HLS ASIA LTD Vs. STATE OF ASSAM

JUDGEMENT

(1.) THE challenge to deduction of tax under the Assam General Sales Tax Act, 1993 (hereafter referred to as the Act) by Oil India Limited, Duliajan, (hereafter referred to as the OIL) from its bills for the services rendered under Contract No. OIL/cco/geol/global/07/98 having failed, the writ petitioner M/s HLS Asia Ltd. , is in appeal.

(2.) WE have heard Dr. Todi, Sr. Advocate assisted by Ms. D. Das, Advocate for the appellant, Mr. S. N. Sharma, Sr. Advocate for OIL and Mr. D. Saikia, learned Standing Counsel, Finance Department, for the revenue.

(3.) THE appellant's pleaded version is that it is a public limited Company registered under the Companies Act, 1956, engaged in contract business with OIL and provides highly professional and technical services in connection with extraction of oil and are also engaged in wire-line logging activities. It entered into a contract registered as above with OIL on 10. 09. 1999 for carrying out wire line logging and perforation activities consisting of electronic/seismic scanning of subterranean strata and rock formation in the oilfields by utilizing its own high tech equipments. In the process such equipments are to be released deep down into the subterranean region through drilled holes into the oil fields, which generate electronic/seismic impulses to be processed through special software and recorded through magnetic tapes. These equipments are owned and used by the Company to be engaged for providing such services to OIL. In terms of the contract, the equipments remained in absolute possession of the Company and used by it to provide the required data and other professional services. The equipments were operated by utilizing the services of highly technically qualified and experienced personnel of the Company. It has been categorically pleaded that the appellant Company used its own equipments, which were never handed over to OIL as stipulated in clause 7. 13 of the contract agreement. The contract further contained clause 7. 14 whereunder OIL was to deduct sales tax from the contractor while making payments. According to the appellant, this provision was unnecessary in view of the fact that no such tax was leviable considering the nature of the works to be rendered under the contract. However, in terms thereof, OIL deducted sales tax under the Act from its bills. Its representation that as in the face of the definition of "sale", "lease" and "operating lease" engrafted in Sections 2 (3), 2 (19) and 2 (25) respectively and the nature of the transaction visualized in the contract agreement did not contemplate transfer of right to use any goods, no such tax was payable, having failed to elicit any positive response, the appellant approached this Court for redress.