TMI Blog2001 (6) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant years in question the petitioner had executed certain works under agreements entered with the R B Department of the State Government. Hence, it could be ascertained from the material on record, though the copy of the agreement is not filed, the petitioner was under an obligation to extract boulders at the specified quarries by the contractor and convert the boulders into the required sizes of the metal for the purpose of laying the road. The same has to be loaded at the place of conversion of the boulders into metal and has to be transported and unloaded at the place of laying the road. In respect of the boulders extracted by the petitioner/dealer on the specified quarries, the petitioner was liable to pay seigniorage fee and the same was deducted out of the amounts payable to the petitioner. For the assessment years in question, the assessee filed returns excluding the above extent from the total turnover. Though for the first three assessment years 1989-90 to 1991-92, the Commercial Tax Officer framed the assessments accepting the claim, subsequently those assessments were revised by the Deputy Commissioner and the turnover relating to the above amounts were brought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the later larger Bench, even assuming that there was a lease under which the petitioner was permitted to extract the boulders for which seigniorage fee was collected, the same does not amount to sale and the department continued to be its owner and there was no property in goods passed on to the petitioner/contractor. Hence, there is no sale while executing the works contract by the contractor. The learned counsel also contended that though in a later decision the apex Court, in the case of Cooch Behar Contractors' Association v. State of West Bengal [1996] 103 STC 477 held that the royalty paid by the contractor to Forest Department of Government for boulders, earth, etc., used in works contract is part of the contractual transfer price, still in view of the larger Bench decision of the apex Court, which is binding on this Court, this Court has to follow the ratio laid down by the larger Bench of the apex Court and if so the contention of the petitioner is liable to be accepted. The learned counsel also contended that in the case of Andhra Pradesh Paper Mills Ltd. v. Government of Andhra Pradesh [1989] 73 STC 26; (1988) 7 APSTJ 139 this Court the considered similar leases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability to tax under the provisions of the Andhra Pradesh General Sales Tax Act, 1957. 6.. From the above rival contentions, the dispute that arises for consideration is "whether the expenditures incurred towards the metal breaking charges, loading and unloading and transport charges are not to be included as part of the turnover under the provisions of the APGST Act". 7.. The simple contention of the petitioner is that as the contractee-supplier continues to be the owner of the metal, the turnover relating to the above items could not be included as part of the turnover liable to tax. Strong reliance was placed on the decision of the larger Bench of the apex Court in the case of Titaghur Paper Mills Co. Ltd. [1985] 60 STC 213. In the case of Orient Paper Mills Ltd. [1977] 40 STC 603, the apex Court held that royalty was a feudalistic euphemism for the price of the timber that was extracted in terms of the lease granted by the State of Madhya Pradesh in favour of the Orient Paper Mills Ltd. The said decision was held per incurium in the later decision of the apex Court in the case of Titaghur Paper Mills Co. Ltd. [1985] 60 STC 213. The apex Court in that case was dealing with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he second contention urged on behalf of the learned counsel for the appellant is concerned, the Tribunal on facts has found the contractor has to pay the price of the goods supplied by the contractee by way of adjustment. This Court in [1989] 73 STC 370; (1989) 2 SCC 645 (Builders Association of India v. Union of India) has observed as follows: '................Ordinarily unless there is a contract to the contrary in the case of a works contract the property in the goods used in the construction of a building passes to the owner of the land on which the building is constructed, when the goods or materials used are incorporated in the building. The contractor becomes liable to pay the sales tax ordinarily when the goods or materials are so used in the construction of the building and it is not necessary to wait till the final bill is prepared for the entire work.' It is, therefore, clear that goods used in the execution of the works contract stand transferred from the contractor to the contractee at the time the goods are incorporated in the construction. It is also brought to our notice by the learned counsel for the respondents that the principle laid down by this Court in N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seigniorage paid and the cost of expenditure incurred by the petitioner towards conversion of the boulders into metals, loading, unloading, transportation, etc., would be the cost of the metal to the petitioner/contractor which was used in execution of the works contract, i.e. laying of the road. While completing the execution of the works contract, the property in the goods has transferred from the contractor to the contractee at the time the goods are incorporated in the laying of the road. Therefore, there is a clear transfer of property in goods while completing the works contract from the contractor to the contractee and the same would result in sale or deemed sale of goods, liable to tax. Similar issue was also considered by the apex Court in the case of Gannon Dunkerley Co. v. State of Rajasthan [1993] 88 STC 204, and it was held "that even in a single and indivisible works contract there is a deemed sale of the goods, which are involved in the execution of a works contract. Such a deemed sale has all the incidents of a sale of goods involved in the execution of a works contract where the contract is divisible into one for sale of goods and the other for supply of labour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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