M/s.A.R.Airways (Pvt.) Ltd.,
8/23, Mehram Nagar,
New Delhi - 110 037.
Present for the Applicant : Shri Manoj Kr. Jain
Present for the Department : Shri Nitya Nand, DR.
ORDER
The above named applicant has filed this application u/s 84 of the Delhi Value Added Tax Act, 2004 (herein after referred to as the "said Act") and the questions put up before this Court for determination under the aforesaid provision of law is as under:
"Whether a sale is exempt from tax under Section 6 of the DVAT Act as non-business assets?"
2. The application for determination has been made in the prescribed format DVAT-42 and the requisite fee of Rs.500/- paid through Demand Draft No.11685 dated 7-02-2008.
3. The facts as stated in the application are that the Applicant is doing the business of hiring Air Craft to the public for hire charges. It is stated that during the hiring, entire possession and supervision of the aircrafts is held by the company as the pilots, airhostesses, technicians etc. are company employees. It is further stated that the company is not a registered dealer under the DVAT Act, 2004 and is not in the business of buying and selling of aircrafts. The aircrafts are the assets of the company as capital goods. It is stated that the company proposes to sell one aircraft (asset, being other than their business activity). The transaction of the dealer as mentioned by him in his application is "sale of aircraft, old and used". In the application, the Applicant has also stated whether this sale is subject to levy of VAT in Delhi, if yes at what rate.
4. Shri Manoj Kumar Jain, Authorised Signatory of the company appeared and reiterated the contentions as raised in the application.
5. The D.R. referred to various provisions of the DVAT Act, 2004 with reference to the question raised by the Applicant, as under.
(A) The definition of business in Section 2(d) sub-clause (v) is as follows:
"Any occasional transaction in the nature of such service, trade, commerce, manufacture, adventure or concern whether or not there is volume, frequency, continuity or regularity of such transaction;
Whether or not such service, trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any gain or profit accrues from such service, trade, commerce, manufacture, adventure or concern;
Explanation:- For the purpose of this clause -
(i) Any transaction of sale or purchase of capital assets pertaining to such service, trade commerce, manufacture, adventure or concern shall be deemed to be business."
(B) The definition of "goods" in Section 2(m) is quoted below:
"(m) "goods" means every kind of moveable property (other than newspapers, actionable claims, stocks, shares and securities) and includes -
(i) livestock, all materials, commodities, grass or things attached to or forming part of the earth which are agreed to be severed before sale or under a contract of sale; and
(ii) ... ... ...
A reading of the above clause shows that aircraft does not come under the category of exception in Section 2(m) of the Act and the transaction as referred above is liable to be included in the definition of sale.
(C) The definition of sale as given in Section 2(zc) sub-clause (viii) read with sub-clause (ix) of Section 2(j) are quoted below:
"(zc) "sale" with its grammatical variations and cognate expression means any transfer of property in goods by one person to another for cash or for deferred payment or for other valuable consideration (not including a grant or subvention payment made by one government agency or department, whether of the central government or of any state government, to another) and includes -
(i) to (vii) ... ... ...
(viii) every disposal of goods referred to in sub-clause (ix) of clause (j) of this section.
(D) The definition of "dealer" as per Section 2(j) of the DVAT Act, 2004 reads as under:
(j) "dealer" means any person, who for the purpose of or consequential to his engagement in or in connection with or incidental to or in the course of his business, buys or sells goods in Delhi directly or otherwise, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration and includes-
(i) to (viii) ... ... ...
Explanation - For the purpose of this clause, each of the following persons, bodies and entities who sells any goods whether in the course of his business, or by auction or otherwise, directly or through an agent for cash or for deferred payment or for any other valuable consideration, shall, notwithstanding anything contained in clause (d) or any other provision of this Act, be deemed to be a dealer, namely: -
(i) to (viii) ... ... ... ...
(ix) Shipping and construction companies, air transport companies, airlines and advertising agencies.
6. Section 3 of the Act is the charging Section and mandates that every dealer who is either a registered dealer or required to be registered under the Act shall be liable to pay tax calculated in accordance with this Act.
7. Section 6 dealing with exempted sales quoted by the applicant is reproduced hereunder:
"6. Sale exempt from tax:
(1) The sale of goods listed in the First Schedule shall be exempt from tax subject to the conditions and exceptions set out therein.
(2) The dealers or class of dealers specified in the Fifth Schedule shall be exempt from payment of tax on all sales of goods effected by them subject to such conditions as may be prescribed.
(3) Where a dealer sells capital goods which he has used since the time of purchase exclusively for purposes other than making non-taxed sale of goods, and has not claimed a tax credit in respect of such capital goods under section 9, the sale of such capital goods shall be exempt from tax.
8. The DR pointed out that item under consideration does not find any mention in First Schedule to the DVAT Act, 2004 and that the Applicant also is not covered in Fifth Schedule V of the DVAT Act, 2004.
9. The D.R. further pointed out that provisions of sub-section (3) of Section 6 of the DVAT Act, 2004 are not applicable in the case of the Applicant. The Applicant has not used the capital goods exclusively for purposes other than making non-taxed sale of goods. Since capital goods in question has not been used exclusively for taxed sale of goods, the condition precedent for claiming exemption under sub-section (3) of Section 6 is conspicuous by its absence. Since the Applicant has not used the capital goods exclusively for purposes of taxed sale of goods, there is no question of the Applicant claiming any tax credit and therefore even the second condition for applicability of sub-section (3) of Section 6 is also not attracted.
10. The D.R. pointed out that the Applicant also stands covered as a casual trader under Section 2(g), which is reproduced hereunder:
"(g) "casual trader" means a person who, whether as principal, agent or in any other capacity undertakes occasional transactions in the nature of business involving buying, selling, supply or distribution of goods or conducting any exhibition-cum-sale in Delhi whether for cash, deferred payment, commissioner, remuneration or other valuable consideration.
11. I have carefully considered the documents filed by the Applicant and heard both the parties. I am of the view that the exemption under sub-section (3) of Section 6 of the DVAT Act, 2004 is not attracted because both the conditions prescribed therein are conspicuous by their absence. As per discussions of law above, there is no doubt that the Applicant ought to pay tax on the sale of old and used aircraft as under the scheme of the Act there is no exemption available to it and I hold that the entire consideration received shall be taxed at the rate of 12.5% as the item is unspecified.
Held accordingly.
(Archna Arora)
Commissioner (T&T)