Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2020 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (3) TMI 6 - HC - VAT and Sales TaxClassification of goods - 'hot mix material' transferred in a works contract - Whether the 'hot mix material' transferred in a works contract is to be taxed under the Act at the prescribed rates of its constituents or at general rate under the residuary clause? HELD THAT:- From the decisions relied, M/S. LARSEN & TOUBRO LIMITED & ANOTHER VERSUS STATE OF KARNATAKA & ANOTHER [2013 (9) TMI 853 - SUPREME COURT], the position emerges that the goods involved in the works contract are taxed as deemed sales. The restrictions under Article 286 of the Constitution of India would apply on the State Legislature while taxing the works contract. The State Legislature has power to prescribe uniform rate of tax on the goods involved in the works contract inspite of the fact that different rates are prescribed under the Act for the constituents involved therein. Further that identity of the goods transferred is lost in the process does not prevent them from being goods. The contention of learned counsel for the State that the goods when being incorporated were transferred in some other form and hence ingredients lose their identity, cannot be accepted, as there is a deemed sale of the ingredients of 'hot mix material' and the loss of identity of goods does not prevent them from being goods for the purpose of deemed sale. The State of Haryana has not prescribed any uniform rate for material used in the works contract. Cement, bitumen, rori etc. which are to be deemed to be sold cannot be taxed at general rate by resorting to residuary clause, these are to be taxed as per the rates prescribed. The residuary clause will come into play only in case the goods are not covered under any of the Schedule to the Act. Even otherwise it would restrict the full play to be given to the deeming fiction of sale of goods involved in works contract. There is another angle to view the contention of the State, if the argument is taken to the logical conclusion and it is held that transfer in works contract is not of the ingredients of hot mix material but of the new product, in that eventuality the restrictions of Article 286 of the Constitution of India and Sections 14 and 15 of the Central Sales Tax Act, 1956 would not apply for taxing the deemed sale - Such an eventuality would be against the law laid down by the Apex Court that restrictions of Article 286 of the Constitution of India will apply and that 46th amendment of the Constitution of India has only given a deeming fiction of sale of goods involved in the works contract and has not given separate or equivalent Entry in List II for levy of tax on sale or purchase of goods. Thus, it is held that the goods transferred in execution of works contract will not be taxed at general rate but as per the rates prescribed of constituents of the 'hot mix material'. Appeal allowed - decided in favor of appellant.
|