TMI Blog2016 (9) TMI 1249X X X X Extracts X X X X X X X X Extracts X X X X ..... CE ARAVIND KUMAR FOR THE APPELLANT : SRI T.K. VEDAMURTHY, AGA) ORDER As all the petitions arise from the common judgment and the order passed by the Tribunal dated 12.11.2014, they have been considered simultaneously. 2. The facts of the case appear to be that for the respective assessment year April 2005 to March 2006 the reassessment under Section 39(1) of the Karnataka Value Added Tax, 2003 (hereinafter referred to as Act ) was undertaken and ultimately the order was passed on 15.04.2010. The matter was carried in appeal before the First Appellate Authority and the authority vide order dated 12.01.2012 dismissed the appeal and confirmed the assessment by levying tax @ 4% on the turnover of iron and steel used in the works contract. The revenue further carried the matter before the Appellate Tribunal and Tribunal ultimately vide order dated 12.11.2014 for the reasons recorded in the order, dismissed the appeal. Under circumstances, the present petitions before this Court. 3. Petitioner revenue has formulated the questions of law in the present petitions as under: (a) In the facts and circumstances of the case, whether the Karnataka Appellate Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be in the same position in the building or the bridge which is constructed. At no point of time the iron and steel is transformed into a new product / goods. There is no value addition to the said steel rods and beams. In fact, steel rods are used only to reinforce the cement concrete. It is used because it is iron and steel rod and it continues to be iron and steel rod even after the completion of the building or the bridge which is constructed, in which these iron and steel rods are used. Therefore it continues to be the declared goods. By virtue of Sec. 15 of the CST Act, the State has an authority to impose tax. It cannot impose tax more than the tax prescribed in Sec.15 of the Act. Hence, in absence of details to transfer of Iron and Steel, in the same form, the case needs to be remanded to the AA to conclude assessment afresh on merits and as per law, and in the light of the law laid down by the Division Bench of the Hon ble High Court of Karnataka, mentioned Supra at Para-15, after providing an opportunity to the appellant of being heard. Hence, on the facts and circumstances and law, we answer to Point No.(1) partly in the affirmative. 6. The above referred record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Edn.) in para 43 at p. 36 it is stated thus: Chattel to be affixed to land or another chattel.- Where work is to be done on the land of the employer or on a chattel belonging to him, which involves the use or affixing of materials belonging to the person employed, the contract will ordinarily be one for work and materials, the property in the latter passing to the employer by accession and not under any contract of sale. Sometimes, however, there may instead be a sale of an article with an additional and subsidiary agreement to affix it. The property then passes before the article is affixed, by virtue of the contract of sale itself or an appropriation made under it. In view of the foregoing statements with regard to the passing of the property in goods which are involved in works contract and the legal fiction created by clause (29-A) of Article 366 of the Constitution it is difficult to agree with the contention of the States that the properties that are transferred to the owner in the execution of a works contract are not the goods involved in the execution of the works contract, but a conglomerate, that is the entire building that is actually constructed. After the 46t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the illustrations of the infinite variety of the manifestation of works contracts . Whatever might be the situational differences of individual cases, the constitutional limitations on the taxing power of the State as are applicable to works contracts represented by building contracts in the context of the expanded concept of tax on the sale or purchase of goods as constitutionally defined under Article 366(29-A), would equally apply to other species of works contracts with the requisite situational modifications. (Paras 38-41) In M/s. Gannon Dunkerley (supra), this Court held: Apart from the limitations referred to above which curtail the ambit of the legislative competence of the State Legislatures, there is clause (3) of Article 286 which enables Parliament to make a law placing restrictions and conditions on the exercise of the legislative power of the State under Entry 54 in State List in regard to the system of levy, rates and other incidents of tax. Such a law may be in relation to (a) goods declared by Parliament by law to be of special importance in inter- State trade or commerce, or (b) to taxes of the nature referred to in sub-clauses (b), (c) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. The Karnataka Appellate Tribunal in an order dated 18.10.2010 in Civil Appeals arising out of SLP(C) Nos. 18646-19117 of 2015 narrates the factual position thus: Different types of steel bars/ rods of different diameters are used as reinforcement (like TMT bars, CTD bars etc). The reinforcement bars/ rods need to be bent at the ends in a particular fashion to withstand the bending moments and flexural shear. The main reinforcement bars/ rods have to be placed parallely along the direction of the longer span. The diameters of such main reinforcement rods/bars and the distance between any two main reinforcement bars/rods is calculated depending on the required loads to be carried by the reinforced cement concrete structure to be built based on various engineering parameters. At right angles to the main reinforcement bars/rods, distribution bars/rods of appropriate lesser diameters are placed and the intersections between the distribution bars/rods and main reinforcement bars/rods are tied together with binding wire. The tying is not for the purposes of fabrication but is to see that the iron bars or rods are not displaced during the course of concreting from the assigned pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be securely held in position during placing of concrete by annealed binding wire not less than 1mm. in size and conforming to IS:280, and by using stays, blocks or metal chairs, spacers, metal hangers, supporting wires or other approved devices at sufficiently close intervals. Bars will not be allowed to end between supports not displaced during concreting or any other operation over the work .... As far as possible, bars of full length shall be used. In case this is not possible, overlapping bars shall not touch each other, but be kept apart by 25mm, or 1 (1/4) times the maximum size of the coarse aggregate whichever is greater, by concrete between them. Where not feasible, overlapping bars shall be bound with annealed steel wire, not less than, 1mm. thickness twisted tight. The overlaps shall be staggered for different bars and located at points along the span where neither shear nor bending moment is maximum. The above specification which are standard for all civil construction works also confirms the correctness of the findings recorded by us supra. Welding of bars/ rods reduces their cross section and to that extent decreases the tensile strength of the reinforcement ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and steel plates are melted and converted into wire and then sold in the market, such wire would only be taxable once so long as it retains its identity as a commercial goods belonging to the category wire made of either iron or steel. The mere fact that the substance or raw material out of which it is made has also been taxed in some other form, when it was sold as a separate commercial commodity, would make no difference for purposes of the law of sales tax. The object appears to us to be to tax sales of goods of each variety and not the sale of the substance out of which they are made. As we all know, sales tax law is intended to tax sales of different commercial commodities and not to tax the production or manufacture of particular substances out of which these commodities may have been made. As soon as separate commercial commodities emerge or come into existence, they become separately taxable goods or entities for purposes of sales tax. Where commercial goods, without change of their identity as such goods, are merely subjected to some processing or finishing or are merely joined together, they may remain commercially the goods which cannot be taxed again, in a ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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