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2021 (4) TMI 1215 - HC - VAT and Sales TaxLevy of Sales Tax - works contract or not - conversion of corrugated box - addition made only on estimation without having any rational nexus with materials on record - HELD THAT:- A careful perusal of the agreement between the Petitioner and IDL would show that what was entrusted by IDL to the Petitioner was in sum and substance, a job work. The quality of paper and the material to be supplied for making of the corrugated boxes was pre-determined. M/s. IDL also determined the dimensions of the boxes. The minutes of the meeting make it clear that after conversion of the material into corrugated boxes, they had to be sent back to M/s. IDL. What was paid for the job work was the conversion rate of ₹ 5.25 per box. Freight was borne separately by M/s. IDL. At no point in time was there any transfer of property in the boxes to the Petitioner. After referring to the decisions in THE ASSISTANT SALES TAX OFFICER AND OTHERS VERSUS BC. KAME [1976 (12) TMI 164 - SUPREME COURT]; THE STATE OF PUNJAB VERSUS ASSOCIATED HOTELS OF INDIA LTD. [1972 (1) TMI 80 - SUPREME COURT]; HINDUSTAN AERONAUTICS LTD. VERSUS STATE OF KARNATAKA [1983 (12) TMI 259 - SUPREME COURT]; HINDUSTAN AERONAUTICS LIMITED VERSUS STATE OF ORISSA [1983 (12) TMI 260 - SUPREME COURT] and STATE OF TAMIL NADU VERSUS ANANDAM VISWANATHAN [1989 (1) TMI 359 - SUPREME COURT], this Court came to the conclusion that the very wording of the agreement made it clear that it was a job work. It was concluded that the photo identity cards supplied to the CEO are not commercial commodities and the same cannot be used or sold by the Petitioner to any other person. The material purchased and utilized in preparation of photo identity cards was very negligible and incidental. The agreement between the Petitioner and M/s. IDL does not answer the characteristics of a works contract as defined in Section 2 (jj) of the OST act. There is also no element of sale as defined under Section 2 (g) thereof. The dominant object is indeed skill and labour to convert paper and board into corrugated cartons or boxes - Decided in favor of assessee. Appeal allowed.
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