9911796707
TMI Blog2009 (6) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... and dispose of by this common judgment. Though number of substantial questions are framed in these appeals in view of the decision of the Supreme Court in the case of State of Andhra Pradesh v. Larsen & Tourbo Ltd. reported in [2008] 17 VST 1 only the relevant questions which would arise for our consideration are extracted hereunder: "(1) Whether the resale tax levied by the respondent under section 6B of the Act considering that the amounts paid by the appellant to the sub-contractor as representing turnover of deemed sale of goods is legally justified? (2) Whether the respondent is legally justified in levying resale tax under section 6B of the Act acting contrary to the law laid down in the decision of the honourable apex court in the case of State of Andhra Pradesh v. Larsen & Tourbo Ltd. [2008] 17 VST 1?" On December 19, 2008, this court framed the following substantial questions of law in STA Nos. 20 to 22 of 2008: "(1) Whether, on the facts and in the circumstances of the appellant's case, was the revisional authority right in holding that the appellant was liable to resale tax under section 6B of the Act, in so far as the payments made to the sub-contractor? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that in view of article 366(29A)(b) of the Constitution of India, once the work is assigned by the contractor to sub-contractor, the only transfer of property in goods is by the sub-contractor(s), who is a registered dealer in this case and who claims to have paid taxes under the Act on the goods used for the execution of the works. Once the work is assigned by L & T to its sub-contractor(s), L & T ceases to execute the works contract in the sense contemplated by article 366(29A)(b) because property passes by accretion and there is no property in goods with the contractor which is capable of retransfer, whether as goods or in some other form. There is no resale by the contractor in favour of sub-contractor. Therefore, the counsel request this court to answer the questions of law framed in favour of appellant-assessees. Ms. Geetha Menon, learned Additional Government Advocate placing strong reliance upon the statutory provisions of section 6B read with rule 6(m) and 6(n) of the Karnataka Sales Tax Rules, 1957, sought to justify the impugned orders contending that the revisional authority has rightly set aside the first appellate authority's order and restored the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy. This collectable new levy should induce the entire trade to issue bills on all their sales". A careful reading of the above portion of the speech made by the Finance Minister of Karnataka State makes it clear that section 6B of the Act was inserted with a view to bring second or subsequent sale of goods under tax umbrella. The learned counsel for the appellants rightly relied upon the judgment referred to supra to construe the speech delivered by honourable Finance Minister as statute for the purpose of ascertaining the object and intentment of inserting section 6B to the statute. It is an undisputed fact in all these cases there is a registered sub-contractor to whom the work is entrusted by the appellant-contractors. It is not the case of Revenue that the sub-contractor is not a registered dealer under section 10 of the KST Act and not paid the tax on taxable turnover in respect of transfer of goods for the execution of work in favour of contractor. The case of the Revenue, placing reliance upon the Division Bench judgment of this court, namely, Larsen and Toubro Limited v. Addl. Deputy Commissioner of Commercial Taxes [2008] 16 VST 616; [2006] 61 KLJ 90, is that tax is lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the dealer executing the work, i.e., the sub-contractor. It is only the sub-contractor who effects transfer of property in goods as no goods vests in the respondentcompany (contractor) so as to be the subject-matter of a retransfer. By virtue of article 366(29A)(b) of the Constitution once the work is assigned by the contractor (L & T), the only transfer of property in goods is by the sub-contractor(s) who is a registered dealer in this case and who claims to have paid taxes under the Act on the goods involved in the execution of the works. Once the work is assigned by L & T to its sub-contractor(s), L & T ceases to execute the works contract in the sense contemplated by article 366(29A)(b) because property passes by accretion and there is no property in goods with the contractor which is capable of a retransfer, whether as goods or in some other form." In paragraph 17 with reference to Builders Association case [1989] 73 STC 370 (SC), the following relevant portion is extracted: "The question which is raised before us is whether the turnover of the sub-contractors (whose names are also given in the original writ petition) is to be added to the turnover of L & T. In other wor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
