JOHN ENERGY LIMITED Vs. STATE OF TRIPURA

JUDGEMENT

(1.) This petition is filed by company registered under the Companies Act and who is engaged in providing services of drilling and work over rig. The petitioner specializes in servicing and recharging oil wells of ONGC as per the requirements and specifications of ONGC. Carrying out such works includes drilling, work over rig and allied services. For such purpose, the petitioner possesses its own equipments, tools, has high-skilled and semi-skilled manpower including engineers. As and when the contract is awarded by the ONGC the petitioner deploys its machinery and manpower for the specific work assigned by ONGC. At the time of completion of the work, the petitioner company removes all its equipments and tools and also withdraws the manpower deployed for the work. The petitioner was awarded a contract by ONGC under a work order dated 28.07.2016 for carrying out one such oil servicing work for and on behalf of ONGC. This contract was awarded to the petitioner pursuant to a tender floated by ONGC for such purpose. The Tripura Value Added Tax department sought to levy VAT on the transaction in question on the premise that in the process of execution of the work in question, there was transfer of right to use the machinery and equipments. The Value Added Tax department issued instructions to ONGC to deduct tax at source on such transactions upon which the petitioner filed the present petition.

(2.) It is not necessary to take note of the relevant terms and conditions of the work order, i.e. the agreement under which the petitioner had carried out the work in question for ONGC since it is an undisputed position that identical situation had come up before this Court and by a judgment in case of Quippo Oil and Gas Infrastructure Ltd. v. State of Tripura and others reported in (2015) 1 TLR 38 the Court had held that the transaction in question is not exigible to Value Added Tax. This was on the premise that according to the Court the contract comprised mainly of hiring of services and a very small element of transfer of right to use goods was involved. It was held that the intention of the parties was to treat the contract as a contract for hiring of services and it was not permissible to divide the contract into two separate parts namely of engagement of services and transfer of right to use the goods. On such basis, the Court came to the following conclusions:

(3.) We are informed that the State of Tripura had challenged this judgment before the Supreme Court and the SLP was dismissed by an order dated 01.02.2017. Thus, this judgment has achieved finality and the issues so far as this Court is concerned must rest here.