TMI Blog2003 (7) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... ecide the controversy arising out of these two Special Appeals and T.R.C. No. 14 of 1999, few facts are necessary to be recorded for the purpose of convenience. 4.. The appellant is a Public Limited Company engaged in manufacturing, fabrication, supply, erection and commissioning of various projects. The nature of work carried out by the appellant is a works contract. During the assessment years 1986-87 and 1987-88 the appellant had entered into a contract with Visakhapatnam Steel Plant and other public sector undertakings. The contract entered into by the appellant for designing, manufacturing, fabrication, installation and commissioning specified project is composite in nature. The appellant, in order to discharge the obligation arising out of the contract into with various contractees, has manufactured specified goods in their factory at Bombay, which is within the State of Maharashtra, and also purchased certain goods from outside the State as well as from the local registered dealers. The contracts specify separate prices for supply of various items required for execution of the project as well as the commissioning and installation charges. The manner and method to be foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act: Rs. 1,60,97,016. (ii) Computation of turnover under various works contract: Rs. 6,35,46,048. II. Rate of tax disputed: (i) Sales of valves treated as sales of electrical goods: Rs. 19,88,402. (ii) Rate of tax on fabricated steel structural: Rs. 44,91,410. 8.. The Appellate Deputy Commissioner, on being appraised on a part of the disputed turnover, satisfied that the goods involved in the works contracts, where the movement was occasioned in the course of inter-State sales and assessed to tax under the APGST Act relating to Rs. 1,60,97,016, should not have been brought under the net of APGST Act and to that extent set aside the order and the appeal was remanded to the assessing authority with a direction to assess such turnover under the CST Act keeping in view the guidelines rendered. In so far as the disputed turnover relating to Rs. 6,35,46,048 is concerned, the Appellate Deputy Commissioner felt that the issue requires a detailed verification of the facts with reference to 13 contracts and set aide the order of the assessing authority and remanded the matter. 9.. As far as the second issue regarding the disputed rate of tax relating to fabricated steel struc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stallation has to be undertaken by the appellant. For installation necessary material was also supplied by the appellant to the contractee, which was made on order to the specification of the contractee at the workshop of the appellant at Bombay. It is also stated that the material, which was manufactured by the appellant, which was made on order to the specification, was also inspected by the representatives of the contractee and after clearance, the goods were transmitted to the State of Andhra Pradesh. It is also stated by the learned Senior Counsel that since the contract is composite in nature, no element of sale is involved within the State of Andhra Pradesh and it is only an inter-State contract and that on the turnover of such contract there is no liability to pay tax to the State of Andhra Pradesh under the Andhra Pradesh General Sales Tax Act, since the goods were manufactured and sale was effected in the State of Maharashtra and that for that inter-State transaction the State of Maharashtra has collected tax under the CST Act and as such the State of A.P. is not entitled to levy and collect tax under the APGST Act. Learned Senior Counsel also stated that though the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel that the agreement was entered into for a particular purpose, pursuant to which certain items were manufactured in the factory owned by the appellant in the State of Maharashtra on a specified order placed by the contractee and that the representatives of the contractee visited the place, inspected the goods manufactured and later on clearance, goods were moved to the State of Andhra Pradesh and that 90 per cent of the payment was also received. Learned Senior Counsel therefore stated that the turnover involved in that transaction is liable to be taxed only under the Central Sales Tax Act, but not otherwise. He also stated that the manner in which the Commissioner of Commercial Taxes interfered by invoking the provisions under section 20(1) of the APGST Act ignoring several decisions of the Supreme Court, the latest being Gannon Dunkerley's case [1993] 88 STC 204, is illegal and therefore, the special appeals are to be allowed. 15.. Referring to T.R.C. No. 14 of 1999 filed by the department against the order made by the Sales Tax Appellate Tribunal, learned Senior Counsel for the appellant stated that now the law is wellsettled and therefore, the TRC is liable to be dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s noticed that certain goods were manufactured by the appellant on the specification of the contractee at their factory near Bombay and that the representatives of the contractee inspected the goods and after satisfied with the quality of goods clearance was given. It is also noticed that 90 per cent of the value of the goods was already received by the appellant from the contractee. 19.. On an analysis of the submissions made on behalf of the appellant and the learned Special Government Pleader for Taxes and on perusal of the orders of the Appellate Deputy Commissioner and the Commissioner of Commercial Taxes, we can say without any hesitation that the movement of goods had occasioned pursuant to the contract only. The documents available on record would go to show that these goods have reached the destination as per the terms of contract. It is not the case of the department that the goods are diverted and not utilised for the project purpose. The movement of goods was occasioned only pursuant to the contract between the appellant and the contractee, certain goods were manufactured to the specification of the contractee and were transmitted to the State of Andhra Pradesh. Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade or commerce or an outside sale, or sale in the course of import in respect of goods which are involved in the execution of a contract since the transfer of property in such goods takes place only in the State in which work is to be executed. On behalf of the appellant it is urged that the works contract can involve transaction constituting sale in the course of inter-State trade and commerce as well as outside or a sale in the course of import and that they will have to be considered in accordance with the principles contained under sections 3, 4 and 5 of the Central Sales Tax Act. In a similar issue the honourable Supreme Court observed, "we do not propose to go into this controversy because 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 of the Central Sales Tax Act or a sale in the course of import under section 5 of the Central Sales Tax Act has to be decided in the light of the particular terms of the works contract and it cannot be decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23 of the Act, on the basis of material available on record, is empowered to decide the matter and to pass such an order as is deemed fit and proper in the circumstances of the case. It is therefore, not open to the respondent to say that this Court while exercising powers under section 23 of the Act cannot pass such an order as indicated above. When the Legislature has not put any fetters on the powers of the Court to grant a relief as it thinks fit and proper in the circumstances, we are of the view, the plea of the department that the High Court cannot grant such a relief, amounts to reading something, which is neither here nor there and cannot be accepted. The department cannot think too big about it and has to necessarily function under the scheme of the Act and cannot encroach upon the powers, which are left to the judiciary. We may also add that the department cannot give a new meaning to the provisions and interpret in such a way as if that the department alone is competent to decide things and pass appropriate orders in given circumstances. 26.. In view of our declaration that transaction in question is inter-State transaction, but not intra-State transaction and in view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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