Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2014 (5) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (5) TMI 911 - HC - VAT and Sales TaxWhether the finding of the Tribunal that the transaction is not indivisible works contract executed in Tamil Nadu, is correct and as a corollary, deletion of levy of penalty u/s 3-B of the Tamil Nadu General Sales Tax Act, is correct - Nature of Contract - Indivisible works contract Deemed inter-state sale - Does insurance borne by assessee change the nature of agreement - Penalty u/s 3-B of the Tamil Nadu General Sales Tax Act Held That:- A perusal of the Letter of Intent shows that nowhere the Madras office figures in, in any manner to be involved in either in the placing of the contract or in finalising the terms of the contract and above all, in the supply and the erection of the machinery Thus, with every stage involvement of Neyveli Lignite Corporation, pursuant to the agreement entered into between the parties, the machineries manufactured were delivered to Neyveli Lignite Corporation at Neyveli - Admittedly, the machineries thus moved from Calcutta/Mumbai was in the custody of Neyveli Lignite Corporation - Considering the above said facts, it is crystal clear that the transactions in question satisfies the requirement under Section 3 of CST Act as to when interstate sale deems to occur - Given the fact that the movement of goods was pursuant to the contract of sale, the fact that the insurance coverage was borne by the assessee/supplier, per se, could not stand in the way of the clear cut facts existing in this case, pointing out that the sale could be nothing but an inter-state sale - In the circumstances, these Revisions are rejected. Relying upon Tvl.Gannon Dunkerly and Co. and Others Vs. State of Rajasthan and Others [1992 (11) TMI 254 - SUPREME COURT OF INDIA] - Even works contract assessable under the Local Act is subject to Sections 3, 4 and 5 of CST Act Going by the definitions of inter-state sale and when a sale or purchase said to take place inside the State u/s 4 of CST Act, which is subject to Section 3 CST Act, there is no hesitation in holding that the transaction cannot be assessed under the provisions of the Local Act - Explanation 3(a) to Section 2 of TNGST Act, which is no different from Section 4 of CST Act, thus clearly goes against the contention of the Revenue - Even in the case of an indivisible contract, what could be taxed under the TNGST Act is the transfer of property in goods - Even though Section 3B was inserted by Act 42 of 1986, after the decision in Tvl.Gannon Dunkerly Section 3B was amended and substituted from 12.3.1993 by Act 25 of 1993. In Tvl.Gannon Dunkerly while considering the 46th Amendment, the Supreme Court pointed out that the State Legislature is not competent and cannot frame its law as to convert an outside sale or a sale in the course of import or export into a sale inside the State and whether the sale is an outside sale or inside sale or is a sale in the course of interstate sale or in the course of import or export would have to be determined in accordance with the principles in Sections 3, 4 and 5 of CST Act - Thus, whether one treats the contract as divisible one or indivisible one, the character of the sale being one of inter-state sale, the contention of the Revenue is rejected - In a contract of this nature, even the theory of accretion would be of any assistance, given the fact that even the charging provision u/s 3B was not available during the relevant assessment years, viz., 1988-89, 1989-90 and 1990-91 - Revisions are dismissed Decided against Revenue.
|