Additional Commissioner of Sales Tax vs Mahyco Monsanto Biotech (India) Ltd.

Admit. The following three questions were raised by the respondent u/s 52 of the Bombay Sales Tax Act, 1959 in respect of the applicability of the Maharashtra Lease Tax Act, 1985:

(1) Whether the sub-licence of Monsanto Technology vide agreement dated April 26, 2002 amounts to ''sale'' u/s 2(10) of the Maharashtra Lease Tax Act, 1985?

(2) If the transaction vide agreement dated April 26, 2002 amounts to a "sale" under the Maharashtra Lease Tax Act, 1985, whether the same is covered under any of the entries in the Schedule to the Maharashtra Lease Tax Act, 1985?

(3) Whether the applicant is liable for registration under the Maharashtra Lease Tax Act; 1985?

Question Nos. (1) and (3) were not pressed. However, it must be pointed out that before the Commissioner, an application was made that the liability if any, be made only prospective to the ruling u/s 52 of the BST Act. Further, before the Tribunal, the respondent urged that the prayer of prospective effect may be decided first and that if the prayer is disallowed, then the determination u/s 52(1)(e) may be taken up for hearing and decision. This pertained to the other two questions which were not pressed. The Commissioner held that the sale of the technical know-how was covered by entry 22 of the Lease Act but rejected the prayer for prospective effect The Tribunal, on the respondent''s appeal, exercised power u/s 52(2) and issued directions that the impugned transactions effected by the respondent during the period up to 31st March, 2005 shall not be liable to tax under the Lease Act provided the appellant has not collected any tax thereon. Accordingly, the Tribunal has held that it was not necessary to hold that section 52(1)(e) applies.

An important question arises as to whether the power u/s 52(2) was validly exercised although the first and third questions originally raised u/s 52 were not pressed. One of the reasons for exercising power u/s 52(2) of the BST Act was that it is doubtful whether the transaction constituted a sale at all or not. However, that issue was not even determined. It is in this background that it is necessary to ascertain whether the exercise of powers u/s 52(2) of the BST Act was valid or perverse.

The following important question of law therefore arises:

Whether, on the facts and in the circumstances of the case and on the true and correct interpretation of the provisions contained in section 4 and section 8(1) of the Maharashtra Sales Tax on the Transfer of the right to use any Goods for any Purpose Act, 1985 (the Lease Act) read with section 52 of the Bombay Sales Tax Act 1959 (the BST Act), the Tribunal was justified in directing that the impugned transaction of sales of technical know-how effected by the respondent during the period up to March 31, 2005 shall not be liable to tax provided the respondent has not collected the tax thereon, in spite of the fact that the legality of the said transaction being that of sales as defined u/s 2(10) of the Lease Act was not in dispute either in the proceedings before the Commissioner of Sales Tax or in the proceedings before the Tribunal?

The Tribunal is therefore directed to draw up a statement of the case, frame the question of law and refer it to this court. It is clarified however that in the event of the question being determined against the respondent, the respondent''s rights u/s 52(1) would stand revived. The sales tax application is accordingly disposed of.