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TMI Blog2014 (5) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Sales Tax Act, 1956 and thus not part of the taxable turnover of the petitioners for the purpose of the Tamil Nadu General Sales Tax Act, 1959? 2. Whether the Sales Tax Appellate Tribunal had erred in proceeding on the basis that for claiming the benefit of Section 5(3) of the Central Sales Tax Act, 1956, production of Form H was necessary? 3. Whether the petitioners are liable to pay purchase tax on the purchase of Fly Ash from the TNEB (Tuticorin Thermal Power Plant)?" 2. The assessee herein is a manufacturer of cement. In the return filed for the assessment year 1991-92, the assessee claimed exemption under Section 5(3) of the Central Sales Tax Act in respect of turnover relating to sale of cement to National Building Construction Corporation Limited (NBCCL), which in turn exported it to Maldives for the purpose of execution of the works contract for construction 200 bed hospitals. The turnover of Rs.32,10,655/- was rejected by the Officer on the ground that even though factually there was sale of cement to NBCCL at Tuticorin Port, who, in turn, had exported the same to Maldives, in the absence of Form-H, the entire claim was to be disallowed. Aggrieved by this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Male. The contract was given pursuant to the agreement between the Government of India and Government of Maldives and that the terms and conditions of the construction as per the agreement were governed by the agreement signed by Ministry of External Affairs and NBCC on 14.3.89 for the execution of the work. The letter dated 29.3.1989 referred to the cost of the project. The letter also touched on the advance to be given to NBCC for purchase of materials. Looking at the terms and conditions therein, it is clear that NBCC was a sub contractor of the Government of India for the purpose of executing the works contract at Maldives. He pointed out that pursuant to such agreement between Government of India and Government of Maldives, NBCC placed an order with the assessee for the purchase of cement for execution of works contract at Maldives. Thus, the condition put forth under Section 5(3) stood satisfied. He further submitted that requirement as regards furnishing of Form H as a mandatory condition was included under Section 5(4) of the Act only with effect from 2004. Till such time, there was no such mandatory requirement and the claim under Section 5(3) of the Act could be proved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Government Pleader (Taxes) and perused the materials available on record. 8. As far as the question No.3, on the levy of purchase tax on the purchase of Fly Ash from the TNEB (Tuticorin Thermal Power Plant) is concerned, learned counsel for the assessee fairly submitted that the said issue is covered by the decision of this Court rendered in T.C(R). No. 34 of 2011 dated 22.9.2011 in the assessee's own case, wherein this Court rejected the assessee's plea. Following the said decision, the third question of law is answered against the assessee. 9. As far as claim under Section 5(3) of the Central Sales Tax Act is concerned, as noted in the preceding paragraph, the Government of India had entered into an agreement with Government of Maldives for the purpose of constructing 200 bed hospitals in Male. The construction was given to NBCC under the "Aid to Maldives" programme of Ministry of External Affairs. A reading of the letter dated 29.3.1980 shows that the total expenditure on the project was not to exceed a sum of Rs.16,96,74,000/-. This was inclusive of foreign exchange component of Rs.5,75,00,000/- and the works was to be executed within a period of 36 months. Clause 9 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form H. As already pointed out, the Revenue does not dispute the fact as to the sale by the assessee to NBCC, who in turn had exported the same to Malidives. This admission takes us to second reasoning given by the Tribunal as well as by the first Appellate Authority to reject the claim of the assessee. 11. Thus, the ground on which the said claim was rejected was that NBCC did not have direct agreement with foreign buyer for export. Secondly even assuming that the contract was one with Maldives Government, the same was only for construction of a building and there was no specific contract or supply of the cement to the foreign customer. Consequently, the claim was to be rejected. The said reasoning of the Appellate Assistant Commissioner found favour with the Tribunal too. 12. As far as this contention is concerned, we agree with the submission made by learned counsel for the assessee, which is directly based on the decision reported in [2008] 17 VST 1 - STATE OF A.P. v. LARSEN AND TOURBO LIMITED. Referring to the decision reported in [1989] 73 STC 370- BUILDERS ASSOCIATION OF INDIA v. UNION OF INDIA, the Apex Court rejected the contention of the Revenue that where the main con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accretion of property in goods. It is subject to the contract to the contrary. Thus, in our view, in such a case the work executed by a sub-contractor, results in a single transaction and not multiple transactions. .................. In our view, if the argument of the Department is to be accepted it would result in plurality of deemed sales which would be contrary to article 366(29A)(b) of the Constitution as held by the impugned judgment of the High Court. Moreover, it may result in double taxation which may make the said 2005 Act vulnerable to challenge as violative as articles 14, 19(1)(g) and 265 of the Constitution of India as held by the High Court in its impugned jugment. " 14. The Revenue does not dispute the fact that the Government of India had the contract for construction of 200 bed hospital in Male. The sub contract was given to NBCC, in satisfaction of which, NBCC placed order with the assessee for supply of cement. It is no doubt true that if the assessee had the contract with Government of India, the question would not even arise as a complicated one. Yet, we do not think that the absence of the same and the grant of sub contract would stand in the way of grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in goods involved in the execution of a works contract and the legislative power under Entry 54 in State List will have to be exercised subject to the restrictions and conditions prescribed in the said provisions in respect of goods that have been declared to be of special importance in inter State trade or commerce. " Thus, it held that principles of Sections 3, 4 and 5 of the Central Sales Tax Act would apply to deemed sale also resulting in transfer of property involved in the execution of works contract. 17. Applying the said principle of law to the facts herein, even though the execution of the works contract, is outside the country, nevertheless the contract that NBCC had on the execution of the works contract being a deemed sale, and going by the agreement that Government of India had with Government of Maldives, which had assigned the work to NBCC for execution and contract having been executed, we have no hesitation in accepting the plea of the assessee that it is entitled to claim exemption under Section 5(3) of the Central Sales Tax Act. We may point out herein that what is an applicable to an interstate works contract as the deemed sale has to be come for its applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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