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2016 (8) TMI 715 - MADRAS HIGH COURT

2016 (8) TMI 715 - MADRAS HIGH COURT - TMI - Nature of the contract - Works contract activity or mere sale activity - doors and windows - levy tax on the entire turnover of ₹ 70,59,413/- at the rate of 12% under Section 3(2) of the TNGST Act, 1959. - Held that:- we are satisfied that a single composite contract of fabrication, supplying and fixing, at the site has been executed between the parties, we are of the considered view that the judgment of the Hon'ble Apex Court in Kone Elevator I .....

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allenge in this appeal is to an order, made in W.P.No.1364/2011 dated 11.02.2013, by which, the writ court, declined to issue a Certiorari, and to quash the proceedings of the Assistant Commissioner (Commercial Taxes), Coimbatore dated 14.12.2010, as illegal and contrary to the clarifications issued by the Commissioner of Commercial Taxes in D.Dis.Acts Cell-II/56922/2000, dated 25.9.2000 and Lr.No.L.Dis.Acts Cell-IV/80171/2002, dated 22.1.2003, binding upon him, as per Section 28-A(3) of the TNG .....

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the appellant purchased raw materials or other goods in the nature of Aluminium channels, mainly used in Aluminium partition works or erection of Aluminium doors, at the place of the customers situated, inside the State of Tamil Nadu. Goods purchased from local dealers inside the State are done, as against Form XVII made on concessional levy, at the rate of 4% along with the surcharge due. 3. The appellant has further contended that from the year 2001 onwards, they have availed option of paymen .....

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ent of execution and accordingly, payments are received, in relation to the contract executed. In the year 2004-2005, the appellant purchased Aluminium sections, used in Aluminium doors/window works to the tune of ₹ 28,94,102/- against From XVII document, thereby, availing the concessional rate of tax. Turnover reported by the assessee was also duly accepted by the respondent. Assessment was completed vide order dated 19.04.2006, and the appellant paid the tax, at the rate of 4%, under Sec .....

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Act, was not eligible, and that the activity of the appellant was an outright sale and therefore, the turnover is assessable under Section 3(2) of the then Tamil Nadu General Sales Tax Act. Supporting the proposal, the respondent contended that the appellant had effected purchases of Aluminium sections, to the tune of ₹ 28,94,102/- against Form XVII, which admittedly mean that the goods purchased under the cover of Form XVII was subjected to manufacturing activity, and so saying, proposed .....

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have been raising quotations/bills describing the nature of work carried out, as supplying, fabrication and fixing, at the site. The appellant has further contended that perusal of the work orders, would reveal the fact that the intention between the parties was to execute the works contract, based on the specification provided, and that it was not a ready made or a product that could be brought, under the definition of sale. It is also the contention of the appellant that they were also regist .....

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of Certiorari to quash the order dated 14.12.2010. 7. On the facts and circumstances, the writ court, has observed as here under: "4. From the facts pleaded, it is seen that the petitioner-assessee is a dealer in aluminium doors, windows, etc. and they did not dispute that they fabricated and erected aluminium doors, windows, etc., as per the orders of the customers giving specifications, designs and size. In order to have a proper execution of the work thus granted, the petitioner-assesse .....

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he facts and circumstances of the present case, vide order dated 11.02.2013, the writ court, dismissed the writ petition. 9. Assailing the correctness of the order made in W.P.No.1364/2011 dated 11.02.2013, the instant writ appeal has been filed. 10. Explaining the nature of contract, Mr.C.Baktha Siromoni, learned counsel for the appellant submitted that the appellant has undertaken to do Aluminium partition work, performed at the site of the customers. Raw materials like, Aluminium and rods, se .....

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appellant further submitted that the case of the appellant differs from the case of manufacturing iron shutters and subsequently, erected in another required place of the customer. He therefore submitted that only in the case of a contract of fixing iron shutters, the predominant element of 'sale' would be present, and whereas, the case of the appellant of entering into a works contract, for Aluminium partition works, the same cannot be compared with erection and installation of lifts, .....

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nd that the original assessment was completed on 29.12.2004. However, after five years, and by change of opinion, the respondent has revised the assessment, under a different head, section 3(2) of the Tamil Nadu General Sales Tax Act, 1959, by levying tax, at the rate of 12%, as per first schedule of Part B of TNGST Act, on the entire works contract receipts of ₹ 70,59,413/- for the Assessment year 2004-2005, which is erroneous. 12. Bringing it to the notice of the court that the principle .....

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e Division Bench, referred to above, has been reversed, the appellant is entitled to a writ of certiorari, as prayed for. 13. Responding to the above, Mr.Kanmani Annamalai, learned Additional Government Pleader (Taxes), appearing for the respondent, fairly submitted that the dictum of this court in T.C.(R) No.1977/2006, has been reversed by the Hon'ble Apex Court but, requested this court, to remit the matter to the Assessing Officer. 14. Heard the learned counsel for the parties and perused .....

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parts, components and accessories of such goods shall also be taxed at the same rate as that of the goods if such spare parts, components and accessories are not specifically enumerated in the First Schedule and made liable to tax under that Schedule: Provided further that in the case of goods mentioned in the First Schedule which are taxable at the point of first sale, the tax under this Act shall be payable by the first or earliest of the successive dealers in the State who is liable to tax un .....

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e total contract value of the civil words executed; (ii) All other works Contracts. Four percent of the total contract value of the works executed. 16. Perusal of the copies of the works contract dated 15.05.2004 and 28.05.2004 respectively, for the Assessment Year 2004-05 executed, in favour of the appellant shows that the works to be done, are fabrication, supplying and fixing of anodised Aluminium sections, as per the annexure to the contract, at the site. Perusal of the revised Assessment Or .....

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erefore, there is no question of any manufacturing activity or fabrication done, at any other place, except at the worksite, and in such circumstances, the activity would not fall under the purview of sale, nor there was any trading transaction. Going through the material on record, we are of the considered view that the explanation offered has not been considered, in proper perspective with reference to the meaning of the word 'sale' or 'works contract'. 17. Going through the ma .....

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India) Limited reported in (2005) 140 STC 22 and Apparels and Handloom Exporters Association and others vs. State of Tamil Nadu and others, reported in (2003) 129 STC 167. Now after considering a plethora of judgments, in the recent decision of the Hon'ble Apex Court in Kone Elevator India Private Limited vs. State of Tamil Nadu reported in (2014) 7 SCC 1 a Constitutional Bench of the Apex Court, has overruled the judgment in State of Andhra Pradesh vs. Kone Elevators (India) Limited reporte .....

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