TMI Blog2010 (3) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal is concerned, the Tribunal without considering the factual aspect relying upon certain decisions has given judgment which according to us requires to be set aside and the matter requires to be re-considered by the assessing officer by giving an opportunity to the respondent-assessee. The respondent-assessee is also permitted to produce all necessary documents before the assessing officer in order to claim exemption. Assessing officer, considering the nature of transaction between the assessee and the Defence Department and the transaction between the assessee and third parties and inter-State sale and so also sale transaction within the State shall take appropriate decision in accordance with law. - 86 of 2007 - - - Dated:- 11-3-2010 - MANJUNATH K.L. AND NAGARATHNA B.V. , JJ. The judgment of the court was delivered by K.L. MANJUNATH J. At the request of the respondent's counsel and the learned Advocate-General, all these matters are heard together. Legality and correctness of the order passed by the Karnataka Appellate Tribunal, Bangalore, in S.T.A. Nos. 564-571 of 2002 and other connected cases. State has come up in these revision petitions raising th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and control purpose. The assessee has maintained accounts separately in respect of each divisions and similarly accounts in respect of those divisions are also audited separately and returns are filed separately. Intelligence authorities of the petitioner inspected the business premises of the respondent and a report was submitted on January 9, 2003. Report disclosed that entire work was carried out at Hindustan Aeronautics Limited workshop, Bangalore, and inspection and certification regarding satisfactory completion of work was done at Hindustan Aeronautics Limited premises. The goods were delivered at Hindustan Aeronautics Limited premises as evident from declaration in form No. 530 used by the defence customers to take delivery of goods at Hindustan Aeronautics Limited premises. Therefore, it was reported that the nature of transactions cannot be considered as inter-State works contract. Accordingly, assessing authority levied tax under section 5B of the Karnataka Sales Tax Act as local works contract on the transactions of work, works executed by the assessee-company. The assessee also claimed exemption in respect of spares, aircrafts and helicopters made to Indian Air Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as goods or in some other form) involved in the execution of works contract mentioned in column (2) of the Sixth Schedule at the rates specified in the corresponding entries in column (3) of the said Schedule. According to the learned Advocate-General, even if it termed as a works contract it also amounts to sale only and it was for the assessee to collect sales tax from the buyer and remit the same to the Department. It is also contended that the respondent-assessee has collected taxes for selling the spare parts not only to different purchasers but also to the Airforce Department only. He has produced certain invoices of the respondent to show that it had collected Central sales tax on the inter-State sale in respect of spares sold to Navy, Airforce, etc. Relying upon these documents, he contends that the transaction between the assessee and the Defence Department and the transactions between the assessee and other purchasers has to be treated as a sale and sales tax has to be paid by the assessee. Per contra, Sri Narayan, counsel appearing for the respondent contends that the respondent-assessee and the Defence Department cannot be treated as different entity and it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is applicable. From the invoices produced by the appellant-Government, it is clear that sales tax is also collected by the respondent-assessee in respect of spare parts sold by it either to Navy or to Airforce. With this background, we have to consider the nature of undertaking of the assessee and whether the transactions between the assessee and the Defence Department has to be considered as inter-State sale or works contract and whether Karnataka Sales Tax Act can be made applicable to the case of the assessee based on the nature of the transaction of the assessee whether Defence Department can be treated as its customer and whether contract entered into between the Defence Department and the HAL has to be treated as a works contract. We have seen the order passed by the assessing officer. We have also seen the order passed by the first appellate authority as well as the second appellate authority. Before the assessing officer, the respondent-assessee has not placed any material in regard to the defence raised on its behalf to claim exemption. In other words, we are of the opinion that the materials which were required to be placed before the assessing officer either to lif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment and that the transaction between the respondent-assessee and the Defence Department is neither sale nor works contract can be considered only by lifting the corporate veil. We have also come across ruling of the Supreme Court between the same parties Hindustan Aeronautics Ltd. v. State of Karnataka reported in [1984] 55 STC 314. The dispute in the aforesaid judgment was in regard to the sale of spare parts to the Airforce and whether such sale would amount to works contract or not. Said judgment has been delivered by the Supreme Court as per the provisions prior to 46th Amendment to the Constitution of India. If there was no 46th Amendment to the Constitution, it would have been easy to follow the judgment of the apex court. But after amendment, even works contract is held to be deemed sale. Therefore in this background we are of the opinion that judgment relied upon by the counsel for the respondent-assessee is of no assistance in the background of this case. When such a defence was not raised before the assessing officer, when no material was placed by the respondent-assessee either before the assessing officer or before the first appellate authority, we are of the opin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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