TaxTMI 
TaxTMI 
2010 (9) TMI 985
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion given in clause (pa) of section 2 of the Act ibid.?" The dealer-assessee is carrying on the business of catering. It entered into an agreement with the Management of Staff Training Colleges of State Bank of India and State Bank of Patiala for catering, house keeping and maintenance during the period from April 1, 2001 to August 5, 2001. The Assessing Authority created a demand of tax in respect of turnover under the contract in question. The plea of the assessee that the contract in question was works contract and did not involve any sale was rejected which was upheld by the appellate authority as well as the Tribunal. The finding recorded by the Assessing Authority is as under: "By legal fiction such transfer, delivery or supply of any goods has been deemed to be sale of goods by person making it and purchase of goods by the person to whom such transfer, delivery or supply is made. There was only one contract express or implied for supply of food and drinks in the mess of the training institute. No part of it is relatable to anything else. Hence the whole consideration received for the supply of food and drinks is held to be 'sale'. This point also gets strength from....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g statute. The authority in determining the liability of the appellant to pay sales tax cannot ignore the form and look at what is called the 'substance of the transaction'. Ex facie, the transaction is one in which the legal owner of the property transferred to another pursuant to a contract for a price, and that transaction must be regarded as a sale. The argument of the counsel for the appellant that supply of food is only incidental or ancillary transaction cannot be accepted in view of my above observations and discussion. Even if for argument's sake the view of the appellant is accepted it would not help him because these so-called connected, incidental or ancillary transactions are so large as to render the main activity infinite or very small bringing the transaction under the purview of 'sales' and not under the 'works contract'. The appellant has relied upon a number of court rulings in support of his case. He has made every effort to distinguish between a contract for sale and a contract for labour or service. The rulings cited in defence include State of Gujarat (Commissioner of Sales Tax, Ahmedabad) v. Variety Body Builders [1976] 38 STC 17....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he supply of food, snacks, drinks and tea, etc., involved in this case is sale which is liable to tax as sale and not as works contract and therefore no fault can be found in the impugned order of the first appellate authority who has confirmed the order of the Assessing Authority. To understand the matter clearly a glance over both the clauses will help in resolving the same. Section 2(pa) Works contracts '"Works contact" means any agreement for executing for cash, deferred payment or other valuable consideration,- (i) the construction, fitting, improvement or repair of any building, road, wall, bridge, embankment, dam or other immovable property; or (ii) the assembling, fabrication, installation, repair, fitting out, altering, ornamenting, blending, finishing, improving, processing, treating or adapting any movable property, whether attached to any immovable property or not; and includes a sub-contract for executing the whole or any part of such work.' Section 2(l)(v) Sale '"Sale" means any transfer of property in goods for cash or deferred payment or other valuable consideration and includes,- . . (v) supply, by way of or as part of any service or in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6th Amendment to the Constitution, composite contracts of sale and service were not covered by the definition of "sale" as held in the judgment of the honourable Supreme Court in State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. [1958] 9 STC 353. This interpretation was sought to be reversed by the Constitution (Fortysixth Amendment) Act, 1982 by incorporating, in the concept of sale, composite transactions or categories mentioned therein. In Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST 95 (SC); [2006] 145 STC 91 (SC); [2006] 3 SCC 1 the effect of the Forty-sixth Amendment was considered and it was observed that deemed sales under article 366(29A) were transactions of composite nature which involved sale as well as service and only element of sale of goods was exigible to sales tax. This view was reiterated in Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes [2008] 12 VST 371 (SC); [2008] 2 SCC 614. It was observed as under (paras 24-33 in VST; paras 23-32 in SCC): "24. The question yet again came up for consideration before a three-judge Bench of this court in Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST 95 (SC); [2006] 145 STC 91 (SC)....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a better phrase, call this the dominant nature test. 50.. What are the "goods" in a sales transaction, therefore, remains primarily a matter of contract and intention. The seller and such purchaser would have to be ad idem as to the subject-matter of sale or purchase. The court would have to arrive at the conclusion as to what the parties had intended when they entered into a particular transaction of sale, as being the subject-matter of sale or purchase. In arriving at a conclusion the court would have to approach the matter from the point of view of a reasonable person of average intelligence.' 25.. We may, at this juncture, also notice the decision of this court in Associated Cement Companies Limited [2001] 124 STC 59 (SC); [2001] 4 SCC 593. The question which arose for consideration therein was as to whether any intellectual property contained in a software would be subject to customs duty within the meaning of section 2(22) of the Customs Act, defining 'goods'. A three-Judge Bench of this court sought to make a distinction between such a contingency arising under the Customs Act involving a works contract and a contract of sale stating: (SCC page 611, para 32; S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sferred, delivered, stored and possessed. As a software was found to be having the said attributes, they were held to be goods. 29.. We have, however, a different problem at hand. The appellant admittedly is a service provider. When it provides for service, it is assessable to a tax known as service tax. Such tax is leviable by reason of a Parliamentary statute. In the matter of interpretation of a taxing statute, as also other statutes where the applicability of article 246 of the Constitution of India, read with Seventh Schedule thereof is in question, the court may have to take recourse to various theories including 'aspect theory', as was noticed by this court in Federation of Hotel & Restaurant Association of India v. Union of India [1989] 74 STC 102 (SC); [1989] 3 SCC 634. 30.. If the submission of Mr. Hegde is accepted in its entirety, whereas on the one hand, the Central Government would be deprived of obtaining any tax whatsoever under the Finance Act, 1994, it is possible to arrive at a conclusion that no tax at all would be payable as the tax has been held to be an indivisible one. A distinction must be borne in mind between an indivisible contract and a compos....