2025-VIL-490-P&H
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VAT High Court Cases

Punjab Value Added Tax Act, 2005 – Supply of goods for trial purpose, Transfer of right to use goods, Deferred payment – Appellant supplied telecom equipment to M/s Spice Communications Pvt. Ltd. on a 2-year trial use basis with an option for Spice Communications to purchase the equipment at the end of the trial period – Dept imposed a tax demand on the appellant-company for the value of goods supplied to Spice Communications, which was upheld by the Tribunal on appeal - Whether the supply of goods on a trial use basis for 2 years, with an option to purchase at the end of the trial period, constitutes a "sale" under Section 2(zf) of the Punjab VAT Act, 2005 – HELD - The definition of "sale" under the PVAT Act includes "transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration" - As per the agreement, Spice Communications had the option to purchase the equipment at the end of the 2-year trial period, and the payment terms involved deferred payment in installments. Since the equipment was not returned by Spice Communications within the trial period, the transaction amounted to a "sale" and the value of the goods supplied was correctly included in the appellant-company's taxable turnover - the supply of goods on a trial use basis with an option to purchase at the end of the trial period, would constitute a "sale" under Section 2(zf) of the Punjab VAT Act, 2005 - the impugned orders passed by the learned Tribunal is upheld and the appeal is dismissed
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