax shall be arrived at by deducting the turnover of such goods on which tax has been levied at the first point of sale.
[(2-C) Subject to the provisions of sub-section (1), in the case of goods mentioned in the Eleventh Schedule, the tax under this Act shall be payable by a dealer at the rate and at the point specified therein on the turnover or quantity in each year relating to such goods.
(3) Notwithstanding anything contained in sub-section (2),[2-A or 2- C] but subject to the provisions of sub-section (1), the tax payable by a dealer in respect of sale of any goods including consumables, https://www.mhc.tn.gov.in/judis 19/43 T.C.(R)Nos.38 & 39 of 2021 Section 3 of Tamil Nadu General Section 5 of Andhra Pradesh General Sales Tax Act, 1959 Sales Tax Act, 1957 Levy of taxes on sales or purchases Levy of tax on sales or purchases of of goods- goods.-
packing material and labels, but excluding plant and machinery, to another dealer for use by the latter in the manufacture, and assembling, packing or labelling in connection with such manufacture inside the State, for sale by him of any goods other than ethyl alcohol, absolute alcohol, methyl alcohol, rectified spirit, neutral spirit and denatured spirit, goods falling under Part A of the Third Schedule, goods falling under item 1 of the Sixth Schedule and arrack, shall be at the rate of only three per cent on the turnover relating to such sale:
Provided that the provisions of this sub-section shall not apply to--
(a) any sale of [high speed diesel oil, light diesel oil and molasses ; and ]
(b) any sale, unless the dealer selling such goods furnishes to the assessing authority in the prescribed manner and within the prescribed period, a declaration duly filled in and signed by the dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority :
Provided further that any dealer who after purchasing the goods in respect https://www.mhc.tn.gov.in/judis 20/43 T.C.(R)Nos.38 & 39 of 2021 Section 3 of Tamil Nadu General Section 5 of Andhra Pradesh General Sales Tax Act, 1959 Sales Tax Act, 1957 Levy of taxes on sales or purchases Levy of tax on sales or purchases of of goods- goods.-
of which he had furnished any declaration, fails to make use of the goods so purchased for the purpose specified in the declaration but disposes of such goods in any other manner, shall pay the difference of tax payable on the turnover relating to sale of such goods at the rate prescribed and three per cent :
Provided also that the dealer purchasing the goods maintains a separate stock account for each of the goods purchased by him showing such particulars as may be prescribed.
(4) Where any dealer, after availing the concessional rate of tax under sub-section (3), does not sell the goods so manufactured, but despatches them to a place outside the State either by branch transfer or by transfer to an agent, by whatever name called, for sale, or in any other manner, except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall pay, in addition to the concessional rate of tax already paid under sub-
section (3) tax at one per cent on the value of the goods so purchased.
(5) Notwithstanding anything contained in sub-section (2), but subject to the provisions of sub-
https://www.mhc.tn.gov.in/judis 21/43 T.C.(R)Nos.38 & 39 of 2021 Section 3 of Tamil Nadu General Section 5 of Andhra Pradesh General Sales Tax Act, 1959 Sales Tax Act, 1957 Levy of taxes on sales or purchases Levy of tax on sales or purchases of of goods- goods.-
section (1), the tax payable by a dealer in respect of sale of any of the goods mentioned in the Eighth Schedule to any other dealer for installation of, and use in his factory site situate within the State for the manufacture of any goods shall be at the rate of three per cent on the turnover relating to such sale :
Provided that the provisions of this sub-section shall not apply to any sale, unless the dealer selling such goods furnishes to the assessing authority in the prescribed manner and within the prescribed period, a declaration duly filled in and signed by the dealer to whom the goods are sold, containing the prescribed particulars in the prescribed form obtained from the prescribed authority :
Provided further that any such dealer,who, after purchasing the goods in respect of which he had furnished any declaration, fails to install the goods and make use of the goods so purchased for the purpose specified in the declaration or disposes of such goods in any other manner within a period of five years shall pay the difference of tax payable on the turnover relating to sale of such goods at the rate prescribed and three per cent ;
https://www.mhc.tn.gov.in/judis 22/43 T.C.(R)Nos.38 & 39 of 2021 Section 3 of Tamil Nadu General Section 5 of Andhra Pradesh General Sales Tax Act, 1959 Sales Tax Act, 1957 Levy of taxes on sales or purchases Levy of tax on sales or purchases of of goods- goods.-
(6) Notwithstanding anything contained in sub-section(2) and subject to the provisions of sub- section(1), the tax payable by a dealer in respect of sale of rubber products including tyres, tubes and flaps inside the State, manufactured by him inside the State out of raw rubber purchased inside the State shall be reduced to the extent of an amount equal to the purchase tax paid on raw rubber over and above three per cent :
Provided that the dealer purchasing raw rubber maintains a separate stock account for the raw rubber purchased by him inside the State, showing such particulars as may be prescribed.
(7) Notwithstanding anything contained in sub-section, (2), (2-A), (2-B),[2-C] or (3), but subject to sub- sections (1) and (8), where goods are sold or purchased together with the containers or packing materials the turnover of such goods shall include the price, cost or value of such containers or packing materials, and the packing charges, whether such price, cost or value or packing charges, are charged separately, or not, and tax shall be levied thereon at the rate applicable to https://www.mhc.tn.gov.in/judis 23/43 T.C.(R)Nos.38 & 39 of 2021 Section 3 of Tamil Nadu General Section 5 of Andhra Pradesh General Sales Tax Act, 1959 Sales Tax Act, 1957 Levy of taxes on sales or purchases Levy of tax on sales or purchases of of goods- goods.-
the goods contained or packed as if such containers or packing materials were the parts of the goods sold or purchased.
(8) Where the sale or purchase of goods contained in any container or packed in any packing material is exempt from tax at the hands of the dealer, then the price, cost or value of such container or packing material and the charges for packing, forming part of the turnover of the goods under subsection (7), shall not be liable to tax.
Explanation-- For the purposes of sub-sections (7) and (8), 'containers' include gunny bags, tins, bottles or any other containers.
17. The High Court of Andhra Pradesh in Rashtriya Ispat Nigam Ltd. Vs. Commercial Tax Officer, Company Circle, Visakhapatnam [MANU/AP/0100/1989], while dealing with Section 5-E of the Andhra Pradesh General Sales Tax Act, 1975 and sale on account of “transfer of right to use” held that “transfer of the right to use” of the goods necessarily involves delivery of possession by the transferor to the https://www.mhc.tn.gov.in/judis 24/43 T.C.(R)Nos.38 & 39 of 2021 transferee and further held that delivery of possession of a thing must be distinguished from its custody. The relevant portion of the judgement reads as under:-
4 .A perusal of these provisions shows that the scope of tax on sale or purchase is considerably enlarged and that sub-clause (d) of clause (29A) of article 366 of the Constitution is now the basis of exigibility of tax under section 5-E of the Act.
5. An owner of property has a bundle of rights in it, namely, right to possess, right to use and enjoy, right to usufruct, right to consume, to destroy, to alienate or transfer, etc. In law it is not only possible but also permissible that the various rights and interest may be vested in various persons. While remaining the owner of a property, a person may create a charge on the property, mortgage it or lease it. In the transaction of sale, all the rights of the owner are transferred to the purchaser and it is said that the property in the goods passes to the purchaser. In a lease of immovable property, there is a transfer of a right to enjoy such property; "a lease of land and a bailment of chattels are transactions of essentially the same nature." (Salmond on Jurisprudence - Twelfth Edition at page 424) Section 148 of the Contract Act defines "bailment" in the following terms :
"148. 'Bailment', 'bailor' and 'bailee' defined. - A 'bailment' is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the 'bailor'. The person to whom they are delivered is called the 'bailee'."
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6. Thus in bailment there is transfer of goods for a particular period and thereafter the goods have to be returned to the person delivering them. One of the categories of bailment is hire of chattel. In Halsbury's Laws of England (Fourth Edition) at paragraph 1551 it is defined as follows :
"It is a contract by which the hirer obtains to use the chattel hired in return for the payment to the owner of the price of the hiring."
7. It is this category of bailment of goods that is the tax base under section 5-E of the Act. The taxable event under section 5-E is the transfer of the right to use any goods. What does this phrase connote ? This means that unless there is a transfer of the right to use the goods, no occasion for levying tax arises; providing a facility which involves the use of goods nor even a right to use the goods is not enough, there must be a transfer of that right.
"The transfer of a right is an event which has a double aspect. It is the acquisition of a right by the transferee, and loss of it by the transferor. The vestitive fact, if considered with reference to the transferee is a derivative title, while from the point of view of the transferor it is an alienative fact."
(Salmond on Jurisprudence - Twelfth Edition at pages 332 and 333.)
8. In Corpus Juris Secundum "transfer" is defined :
"The common use of the word 'transfer' is to denote the passing of title in property, or an interest therein, from one person to another, and in this sense the term means that the owner of property delivers is to https://www.mhc.tn.gov.in/judis 26/43 T.C.(R)Nos.38 & 39 of 2021 another person with the intent of passing the rights which he had it to the latter."
(Corpus Juris Secundum, Vol. 87, page 892.)
9. The essence of transfer is passage of control over the economic benefits of property which results in terminating rights and other relations in one entity and creating them in another. While construing the word "transfer" due regard must be had to the thing to be transferred. A transfer of the right to use the goods necessarily involves delivery of possession by the transferor to the transferee. Delivery of possession of a thing must be distinguished from its custody. It is not uncommon to find the transferee of goods in possession while transferor is having custody. When a taxi cab is hired under "rent-a- car"
scheme, and a cab is provided, usually driver accompanies the cab; there the driver will have the custody of the car though the hirer will have the possession and effective control of the cab. This may be contrasted with the case when a taxi car is hired forgoing from one place to another. There the driver will have both the custody as well as possession; what is provided is service on hire. In the former case, there was effective control of the hirer (transferee) on the cab whereas in the latter case it is lacking. We may have many examples to indicate this difference.
18.The Hon’ble Supreme Court in State of A.P. v. Rashtriya Ispat Nigam Ltd., (2002) 3 SCC 314, upheld the decision of the High Court of Andhra Pradesh. The relevant portion of the judgment reads as under:-
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4. The High Court after scrutiny and close examination of the clauses contained in the agreement and looking to the agreement as a whole, in order to determine the nature of the transaction, concluded that the transactions between the respondent and contractors did not involve transfer of right to use the machinery in favour of the contractors and in the absence of satisfying the essential requirement of Section 5-E of the Act i.e. transfer of right to use machinery, the hire charges collected by the respondent from the contractors were not exigible to sales tax. On a careful reading and analysis of the various clauses contained in the agreement and, in particular, looking to clauses 1, 5, 7, 13 and 14, it becomes clear that the transaction did not involve transfer of right to use the machinery in favour of contractors.
The High Court was right in arriving at such a conclusion. In the impugned order, it is stated, and rightly so in our opinion, that the effective control of the machinery even while the machinery was in use of the contractor was that of the respondent Company; the contractor was not free to make use of the machinery for the works other than the project work of the respondent or move it out during the period the machinery was in his use; the condition that the contractor would be responsible for the custody of the machinery while it was on the site did not militate against the respondent's possession and control of the machinery. It may also be noticed that even the Appellate Deputy Commissioner, Kakinada in the order dated 15-11- 1999 in regard to Assessment Years 1986-87 and 1987-88 held that under the terms and conditions of the agreement, there was no transfer of right to use the machinery in favour of the contractor. Although it cannot be said that the appellant was estopped from contending otherwise in regard to Assessment Year 1988-89, it is an additional factor https://www.mhc.tn.gov.in/judis 28/43 T.C.(R)Nos.38 & 39 of 2021 and circumstance, which supports the stand of the respondent.
5. In our view, no fault can be found with the order under challenge. In the light of what is stated above this appeal has no merit. Consequently it is dismissed directing the parties to bear their respective costs.
19. The decision of the Hon'ble Supreme Court in Tata Consultancy Services vs. State of A.P, (2001) 122 STC 198, which referred the case to the Larger Bench and decided in Tata Consultancy Services vs. State of A.P, (2004) 137 STC 620 which has been strongly relied upon by the learned counsel for the respondent/Commercial Tax Department and the decision of the Hon'ble Supreme Court in Commissioner of Sales Tax vs. Madhya Pradesh Electricity Board, (1969) 1 SCC 200, is not relevant. There it was held that in India the test, to determine whether a property is "goods" for purposes of sales tax, is not whether the property is "tangible" or "intangible" or "incorporeal." The test was whether the concerned item was capable of abstraction, consumption and use and whether it can be transferred, transmitted, delivered, stored, possessed, etc. https://www.mhc.tn.gov.in/judis 29/43 T.C.(R)Nos.38 & 39 of 2021
20. The Hon'ble Supreme Court in Tata Consultancy Services vs. State of A.P, (2004) 137 STC 620 observed that a software programme may consist of various commands which enable the computer to perform a desig- nated task and that the copyright in that programme may remain with the originator of the programme. But the moment copies are made and marketed, it becomes goods, which are susceptible to sales tax, Even intellectual property, once it is put on to a media, whether it be in the form of books or canvas (in case of painting) or computer discs or cassettes, and marketed would become "goods".
21. There, the Commercial Tax Officer, Hyderabad, had held that the sale of canned software (packaged branded software) were liable to tax under the provisions of Andhra Pradesh General Sales Tax Act, 1957. The said orde was affirmed by the Sales Tax Appellate Tribunal on 01.04.1996. Under these circumstances Tata Consultancy Services filed W.P.No.22375 of 1994 for a declaration that section 2 (n) read with explanation IV, sections 5 and 5-E of the Andhra Pradesh General Sales Tax Act, 1957 (for short, "the APGST Act") was ultra vires the Constitution of India and the legislative competence of the Andhra Pradesh Legislature in so far as they seek to levy tax on the amounts received on the transfer of the https://www.mhc.tn.gov.in/judis 30/43 T.C.(R)Nos.38 & 39 of 2021 right to use the software and the consequential relief restraining the respondents therein therein from taking any steps in furtherance of the impugned provision and also directing the respondents to withdraw the levy among other consequential reliefs.
22. Aggrieved by the same, the appellants filed a Tax Revision Case before the Andhra Pradesh High Court dismissed both the Writ Petition and Tax Revision in (1997) 105 STC 421 on 12.12.1996. On fact, the appeal to the Hon'ble Division Bench, the case was reffered to a larger bench in Tata Consultancy Services vs. State of Andhra Pradesh (2001) 122 STC 198.
23. The Hon'ble Supreme Court in Tata Consultancy Services vs. State of A.P, (2004) 137 STC 620, held that the moment copies are made and marketed, it becomes goods, which are susceptible to sales tax . Para 16 and para 24 reads as under :-
16. Thus this Court has held that the term "goods", for the purposes of sales tax, cannot be given a narrow meaning. It has been held that properties which are capable of being abstracted, consumed and used and/or transmitted, transferred, delivered, stored or https://www.mhc.tn.gov.in/judis 31/43 T.C.(R)Nos.38 & 39 of 2021 possessed, etc., are "goods" for the purposes of sales tax. The submis- sion of Mr. Sorabjee that this authority is not of any assistance as a software is different from electricity and that intellectual incorporeal property whereas electricity is accepted. In India the test, to determine whether software is not, cannot be a property is "goods", for purposes of sales tax, is not whether the property is tangible or incorporeal. or intangible. The test is whether the concerned item is capable of abstraction, consumption and use and whether it be transmitted. can transferred, delivered, stored, possessed, etc. Admittedly in the case of software, both canned and uncanned, all of these are possible.
24. In our view, the term "goods" as used in article 366(12) of the Constitution of India and as defined under the said Act are very wide and include all types of movable properties, whether those prop- erties be tangible or intangible. We are in complete agreement with the observations made by this Court in Associated Cement Companies Ltd. (2001) 4 SCC 593. A software programme may consist of various commands which enable the computer to perform a desig-
nated task. The copyright in that programme may remain with the originator of the programme. But the moment copies are made and marketed, it becomes goods, which are susceptible to sales tax, Eved intellectual property, once it is put on to a media, whether it be in the form of books or canvas (in case of painting) or computer discs or cassettes, and marketed would become "goods". We see no difference between a sale of a software programme on a CD/floppy disc from a sale of music on a cassette/CD or a sale of a film on a video cassette/ CD. In all such cases, the https://www.mhc.tn.gov.in/judis 32/43 T.C.(R)Nos.38 & 39 of 2021 intellectual property has been incorporated on a media for purposes of transfer. Sale is not just of the media which by itself has very little value. The software and the media cannot be split up. What the buyer purchases and pays for is not the disc or the CD. As in the case of paintings or books or music or films the buyer is purchasing the intellectual property and not the media, i.e., the paper or cassette or disc or CD. Thus a transaction sale of computer software is clearly a sale of "goods" within the meaning of the term as defined in the said Act. The term "all materials, articles and commodities" includes both tangible and intangible/incorporeal property which is capable of abstraction, consumption and use and which can be transmitted, transferred, delivered, stored, possessed, etc. The software programmes have all these attributes.
24. A reading of the above decision of the Hon'ble Supreme Court makes it clear that the decision in Tata Consultancy Services vs. State of A.P, (2001) 122 STC 198, related to levy of sales tax on canned software packages, wherein the appellants therein namely, Tata Consultancy Services were the licensees and had permission to sub- license the software in packages to others. The canned software programmes in packages included programmes like, Oracle, Lotus, Master Key, N-Export, Unigraphics etc. https://www.mhc.tn.gov.in/judis 33/43 T.C.(R)Nos.38 & 39 of 2021
25. It is in this context, the Hon'ble Supreme Court in Tata Consultancy Services vs. State of A.P, (2004) 137 STC 620 had answered as above in para-16 and 24. It is clear that a software programme is made of various commands which enables computer programmes to perform a designated task. The copyright in the programme may remain with the originator of the programme. However, the moment copies are made and marketed, it becomes goods and are therefore susceptible to sales tax. Even intellectual property, once it is put on to a media, whether it be in the form of books or canvas (in the case of painting) or computer discs or cassettes, and marketed would become "goods".
26. Admittedly, this is a case of where online data/content although can be both canned and sold was dessiminated as a services. Both are possible. However, the test in Tata Consultancy Services vs. State of A.P, (2004) 137 STC 620, cannot be applied to the facts of the present case. As mentioned above it dealt with canned software i.e. those software which are stored in C.D or other media and are sold off the shelf. There software was licensed to Tata Consultancy for being sub- licensed and sold as canned branded software. https://www.mhc.tn.gov.in/judis 34/43 T.C.(R)Nos.38 & 39 of 2021
27. A reading of the agreement makes it clear that the petitioner's principal developed E-learning products (online content) which was made available in its website and was available to be accessed by educational institutions through subscribtion on its online portals. The petitioner merely facilitated the principal by soliciting business from Educational Institutions/ Corporate Bodies for the said principal in India.
28. The activity carried out by the petitioner on behalf of principal cannot be stated as "sale" of goods within the meaning of Section 2(j) of TNGST Act, 1959. At best the activity undertaken by the petitioner to its principal in facilitating the sale of online service i.e.retrival of educational material would have been a business auxiliary service within the meaning of Section 65(19) of the Finance Act, 1994 r/w Section 65 (105) (zzb) of the Finance Act, 1994. The petitioner in turn would have been liable to service tax under Section 66 of the Finance Act, 1994 for providing taxable service under Section 65 (105) (zzb) of the Finance Act, 1994. These definitions are reproduced below :-
https://www.mhc.tn.gov.in/judis 35/43 T.C.(R)Nos.38 & 39 of 2021 Finance Act, 1994 Section 65 (19) "business auxiliary service" (105)”taxable service” means any means any service in relation to, [service provided or to be provided], -
(i) promotion or marketing or sale of (zzb)to a client, by [any person] in goods produced or provided by or relation to business auxiliary service;
belonging to the client; or
(ii) promotion or marketing of service provided by the client; or [xxx] ( iii) any customer care service provided on behalf of the client; or
(iv) procurement of goods or services, which are inputs for the client, or [Explanation: For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, "inputs" means all goods or services intended for use by the client;]
(v) production or processing of goods for, or on behalf of, the client:] (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses
(i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, [but does not include any activity that amounts to manufacture of excisable goods;] Explanation: For the removal of https://www.mhc.tn.gov.in/judis 36/43 T.C.(R)Nos.38 & 39 of 2021 doubts, it is hereby declared that for the purposes of this clause,-
(a) "commission agent" means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person-
(i) deals with goods or services or documents of title to such goods
(ii) or services; or collects payment of sale price of such goods or services;
or
(iii) guarantees for collection or payment for such goods or services;
(iv) undertakes any activities relating to such sale or purchase of such goods or services; or [(b) "excisable goods" has the meaning assigned to it in clause (d) of section 2 of the Central Excise Act, 1944 (1 of 1944);
(c) "manufacture" has the meaning assigned to it in clause (f) of section 2 of the Central Excise Act, 1944 (1 of 1944);]
29. Since the service was provided from out of the country by the principal of the pettioner namely, M/s.Elsevier B.V, at best, such a service would have amounted to provision of "online information and data base access or retrieval service" as defined in Section 65(75) and https://www.mhc.tn.gov.in/judis 37/43 T.C.(R)Nos.38 & 39 of 2021 taxable service within the meaning of Section 65(105)(zh) of the Finance Act, 1994. The respective definitions are reproduced below:-
Finance Act, 1994 Section 65 (75)"on-line information and (zh) 2[to any person], by [any person) database access or retrieval" means in relation to on-line information and providing data or information, database access or retrieval or both in retrievable or otherwise, 5[to any electronic form through computer person], in electronic form through a network, in any manner;
computer network;
30. The Hon’ble Supreme Court in M/s. K.P. Mozika v. Oil and Natural Gas Corporation Ltd. and Ors. [2024] 1 S.C.R. 488, held that the transfer of the right to use will involve not only possession, which may be granted at some stage (after execution of the contract), but also the control of the goods by the user and further held that whenever there is no such control on the goods vested in the person to whom the supply is made, the transaction will be of rendering service within the meaning of Section 65(105) (zzzzj) of the Finance Act after the said provision came into force. Para 42 of the Judgment reads as under:-
42. Essentially, the transfer of the right to use will involve not only possession, which may be granted at some stage (after execution of the contract), but also the control of the goods by the user. When the https://www.mhc.tn.gov.in/judis 38/43 T.C.(R)Nos.38 & 39 of 2021 substantial control remains with the contractor and is not handed over to the user, there is no transfer of the right to use the vehicles,cranes, tankers, etc. Whenever there is no such control on the goods vested in the person to whom the supply is made, the transaction will be of rendering service within the meaning of Section 65(105) (zzzzj) of the Finance Act after the said provision came into force..
31. Sale of software cannot be confused with dissemination of online content as a service. That apart, in this case, there is no sale of the online content by the petitioner or principal, namely M/s.Elsevier B.V, At best, the dispute in the facts and circumstances of the present case could have been examined from the point of you under Section 3-A of TNGST, Act, 1959 which deals with levy of tax on the right to use any goods.
32. The sale of online content would certainly be a sale of an intangible good and therefore would have satisfied the definition of “goods” under Section 2(j) of TNGST Act, 1959. Therefore, it would have been liable to tax under Section 3-A of TNGST Act, 1959. However, such sale should have taken place within the State of Tamil Nadu. This is not the case here. Here, there was a mere access to an online content by the petitioner's Principal to the subscribers namely educational institution. It would not amount to sale albeit “transfer of https://www.mhc.tn.gov.in/judis 39/43 T.C.(R)Nos.38 & 39 of 2021 right to use of goods” under Section 3-A of the TNGST Act, 1959 as the possession and control of the online content still remains with the principal. The subscribers are merely entitled to access the content and download the same for educational purpose, which is nothing but a online rendering of service.
33. Since the petitioner has also not put the online content on to a media or in such other form such as books, or canvas or computer discs or cassettes etc., it cannot be said that the petitioner traded in “goods” for the purpose of the definition of Section 2(j) of the Tamil Nadu General Sales Tax Act, 1959. If the petitioner or its principal had allowed the subscriber to download the entire online content for consideration by giving one time password, perhaps it can be said that there was sale viz., “transfer of rights” to use the online content to the recipient of such online content.
34. Since the petitioner has merely facilitated the principal to provide access to its online data to the subscribers, namely educational institutions / corporate bodies, it cannot be said that there was sale of "goods" or transfer of right to use.
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35. We are of the view that there is no "sale" of "goods" within the meaning of Section 2 (j) of the Tamil Nadu General Sales Tax Act, 1959 in the facts of the present case.
36. In the result, we answer the substantial questions of law in favour of the petitioner and against the Commercial Tax Department.
37. Therefore, these Tax Case Revisions are allowed. No costs. Consequently, connected miscellaneous petitions are closed.
(R.S.K.J.,) (C.S.N.J.,)
25.11.2024
Index : Yes/No
Internet : Yes/No
Neutral Citation : Yes/No
Speaking: Non-Speaking Order
kkd
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1. The Joint Commissioner ( CT) Chennai (Central) Division Chennai 600 006.
2. The Sales Tax Appellate Tribunal (Additional Bench) Chennai.
https://www.mhc.tn.gov.in/judis 42/43 T.C.(R)Nos.38 & 39 of 2021 R.SURESH KUMAR, J.
AND C.SARAVANAN, J.
Kkd Pre-delivery Common Order in T.C.(R)Nos.38 & 39 of 2021 25.11.2024 https://www.mhc.tn.gov.in/judis 43/43