TMI Blog2016 (9) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... ues, the petitioner should first furnish adequate information. Input tax credit - with regard to the mismatch, the petitioner can very well establish through records, regarding the payment of sale price etc., and without furnishing specific details with regard to the transactions, the petitioner cannot say that the selling dealer alone has to be proceeded against. The initial burden of proof is on the petitioner and if he discharges the burden to the satisfaction of the Assessing Officer, then only the burden of proof shifts. Therefore, to decide this issue also, the petitioner has to necessarily place additional facts. With regard to the sale of fixed assets, wherein the petitioner's contention is that the Assessing Officer was wrong in construing the deletion of assets in the balance sheet, as sale of assets by the petitioner and ignored the FIR and the insurance documents submitted by the petitioner in support of their case that the deletion of assets in the balance sheet was due to theft of assets. With regard to transfer of construction equipment to the petitioner's group company, resulting in deletion of assets in the balance sheet, the petitioner has reported the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the petitioner executes a sale deed for sale of undivided portion of the land and the sale is duly registered. The petitioner deducts the land cost and reports the construction cost as total turnover in its VAT returns as well as the service tax returns. 4. Sofar as the payment of tax under TNVAT Act, the petitioner claims deduction on 30% of the total turnover in terms of Rule 8(5)(d) of the TNVAT Rules and pays tax at appropriate rate on the balance turnover after availing Input Tax Credit of the tax paid on the purchases. The petitioner is stated to have paid Service Tax on the labour portion of the contract. The petitioner completed the construction during March 2014, however at that time, 50% of the flats remained unsold. The petitioner would state that after completion of the construction, more particularly, after receipt of the completion certificate, the petitioner cannot enter into construction agreements for the sale of unsold flats and therefore, the unsold flats have to be sold as immovable property and such sale cannot be subjected to levy of sales tax, since at the relevant time, 50% of the flats remained unsold. Therefore, in the monthly return for October 2014, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the taxable event is the transfer of property in goods involved in the execution of the works contract and the said transfer of property in such goods takes place when the goods are incorporated in the works, the value of the goods which can constitute the measure for the levy of the tax has to be the value of the goods at the time of incorporation of the goods in the works and not the cost of acquisition of the goods by the contractor. It is submitted that when 50% of the flats remained unsold on the date when the completion certificate was issued by the competent authority any further sale beyond the said date, would amounts to sale of immovable property and the same is not liable to tax under TNVAT Act. Therefore, it is contended that the respondent erroneously computed the taxable turnover without reference to the provision of Rule 8(5) of the TNVAT Rules, which would require that the taxable turnover in respect of transfer of property in goods involved in the execution of works contract has to be computed. 7. Further, it is submitted that the provisions of Section 3-B of the Tamil Nadu General Sales Tax Act, 1959, with necessary modifications relating to secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed sale value in works contract for the years 2011-12 to 2014-15; (ii) Input Tax Credit Reversal on cross verification of buyer and seller as per Annexure-I of buyer and Annexure-II of sellers for the year 2011-12 to 2013-14; (iii) Levy of tax on sale of assets for the years 2012-13 and 2013-14; (iv) Reversal of Input Tax Credit on interstate sales without C Forms; and (v) Penalty under Section 27(3) and 27(4) of the Act on suppression and escapement of turnover. 10. It is submitted that opportunity was granted to the petitioner to submit their objections and the Assessing Officer has correctly estimated the deemed sale value involved in the works contract by adding gross profit and freight. Relying upon the decision in the case of Kamatchi Laminations vs. State of Tamil Nadu reported in 95 STC 378, it is submitted that the profits which are relatable to the supply of materials can be included in the value of the goods and profits which are relatable to supply of labour and service to be excluded. Therefore, it is submitted that the contention of the dealer, the taxes leviable only on the purchase turnover in respect of goods involved in the works contract, has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the issues in seriatim. 13. The endeavour of the learned Senior counsel for the petitioner is to convince this Court that the computation of the deemed sale value as done by the Assessing Officer in contra distinction with the procedure adopted by the petitioner is erroneous. The case of the petitioner itself is that the entire construction has been completed and the completion certificate has been issued by the Planning Authority, yet on the date of issuance of such completion certificate, 50% of the flats remained unsold. Therefore, it is their case that sofar as the transfer of those 50% of the flats, the petitioner cannot enter into a construction agreement, as the construction is already over and what is being sold, is an immovable property and not liable to tax. 14. Thus, the factual issue is as to how many number of flats have been sold, and what remained unsold on the date of issuance of completion certificate, whether the procedure adopted by the petitioner for the purpose of availing the Input Tax Credit was justifiable, whether it confirms to the procedure under Section 5 or whether there is an infraction of Rule 8(5) etc. 15. The legal position with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amendment are subject to the drill ofArticle 286(3) read with Section 15 of the Central Sales Tax Act, namely, that they are chargeable at a single point and at a rate not exceeding 4% at the relevant time. Further, the point at which these iron and steel products are taxable is the point of accretion, that is, the point of incorporation into the building or structure. 14. The relevant paragraphs from these two decisions, therefore, need to be set out. In Builders Association (supra), this Court held: We are of the view that all transfers, deliveries and supplies of goods referred to in clauses (a) to (f) of clause (29-A) of Article 366 of the Constitution are subject to the restrictions and conditions mentioned in clause (1), clause (2) and sub-clause (a) of clause (3) of Article 286 of the Constitution and the transfers and deliveries that take place under sub- clauses (b), (c) and (d) of clause (29-A) of Article 366 of the Constitution are subject to an additional restriction mentioned in sub- clause (b) of Article 286(3) of the Constitution. [para 32] In Benjamin's Sale of Goods (3rd Edn.) in para 43 at p. 36 it is stated thus: Chattel to be affixed to land or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -A) of Article 366 is to be found only in entry 54 and not outside it. We may recapitulate here the observations of the Constitution Bench in the case of Bengal Immunity Company Ltd. [AIR 1955 SC 661 : (1955) 2 SCR 603 : (1955) 6 STC 446] in which this Court has held that the operative provisions of the several parts of Article 286 which imposes restrictions on the levy of sales tax by the States are intended to deal with different topics and one could not be projected or read into another and each one of them has to be obeyed while any sale or purchase is taxed under entry 54 of the State List. We, therefore, declare that sales tax laws passed by the legislatures of States levying taxes on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract are subject to the restrictions and conditions mentioned in each clause or sub- clause of Article 286 of the Constitution. We, however, make it clear that the cases argued before and considered by us relate to one specie of the generic concept of works contracts . The case-book is full of the illustrations of the infinite variety of the manifestation of works contracts . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods involved in the execution of a works contract and the said transfer of property in such goods takes place when the goods are incorporated in the works, the value of the goods which can constitute the measure for the levy of the tax has to be the value of the goods at the time of incorporation of the goods in the works and not the cost of acquisition of the goods by the contractor. We are also unable to accept the contention urged on behalf of the States that in addition to the value of the goods involved in the execution of the works contract the cost of incorporation of the goods in the works can be included in the measure for levy of tax. Incorporation of the goods in the works forms part of the contract relating to work and labour which is distinct from the contract for transfer of property in goods and, therefore, the cost of incorporation of the goods in the works cannot be made a part of the measure for levy of tax contemplated by Article 366(29-A)(b). 16. Similarly, with regard to the mismatch, the petitioner can very well establish through records, regarding the payment of sale price etc., and without furnishing specific details with regard to the transactions, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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