TMI Blog2011 (8) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Appellant : Rakesh Ranjan Agrawal, B.J. Agrawal and R.R. Agrawal For the Respondent : The C. S. C., ARUN TANDON J. This trade tax revision has been filed by the assessee against the order of the Tribunal dated July 21, 2003 passed in Second Appeal No. 402 of 2000 (assessment year 1996-97). Facts in short giving rise to the present revision are as follows: The assessee is stated to have entered into agreements for installation and commissioning of sprinkler irrigation system, with the Delhi Development Authority, Delhi and National Building Construction Corporation, Faridabad in the assessment year 1996-97. The assessee disclosed Central sales tax of ₹ 37,32,284.16 along with total receipt of ₹ 15,60,266 towards the works contract, from the aforesaid two contracting parties. It is not in dispute that the assessee for the purpose of executing the works contract supplied sprinkler irrigation systems. The assessing authority vide order dated March 7, 1998 accepted the accounts books. He levied Central sales tax of an amount of ₹ 7,80,133 on the material value of the goods used in the execution of works contract at the rate of 10 per cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Officer reported in [2002] 128 STC 358 (Mad). The learned counsel for the assessee further contended that in case of 20th Century Finance Corpn. Ltd. v. State of Maharashtra reported in [2000] 119 STC 182 (SC); [2000] 16 NTN 425, the power of the State to levy tax on transfer of right to use goods would arise only when (a) the contract of transfer of right to use has been executed outside the State, (b) sale has taken place in the course of inter-State trade and (c) sales are in the course of export or import in the territory of India. He submits that the State is not competent to levy tax on the transfer of right to use goods which is deemed sale only if such sale takes place outside the State. Lastly, it has been submitted that the State cannot levy tax on deemed sale in view of article 286 of the Constitution. The transactions covered by sections 3, 4 and 5 of the Central Sales Tax Act cannot be taxed by the State authorities. Reference has also been made to the judgment in the case of Tata Elxsi Limited v. State of Uttaranchal [2004] 134 STC 403 (Uttara); [2004] 24 NTN 16. Shri B.K. Pandey in reply however submits that the legal position with regard to works contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttaranchal [2004] 134 STC 403 (Uttara); [2004] 24 NTN 16 and 20th Century Finance Corpn. Ltd. [2000] 119 STC 182 (SC); [2000] 16 NTN 425 he states that the same have no application in the controversy at hand. I have heard counsel for the parties and have examined the records. Short controversy in the present revision for consideration before the court is as to whether the total value of the goods used in the execution of the works contract entered into between assessee, Delhi Development Authority or with National Building Construction Corporation could be treated to be a divisible part of the works contract so as to be subjected to levy of Central sales tax in view of the amendment introduced by addition of sub-clause (b) to clause (29A) of article 366 of the Constitution of India. The Supreme Court in paragraphs 34, 35, 36, 37 and 38 has examined the impact of such amendment introduced in the Constitution of India and has gone to hold that because of legal fiction so introduced under the aforesaid clause on being carried to its logical end would mean that a single works contract stands divided into two parts automatically by operation of law. There is a deemed sale of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the view that even in the absence of any amendment having been made in the Central Sales Tax Act (after the Forty-sixth Amendment) expressly including transfers of property in goods involved in the execution of a works contract, the provisions contained in sections 3, 4 and 5 would be applicable to such transfers and the legislative power of the State to impose tax on such transfers under entry 54 of the State List will have to be exercised keeping in view the provisions contained in sections 3, 4 and 5 of the Central Sales Tax Act. For the same reasons sections 14 and 15 of the Central Sales Tax Act would also be applicable to the deemed sales resulting from transfer of property 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. 38. Since the question of levy of inter-State sales tax under section 6 of the Central Sales Tax Act is not in issue in these cases which only relate to imposition of sales tax by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to warrant any interference in exercise of revisional jurisdiction. The judgment in the case of Jindal Irrigation Limited [2010] 28 VST 126 (All); [2008] UPTC 1258, has not taken note of the relevant paragraph of judgment of the Constitution Bench of the Supreme Court in the case of Gannon Dunkerley Co. [1993] 88 STC 204 (SC); [1993] UPTC 416 as noticed above. Paragraphs 41 to 44 of the said judgment of Gannon Dunkerley Co. [1993] 88 STC 204 (SC); [1993] UPTC 416 as reproduced and relied on by the single judge in this case of Jindal Irrigation Limited [2010] 28 VST 126 (All);[2008] UPTC 1258 have no application with regard to controversy in hand. For ready reference: Paragraphs 41 to 44 of the judgment in the case of Gannon Dunkerley Co. [1993] 88 STC 204 (SC); [1993] UPTC 416 are quoted below (pages 231 and 232 in 88 STC): 41. It must, therefore, be held that while enacting a law imposing a tax on sale or purchase of goods under entry 54 of the State List read with sub-clause (b) of clause (29A) of article 366 of the Constitution, it is not permissible for the State Legislature to make a law imposing tax on such a deemed sale which constitutes a sale in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lve any contradiction in saying that an inter-State sale or purchase is inside a State or outside it.' (page 321 of STC; 1086 of SCR). 44. The location of the situs of the sale in sales tax legislation of the State would, therefore, have no bearing on the chargeability of tax on sales in the course of inter-State trade or commerce since they fall outside the field of legislative competence of the State Legislatures and will have to be excluded while assessing the tax liability under the State legislation. The same is true of sales which are outside the State and sales in the course of import and export. The State Legislature cannot so frame its law as to convert an outside sale or a sale in the course of import and export into a sale inside the State. The question whether a sale is an outside sale or a sale inside the State or whether it is a sale in the course of import or export will have to be determined in accordance with the principles contained in sections 4 and 5 of the Central Sales Tax Act and the State Legislature while enacting the sales tax legislation for the State cannot make a departure from those principles. It is clear that the paragraphs 41 to 44 deal w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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