Indian Kanoon - Search engine for Indian Law

21. That being so, the rent charged by the Bank for user of the Lockers also cannot be taxed under the Act and that is another reason vitiating the impugned orders of assessment and notices issued by the respondents to the Banks attracting liability of tax upon the petitioners under the Act.

Moreover, the entire transaction of hiring of a Locker by a customer or letting out a Locker by the Bank to its customers involves service with primary object of safety and security of the valuables of the customers kept in the Lockers. It is an indivisible contract and not a composite contract. Even in those cases, where sales tax would have been chargeable on that element of a contract which is part of a composite contract but is distinct, but in case of an indivisible contract, the amount cannot be separated to attract the liability of sales tax at all. In Imagic Creative Pvt. Ltd. (supra), the Court with reference to payment of service tax as well as sales tax observed "Payments of service tax as also the VAT are mutually exclusive. Therefore, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in a case of this nature, sales tax would be payable on the value of the entire contract; irrespective of the element of service provided.