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2014 (5) TMI 457 - HC - VAT and Sales TaxNature of agreement - Works contract or contract of sales - "supply, laying and polishing of the mosaic tiles" - involvement of manufacturing activity - definition of "works contract" u/s 2(u) of the TN GST Act, 1959, which includes any agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, "manufacture", of any moveable or immoveable property and the conclusion of the AO and first appellate authority - Held that:- When the dealer purchases a commodity, which had already suffered tax and out of such commodity, manufactures another commercial commodity and uses the commercial commodity in the execution of works contract, if such commercial commodity purchased by the dealer is not used in the execution of the works contract in the same form in which it was purchased, in such case, what is used in the execution of works contract is a distinct and different commodity. Assessee has admittedly purchased sand, cement, colour and so on, which goods had suffered tax - But when these goods were used in the manufacturing activity, those goods are transformed into another commercial commodity, namely, mosaic - The transaction would be considered as one of sale - Relying upon Apparels and Handloom Exporters Association and Others v. State of Tamil Nadu and Others [2001 (9) TMI 1114 - MADRAS HIGH COURT] this Court considered the meaning of "whether as goods or in some other form" employed in Article 366 (29-A) of the Constitution of India and Observed that whether the goods purchased by the dealer are used in the works contract in the same form and even after such use, the commodities used lose their character are the test to determine as to whether it is a works contract or sale. In a case of manufacture of mosaic tiles, in our opinion, the same yardstick cannot be applied inasmuch as the goods used by the dealer transformed into a different good, viz., mosaic and the cement, colour, sand and chips lose their individual identity by that transformation. In that sense, the transaction of a mosaic to the contractor would amount to sale and not works contract. - All the questions raised are answered against the assessee - Revisions are dismissed - Decided against assessee.
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