Page 245 - GSTL_21st May 2020_Vol 36_Part 3

2020 ] IN RE : SIEMENS LTD. 491
47. Further appellant in support of his claim has cited some decisions
related to how the agreement is to be read, which are; M/s. VISA International
Limited v. Continental Resources (USA) Limited, [2009 (2) SCC 55], Union of India v.
Mahindra and Mahindra [1995 (76) E.L.T. 481 (S.C.)] and Mirah Exports Pvt. Ltd. v.
Collector of Customs [1998 (98) E.L.T. 3 (S.C.)], Rajasthan Spg. & Wvg. Mills Ltd. v.
Commissioner of C. Ex., Jaipur [2001 (131) E.L.T. 594 (Tri. - Del.)], S.S. Associates v.
Commissioner of C. Ex., Bangalore [2010 (19) S.T.R. 438 (Tri. - Bang.)]. The sum &
substance of these decisions is that the Department cannot question the commer-
cial wisdom of the parties entering into an agreement and must proceed on the
basis that what is stated in the contract reflects the true nature of the intent and
transaction and that it is therefore impermissible for the tax authorities to go be-
hind the language of the contract or act contrary to it without producing evi-
dences. In this respect we refer to the Supreme Court judgment in the case of
Bhopal Sugar Industries Ltd. v. Sales Tax Officer, Bhopal on 14 April, 1977 (Equiva-
lent citations : AIR 1977 SC 1275, 1977 SCR (3) 578). The Apex Court has ob-
served the following -
“It is well settled that while interpreting the terms of the agreement, the
Court has to look to the substance rather than the form of it. The mere fact
that the word ‘agent’ or ‘agency’ is used or the words ‘buyer’ and ‘seller’
are used to describe the status of the parties concerned is not sufficient to
lead to the irresistible inference that the parties did in fact intend that the
said status would be conferred. Thus, the mere formal description of a per-
son as an agent or buyer is not conclusive, unless the context shows that the
parties clearly intended ‘to treat a buyer as a buyer and not as an agent.”
It is clear from the observations made by this Court that the true relation-
ship of the parties in such a case has to be gathered from the nature of the
contract, its terms and conditions, and the terminology used by the parties
is not decisive of the said relationship.”
Thus, what the Supreme Court says above is that the form of the agreement is
not important, it is rather the substance which has to be seen. The parties may
use any words they like to suit their intention and it is therefore imperative that
the agreement may not be taken as it is but its nature/substance has to be seen to
arrive at the correct conclusions.
48. The appellant in support of his claim of exemption related to trans-
portation services has relied on some judgments like Bharathi Soap Works v. CCE
& C., Guntur [2008 (9) S.T.R. 80 (Tri. - Bang.)]; Essar Logistics Ltd. v. CCE, Surat
[2014 (33) S.T.R. 588 (Tri. - Ahmd.)], etc. and Commissioner of Cus. (Prv.), Amritsar
v. Malwa Industries Ltd. [2009 (235) E.L.T. 214 (S.C.)]. The judgments quoted by
the appellants are with respect to the transactions of transportation contract
which appellant has considered it as a separate contract and in isolation of other
contract of supply of goods. Here the contract of transportation of goods is not be
considered in the isolation but it has to be read along with the contract of supply
of goods since performance of both of these contracts being interdependent and
naturally bundled resulting into composite supply under GST. The decisions re-
lied upon by the applicant in support of his claim are not applicable to the facts
of the case considering the fact that the nature of supplies under contracts being
composite supply under Goods and Services Tax Act, and the supply of trans-
portation services cannot be considered in isolation in determining the levy of
tax.

GST LAW TIMES  21st May 2020  245