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2013 (12) TMI 1586 - HC - VAT and Sales TaxWorks contract of civil works - iron and steel - classification of goods - taxable at 4% or 12.5%? - Held that: - Merely because iron and steel are cut into a particular length depending on the requirement and they are bound by wire and converted into a particular shape, the iron and steel do not lose their original characteristics. It continues to be the same product. Even after these beams, pillars, roofs are cast, the rod and steel continues to be in the same position in the buildings or the bridge which is constructed. At no point of time the iron and steel is transformed into a new product/ goods. There is no value addition to the said steel rods and beams. In fact, steel rods and beams. In fact, steel rods are used only to reinforce the cement concrete. It is used because it is iron and steel rod and it continues to be iron and steel rod even after the completion of the building or the bridge which is constructed, in which these iron and steel rods are used. Therefore, it continues to be the declared goods. By virtue of Section 15 of the CST Act, the state has an authority to impose tax. It cannot impose tax more than the tax prescribed in Section 15 of the Act - the Assessing Authority was justifies in levying on these iron and steel rods at 4%. Point of taxation - Held that: - the sale of goods takes place either by transfer of title or by delivery of possession or at the tome of incorporation of the goods in the course of execution of any works contract. It is a deeming provision. Therefore for any amount to be included in the turnover, the condition precedent in there should be a sale or delivery of possession or incorporation of the goods in the course of execution of any works contract. If none of these events have happened, there is no turnover, If consideration of entering into the works contract, if amounts are paid in advance as mobilization advance, that amount is paid to the contractor to take steps to execute the work. On the date of amount is paid, the contractor neither transfers title in the property nor delivers possession nor incorporates any goods in the work. Therefore the question of treating the advance amount paid as part of consideration for transfer of property in goods would not become turnover and therefore the explanation added to Rule 3 with the object of levying sales tax on advance receipt runs counter to the aforesaid statutory provisions as well as the constitutional provisions. Tax on bullet tanks - Held that: - the steel plates before it was incorporated has undergone the process of manufacture and ceased to be the steel plates and it has been taken the form of either section or bullet tank. Therefore, the value of the steel plates at the time of acquisition is not the same at the time of incorporation. It was the declared goods at the time of acquisition. It ceased to be declared goods at the time of incorporation. Before incorporation. Before incorporation there is value addition to the steels plates by the process of manufacture. Therefore, the prohibition contained under section 15 of the CST is not attracted and the state legislature has the power to levy tax in terms of Item No.23 of Sixth Schedule on these goods as it does not fall within any of the categories mentioned from Item Nos. 1 to 22 and also for the reason that it is not a declared goods as stipulated under section 14 of the CST Act - the authorities were justified in levying tax at 12.5% in terms of Item No.23 of Sixth Schedule on the bullet tanks. Appeal allowed - decided partly in favor of appellant.
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