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2014 (10) TMI 810 - HC - VAT and Sales TaxWrit petition against the SCN issued under VAT - SCN issued for rectification of the exemption fees certificate in prescribed form VAT-14 - Held that:- While the jurisdiction of the assessing authority under section 33 of the Act of 2003 to rectify the apparent mistake as such is not challenged and possibly cannot be challenged also, the mixed questions of facts and law including certain complex questions, if decided by this court at this stage, would be like putting the cart before the horse. The assessing authority has the quasi-judicial discretion and authority to decide all these questions, which are raised in the present writ petitions and this court is at loss to understand how without even replying the show-cause notice, the petitioner-company chose to straightway invoke the extraordinary jurisdiction of this court under article 226 of the Constitution of India for challenging the impugned rectification proceedings. Taking a view in favour of the Revenue is within the discretion of the assessing; authority and to contend otherwise is the pain of such proceedings for the assessee but it cannot mean that every such show-cause notice or appealable order passed upon such show-cause notice has to be adjudged as right or wrong in writ jurisdiction. If the thing to be delivered has any individual existence before the delivery as the sole property of the party who is to deliver it, then it is a sale. If the bulk of material used in construction belongs to the manufacturer who sells the end-product for a price, then it is a strong pointer to the conclusion that the contract is in substance one for the sale of goods and not one for labour. However, the test is not decisive. It is not the bulk of the material alone but the relative importance of the material qua the work, skill and labour of the payee which also has to be seen. If the major component of the end-product is the material consumed in producing the chattel to be delivered and skill and labour are employed for converting the main components into the end-products, and the skill and labour are, only incidentally used, the delivery of the end-product by the seller to the buyer would constitute a sale. On the other hand, if the main object of the contract is to avail of the skill and labour of the seller though some material or components may be incidentally used during the process of the end-product being brought into existence by the investment of skill and labour of the supplier, the transaction would be a contract for work and labour. While the exemption fees in lieu of tax on works contract is admittedly based on the total value of the contract, which total value may comprise of the taxable portion (supply of goods) of works contract as well as non-taxable (labour and service) of such works contract, still the exemption fee is levied on the gross total value of the contract, therefore, the question of imposition of tax on taxable portion of works contract does not arise in the present case of question of relating to exemption fees on gross value of the contract and, therefore, the judgments relied upon by the learned counsel for the petitioner seeking to contend that the assessing authority is not entitled to levy higher amount of exemption fee on the basis of law propounded in these judgments is an argument, with respects, is an argument off the mark and, therefore, the same is liable to be rejected. Court is not inclined to pronounce upon the identity of two contracts as one and the same is left open for the assessing authority to do so after the assessee files its reply along with relevant evidence and the assessing authority adjudicates upon the said issues, this court cannot agree with the contention of learned counsel for the petitioner that the two contracts in question lie in a water tight separate compartment and cannot be treated as one integrated contract. The said integrated one contract from the stage of designing to commissioning of plant and equipments, if it is ultimately held to be one integrated contract, may fall under clause (3) of the notification dated August 11, 2006 rather than clause (2). Be that as it may, since all these questions are open questions yet to be decided by the assessing authority, this court, advisedly, does not want to go into the finer details of the questions of facts and apply, the law propounded by the superior courts at this stage. - Decided against Assessee.
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