TMI Blog2001 (2) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the writ petition before the Rajasthan Taxation Tribunal challenging the said notices on number of grounds. One of the grounds is that Explanations I and II of section 2(o) of the Rajasthan Sales Tax Act, 1954 defining "sale" (hereinafter referred to as "the Act of 1954") as well as section 2(38)(ii) read with Explanations II and IV of the Rajasthan Sales Tax Act, 1994 (for short "the Act of 1994") cannot be stretched to mean that the word "sale" would include inter-State sale. These Explanations cannot be construed to mean so as to bring the inter-State sale within the purview of the provisions of the Act else it would be ultra vires the competence of the State Legislature. 4.. It has been urged by the learned counsel for the petitioner that the impugned notices on the face intends to include the value of all the goods involved in the execution of works contract of retreading of tyres by holding that property in goods have been passed in the form of tread rubber within the State of Rajasthan when the same were appropriated in the job-work done by the assessee, irrespective of the fact that the raw materials used in doing the job-work, the materials used by the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... works contract is the value of the goods as at the time of appropriation and not merely value of the initial raw materials. 7.. So far as the question of determining the identity of goods and value of goods, property in which is transferred due to its involvement in execution of works contract is concerned, we are of the opinion that this matter pertains to investigation of the fact as well as interpretation of statute which involves no question of jurisdiction and the assessing authority must be allowed to reach his own finding on such mixed questions of fact and law. Such findings are subject to be corrected if found to be erroneous through appropriate remedial forums provided under the Act. There is no reason for this Court to invoke extraordinary jurisdiction at this stage for deciding this issue on merit. 8.. So far as the other contention emanating from the notice for levying tax on the purchase of goods made by the assessee, whether within the State or from outside in the course of inter-State trade or commerce only on the basis of its appropriation within the State of Rajasthan with reference to Explanations attached to definition of "sale" under the Act of 1994, and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or in part entered into outside the State or that the goods have been wholly or in part moved from outside the State; and\ (b) in a case falling under sub-clause (iv), if the goods are used by the lessee within the State, whether or not for a specified period, notwithstanding that the agreement for the lease has been made outside the State or that the goods have been moved from outside the State or the goods have been delivered to the lessee outside the State. Explanation III.-.................... Explanation IV.-Where the work under a works contract is spread over in many States including the State of Rajasthan, the part of the work done, within this State shall be deemed to be the sale made in the State, irrespective of the place of agreement for works or the point of movement of goods involved in the execution of that works contract." 12.. A perusal of the aforesaid provision goes to show that vide clause (a) of Explanation II which concerns transfer of property in goods involved in execution of a works contract whether as goods or in any other form, it is envisaged that a sale shall be deemed to take place within the State of Rajasthan on the basis of appropriation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92-A of List I. (2) Entry 92-A of List I of the Seventh Schedule.-Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce. (3) Article 286.-(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place- (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of the territory of India. (2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). (3) Any law of a State shall, in so far as it imposes, or authorises the imposition of,- (a) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or (b) a tax on the sale or purchase of goods, being a tax of the nature referred to in sub-clause (b), sub-clause (c) or sub-clause (d) of clause (29-A) of article 366, be subject to such restriction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les Tax Act, 1954 since repealed as under: "(3) Notwithstanding anything contained in this Act, in the case of a works contract, the turnover of such contract shall be subjected to tax: Provided that such deductions, as may be prescribed, may be allowed to a contractor while determining his tax liability." The term "sale" was defined under section 2(o) of the Act of 1954 as under: "(o) 'sale' with all its grammatical variations and cognate expressions, means every transfer of the property in goods (other than by way of mortgage, hypothecation, charge or pledge) by one person to another for cash or deferred payment or other valuable consideration and includes: (i) ................... (ii) ................... (iii) ................... (iv) ................... (v) ................... (vi) ...................". The expression "turnover" is defined in clause (t) as under: "(t) 'turnover' means the aggregate amount of sale prices received or receivable for a sale, transfer, delivery or supply by a dealer in any of the ways referred to in clause (o)." 19.. The apex Court taking into consideration the relevant provisions of the Rajasthan Sales Tax Act, 1954 in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eby transgress these constitutional limitations. The absence of any amendment in the definition of "sale" contained in section 2(g) of the Central Sales Tax Act, 1956, so as to include transfer of property in goods involved in the execution of a works contract does not in any way affect the applicability of the sections 3, 4 and 5 and sections 14 and 15 to such transfers. With this premise the court further held: "The question whether a deemed sale resulting from transfer of property in goods involved in the execution of a particular works contract amounts to a sale in the course of inter-State trade or commerce under section 3 of the Central Sales Tax Act or an outside sale under section 4 or a sale in the course of import under section 5 has to be decided in the light of the particular terms of the works contract and it cannot be decided in the abstract. So far as sales in the course of inter-State trade or commerce are concerned, the position is well-settled that the situs of the sale or purchase is wholly irrelevant as regards its inter-State character. The location of the situs of the sale in sales tax legislation of the State would, therefore, have no bearing on the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged and it includes sales outside the State or sales which are inter-State sales have been made chargeable if the goods are used within the State. Therefore the said explanation is in excess of legislative power under entry 54 of List II of the Seventh Schedule. There was difference of opinion on another issue with which we are not concerned here. To accord with conclusion that the provision in Explanation II was in excess of legislative competence of the State leading judgment contained direction that the Explanation II(b) of section 2(38)(iv) shall be read down to this effect that it would not be applicable to the transaction of the transfer of right to use any goods if such deemed sale is (i) an outside sale, (ii) sale in course of the import of the goods into or export of the goods out of the territory of India and (iii) an inter-State sale. 23.. The other judgment too held the provision to be ultra vires the legislative competence of State Legislature. The result was that the provisions of the explanation stood nullified unanimously. 24.. Following the aforesaid two decisions, this Court has struck down clause (a) of explanation II of section 2(38) for the very same reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods involved in such execution may change their shape and form when the property passes from seller to buyer. 28.. We may clarify that provision of the Act referred in the notice is to Explanation IV but primarily it appears to be an intent to invoke clause (a) of Explanation II to section 2(38) which already stands declared ultra vires by the decision in D.B. Civil Writ Petition No.1538 of 1999 Triveni Engineering Industries Ltd. v. State of Rajasthan decided on February 16, 2001 [2001] 124 STC 17 (Raj). Even in determining the turnover with reference to deemed sale within State of Rajasthan clause (a) of Explanation II is to be invoked inherently. 29.. As a result this petition is partly allowed. The impugned notices to that extent it proposes to include the value of goods involved in the execution of works contract within the taxable turnover by invoking Explanation II/IV to section 2(38) of Rajasthan Sales Tax Act, 1994 is concerned is held to be ultra vires. The assessing officer is free to decide the question of the value of goods involved in execution of works contract and property in which has been transferred in the execution of works contracts for the purpose of l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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