TMI Blog2007 (12) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... JJ. JUDGMENT 1. The instant petition filed under Article 226 of the Constitution prays for quashing detention order dated 7.11.2007 (P-3) and subsequent proceedings thereto. It has further been prayed that direction be issued to respondent Nos. 2 and 3 to release the goods and vehicle with documents without any further delay. 2. Brief facts of the case are that the petitioner company is engaged in the manufacturing/fixation of elevator and is a registered dealer under the U.P. Sales Tax Act and Central Sales Tax Act, 1956 (for brevity, 'the C.S.T. Act'). During the course of its business the petitioner-company agreed with E.P. (India) Ltd.-respondent No. 4 to supply and fix E.C.E. Elevator at site No. 5 of Punjab National Bank, Ferozepur Road, Ludhiana. On 31.7.2007, contract was signed prescribing dimensions of the lift and for carrying out installation etc. (P-l). The petitioner-company dispatched the goods vide-challan-cum-invoice No. 185, dated 6.11.2007 and challan CED/GEB No. 112, dated 6.11.2007 to respondent No. 4 (P-2 and P-2A). It is claimed that the bills contained all the particulars of the goods viz, quantity, quality, price, tax charged etc. The g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;. It has been asserted that in the present case neither the contractor nor the contractee are registered under the Punjab Value Added Tax Act, 2005 (for brevity, 'the Act') and the C.S.T. Act, in the State of Punjab. It is claimed that they are liable to pay tax and are obliged to file returns in accordance with the provisions of the Act. 5. It has further been asserted that the petitioner has deliberately withheld the VAT number of the consignee-respondent No. 4. A reference has been made to Section 2(z)(u) of the Act to assert that it included any agreement for carrying out for cash even installation or commissioning of any movable or immovable property. It has also been claimed that the petitioner is covered by expression 'person' used in Section 2(t) of the Act. The respondents have claimed that the petitioner as required to come forward for getting the goods released in accordance with the provisions of Section 51(6)(a) of the Act, which require furnishing of adequate security equivalent to the amount of penalty and tax involved, despite the fact that notice under Section 51(7)(b) of the Act was issued. It is repeatedly claimed that the petitioner is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.N.), dated 26.2.2006, for deposit of VAT/Tax, which is deducted @ 2% from various contracting agencies. Mr. D.S. Brar, learned Counsel for the petitioner has submitted that last year also the petitioner faced with the similar difficulties, which resulted in filing of C.W.P. No. 19392 of 2006 and the aforementioned petition was dismissed as withdrawn because after issuance of notice for admission of petition the goods belonging to the petitioner were released, as is evident from perusal of order dated 8.12.2006 (P-7). He has pointed out that the goods were nothing else but lift parts, which have been brought in knock down condition. Therefore, learned Counsel has submitted that every time a lift is supplied to a buyer in the State of Punjab, the petitioner cannot be put to unnecessary curbs and harassment, especially when the position stands settled. He has further submitted that the provisions of Section 21 of the Act, requiring registration by any person, would not apply to the petitioner as the expression 'person' in Section 2(t) and (i) of the Act does not cover a person like the petitioner, who is not engaged in the business of transfer of goods for cash or default ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition merits acceptance. The primary question which requires determination in this matter is whether the sale of lifts by the petitioner to respondent No. 4 in pursuance to agreement dated 31.7.2001 (P-l), entered into between the petitioner and respondent No. 4, was an inter-State sale or intra-State sale attracting payment of Value Added Tax under the Act. In that regard the transaction is required to be subjected to a test as laid down by a Constitution Bench of Hon'ble the Supreme Court in the case of State of A.P. v. National Thermal Power Corporation Ltd. . Discussing as to what would be a sale in the course of inter-state trade, it has been held in para 24 as under: 24. It is well settled by a catena of decisions of this Court that a sale in the course of inter-State trade has three essential ingredients: (i) there must be a contract of sale, incorporating a stipulation, express or implied, regarding inter-State movement of goods; (ii) the goods must actually move from one State to another, pursuant to such contract of sale, the sale being the proximate cause of movement; and (iii) such movement of goods must be from one State to another State where the sale conclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per BOQ at Annexure-I. The terms Conditions governing the order shall interalia include the following: 1. SCOPE OF WORK: Design, Manufacture, Supply, Installation, Testing and Commissioning of 2(two) Nos. 10 passenger (680 Kgs.) capacity, 1.0 M/sec speed Lifts for Zonal Office Building R.C.C. frame structure (Basement and ground plus 4 upper floors) under construction for Punjab National Bank at Ferozepur Road, Ludhiana, Punjab. 13. The second condition that the goods must actually move from one State to another in pursuance to contract of sale, the sale being the proximate cause of movement stand also fulfilled because both the lifts according to specification were supplied to respondent No. 4 at Ludhiana, as is evident from the invoice dated 6.11.2007 (P-2). The invoice further shows that Central Sales Tax @ 12% stood paid. Therefore, the proximate cause of movement was the contract of sale although installation was also involved, which is incidental. The third condition that such movement of goods must be from one State to another State where the sale has been concluded is also obviously stands satisfied because the goods have moved from New Delhi to the State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is settled law that the substance and not the form of the contract is material in determining the nature of transaction. No definite rule can be formulated to determine the question as to whether a particular given contract is a contract for sale of goods or is a works contract. Ultimately, the terms of a given contract would be determinative of the nature of the transaction, whether it is a sale or a works contract . Therefore, this question has to be ascertained on facts of each case, on proper construction of terms and conditions of the contract between the parties. 15. When we examined the agreement of sale, dated 31.7.2007 (P-1) between the petitioner and respondent No. 4 in the light of observations made by Hon'ble the Supreme Court, it becomes patent that the main object of installation of lifts at the Zonal Office Building for the Punjab National Bank under construction, was not one for 'work and labour' because the lifts have been transported and supplied to respondent No. 4 under the agreement in a semi-knocked down condition, which were to be installed at the Zonal Office Building for the Punjab National Bank. The installation part is only an inciden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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