TMI Blog2003 (6) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... contention in full, and had determined the taxable turnover at Rs. 3,24,920, after granting deduction in respect of the materials already suffered tax. The Deputy Commissioner, Commercial Taxes, Alappuzha, however, initiated suo motu proceedings under section 35 of the Kerala General Sales Tax Act, 1963 (for short the Act ) and set aside the assessment on the ground that a scrutiny of the assessment records revealed that the assessee was manufacturing mosaic tiles in his factory using raw materials purchased from inside and outside the State, and then the mosaic tiles are taken to work sites for laying on contract basis. According to the Deputy Commissioner, the deemed sales of mosaic tiles by the contractor to the awarder was liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a single Judge of this Court in Sivanandan v. State of Kerala (1994) 2 KTR 256, particularly the observations made in paragraphs 34 and 35 occurring at page 272 of the said report. Counsel accordingly submitted that both the Deputy Commissioner and the Tribunal had erred in holding that the assessee is liable to tax on the turnover of mosaic tiles used in the execution of the works contract. 3.. We have also heard the learned Government Pleader appearing for the respondent. He submits that the assessee is having a factory, in which he is engaged in the manufacture of mosaic tiles, and that the contracts entered into by the assessee with various parties were for supply of mosaic tiles and for laying and polishing the same, and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of first sale in the State. Since, admittedly, the mosaic tiles are stated to have been manufactured by the assessee and used the same in the execution of the works contract, the sales turnover is liable to tax at the hands of the assessee. On the other hand, if the contract was one for mosaic flooring simpliciter, and if the assessee purchased raw materials and, incidentally, converted the same into mosaic tiles for the purpose of execution of the contract, it cannot be said that the intermediate product, viz., mosaic tiles manufactured by the assessee for the purpose of execution of the contract of mosaic flooring, be made liable to tax under the Act. A learned single Judge of this Court, in Sivanandan's case (1994) 2 KTR 256 mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate category of goods. That is what the offending words in the two provisos seek to do. They are therefore bad. 35.. The position as it stands under the provisos is like this. Iron and steel which have been used by the contractor in the making of a window grill, or a trellis work, or a truss; or cement, and iron and steel used for making a pile which is driven into the foundation; or timber made into doors and windows, which are subsequently used in the work, will be liable to be taxed (though otherwise non-liable exempt), merely because they have undergone a process of processing or manufacture before being used in the work. This, in my opinion, is not correct. The transformation which these goods undergo at the hands of the contractor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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