2013 (7) TMI 895 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of the Tamil Nadu General Sales Tax Act regarding the transfer of property in works contract of dyeing.
2. Assessment of the processes of dyeing and printing of cloth under the said Act.
3. Determination of whether the transfer of property in goods in works contracts is significant enough to attract the provisions of the Act.

On the first issue, the Tribunal held that without proof of transfer of property in the execution of works contract, a 50% exemption on total turnover should be given for labour and other charges, with only 50% of turnover assessed as costs of dyes as consumables. This decision led to a reduction in penalty.

Regarding the second issue, both parties acknowledged that a previous court decision (T. C. No. 78 of 2011) had addressed a similar matter. In that case, it was established that the purchase of dyes and chemicals outside the State for works contracts constituted a "sale" and fell under section 3B of the Act, based on the precedent set by the Rainbow Colour Lab v. State of Madhya Pradesh case. Consequently, the court allowed the tax case revision and overturned the decision of the Sales Tax Appellate Tribunal.

In conclusion, the court set aside the order of the Sales Tax Appellate Tribunal based on the precedent established in a previous case. As a result, the tax case revision was allowed without any costs incurred.