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2014 (5) TMI 611 - HC - VAT and Sales TaxTax Exemption - Nature of Agreement – Whether sale of cement to NBCC is a sale, which is deemed to be a sale in the course of export within the meaning of Section 5(3) of the CST, 1956 and thus not part of the taxable turnover of Asseessee for the purpose of the TNGST Act, 1959 – Works Contract - Sale in the course of export - Taxable turnover – Claim u/s 5(3) of CST Act – Filing of Form H - Brief Facts - The order dated 29.3.1980 shows that contract for execution of 200 bed Indira Gandhi Memorial Hospital was outsourced to NBCC and in the execution of the said project, NBCC in turn placed orders with the assessee for the supply of cement - Assessee sold cement to NBCC, who in turn, exported the same to Maldives from Tuticorin Port - The only ground on which the Revenue rejected the assessee's case was for non-filing of Form H - Held that:- At the relevant assessment year under consideration viz., 1991-92, Section 5(4) was not there to hold that filing Form H as a mandatory requirement for claiming exemption u/s 5(3) of the Act – The law as it existed required that so long as the assessee was in a position to substantiate the penultimate sale claim, that it was for the purpose of complying with the agreement or order that the exporter had for or in relation to such export, the assessee would be entitled to claim exemption u/s 5(3) of the Act - A reading of the amended Rule 12(10)(a) of the CST (Registration and Turnover) Rules, 1957, shows the mandatory character of the furnishing of Form H by the dealer to the prescribed authority upto the time of assessment before the first Assessing Authority - Thus, as evident from the amendment inserting Section 5(4), with effect from 13th May 2005, It is agreed that the claim u/s 5(3) as it stood at the material time cannot be rejected solely on the ground that Form H was not filed - Therefore, it is open to an assessee to prove the claim for Section 5(3) exemption through such materials also and not necessarily through Form H Agreement – Direct Agreement – Penultimate sale - Overseas Contract – Held That:- Judgment in STATE OF A.P. v. LARSEN AND TOURBO LIMITED [2008 (8) TMI 21 - SUPREME COURT] followed The ground on which the said claim was rejected was that NBCC did not have direct agreement with foreign buyer for export - Secondly even assuming that the contract was one with Maldives Government, the same was only for construction of a building and there was no specific contract or supply of the cement to the foreign customer - Consequently, the claim was to be rejected - The said reasoning of the Appellate Assistant Commissioner found favour with the Tribunal too - SC rejected the contention of the Revenue that where the main contractor and sub contract enter into an execution of works contract, even if there is no privity of contract between the contractee and the sub-contractor, that would not do away the principle of transfer of property by the sub contractor by accretion on the property belonging to the contractee – Treating the sub contract given to NBCC as the contract for execution by Government of India, we hold that the assessee is entitled to succeed in its claim for exemption u/s 5(3) of the Act as the penultimate sale leading to export. Relying upon BUILDERS ASSOCIATION OF INDIA [1989 (3) TMI 356 - SUPREME COURT OF INDIA] and held that the tax leviable by virtue of clause (29-A)(b) of Article 366 of the Constitution thus is subject to the same constitutional discipline to which any levy under Entry 54 of the State List is made - Thus, Supreme Court held that principles of Sections 3, 4 and 5 of the Central Sales Tax Act would apply to deemed sale also resulting in transfer of property involved in the execution of works contract - Applying the said principle of law to the facts herein, even though the execution of the works contract, is outside the country, nevertheless the contract that NBCC had on the execution of the works contract being a deemed sale, and going by the agreement that Government of India had with Government of Maldives, which had assigned the work to NBCC for execution and contract having been executed, This Court has no hesitation in accepting the plea of the assessee that it is entitled to claim exemption u/s 5(3) – It may be pointed out herein that what is an applicable to an interstate works contract as the deemed sale has to be come for its application to an execution of an overseas works contract - Revision is allowed in respect of question Nos. 1 and 2 - In the circumstances, and the assessee is entitled to Section 5(3) exemption on the penultimate sale of cement leading to its export. Levy of tax - Purchase tax on purchase of Fly Ash - Whether the petitioners are liable to pay purchase tax on the purchase of Fly Ash from the TNEB (Tuticorin Thermal Power Plant) - Held that:- Assessee himself submitted that the said issue is covered by the decision of this Court rendered in T.C(R). No. 34 of 2011 dated 22.9.2011 in the assessee's own case, wherein this Court rejected the assessee's plea - Following the said decision, this question of law is answered against the assessee – Decided against the assessee. Levy of Penalty – Held that:- As already held that the purchase tax on purchase of Fly Ash was held against the assessee by reason of this decision of this Court rendered in T.C(R). No. 34 of 2011 dated 22.9.2011 in the assessee's own case - The levy of penalty was however deleted by the Tribunal in the appeal relating to the assessment year 1986-87, which was also not subjected to any revision at the hands of the Revenue - On the mere score of purchase tax being levied, the penalty should not be sustained, particularly with reference to the sustained portion of the assessment on purchase tax levy on fly ash - In the circumstances, maintaining uniformity in the treatment on the levy of penalty between the assessment year 1986-87 and the current year 1991-92, No justification found to restore the levy of penalty on the above relating to purchase tax levy - Revision is partly allowed – Decided partly in favour of Assessee.
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