KOCHI REFINERIES LTD., AMBALAMUGAL Vs. STATE OF KERALA

JUDGEMENT

(1.) Two revisions against two orders of the Tribunal for two assessment years. The questions of law raised are almost similar and hence these revisions are taken up together. In S.T.Rev.No.86 of 2012, with respect to the assessment year 2001-02, the assessee has approached this Court with three questions of law; one an omnibus claim on the various exemptions and concessions raised before the Tribunal and the other on refusal of the Tribunal to verify Form-18 declarations and SRO Forms produced for concessional rate of tax. We see that a number of grounds have been raised before the Tribunal, which have not been raised as questions of law in the revision. Essentially the questions arising are on facts, but despite that for examination of the issues, we re-frame the questions for consideration as follows:

(2.) On the questions raised as (1) and (2), the claim of the assessee is that the assessee purchase furniture for the use of its employees, which is used by them in the residential quarters allotted to them. There is a specific contract levying hire charges for such furniture, which charges are to be paid for a period of seven years, on expiry of which or on retirement or transfer prior to that period; the employee is given an option to exercise his right to purchase the same. The AO has levied tax on the hire charges collected, alleging it to be charges on the transfer of right to use. The further sale component at the time of exercise of option by the employees has also been taxed. The first appellate authority and the Tribunal refused to interfere with the same. The contention of the assessee is that, in fact, it is a loan to the employees for the purpose of purchase of furniture. If it were a loan it should have been disbursed so, but the specific contract reveals that the assessee retained the ownership of the furniture and also received hire charges for the same. The three purchase vouchers in the name of the assessee, produced by the assessee itself, goes against its contention that it was a mere loan. The assessee had been supplying furniture to its employees and also had been taking hire charges for the same which definitely comes within the ambit of a transfer of right to use and we do find any reason to interfere with the order of the AO as approved by the Tribunal. The tax levied on such transfer of right to use cannot be faulted.

(3.) The next question is on the sale to the employees being a second sale. The assessee had produced before the Tribunal three invoices which indicated purchases from a manufacturer of furniture. The Tribunal only to that extent granted relief, insofar as the second sale was absolved from liability to tax. The assessee did produce any evidence to indicate that the other furniture supplied to its employees and later purchased by them, had suffered tax at the earlier point. Hence, there could be no interference on that count also.