Lease transaction- Tax tro be levied as per the alw prevailing on the date of lease (not on the date of payment)

High Court of Karnataka

Tax laws applicable on the date of lease of the goods will govern and not the laws on date of receiving the payment.

The State of Karnataka

Vs.

M/s. Lease Plan India Limited

06/08/2014:

Respondent assessee leased vehicle to its customer on some date prior to introduction of KVAT Act  for a period of five years on rental payable monthly. The said lease transaction, being subsequent sale was not taxable in earlier Act. Held-After the coming into force of the new Act, the assessee has not leased any car to his customers. Lease was prior to 1.4.2005. It is for a period of 5 years. Under the terms of the agreement, the customer has to pay lease rents for every month for a period of 5 years. Therefore, though the assessee continued to receive rentals every month after 1.4.2005, it is in pursuance of a sale which took place prior to 1.4.2005. As no sale has taken place after 1.4.2005, the liability to pay tax under Section 3 does not arise.

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