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2018 (4) TMI 751

xception carved out in section 8? - Held that: - The tribunal holds that both parties in the present case are situate and registered in the State of Maharashtra. The goods have moved from the State of Maharashtra as per the contract executed between them. Therefore, there is a sufficient nexus to hold that the impugned sales are liable to tax under the provisions of the MVAT Act. In any event, only those goods have been considered for the purpose of levy of tax, which have moved from the State of Maharashtra. - This was a highly debatable issue. If the tribunal was required to refer to not only the legal principles, but whether they are applicable will have to be eventually determined on the basis of the terms and conditions of the contract, then, in the given facts and circumstances of the case, there was no reason to impose any condition of part payment - an unconditional stay of recovery pending disposal of the appeal is justified. - Petition allowed. - Writ Petition No. 1775 of 2018 - Dated:- 4-4-2018 - S. C. DHARMADHIKARI & PRAKASH. D. NAIK, JJ. Mr. Prakash Shah with Mr. B. N. Mehta i/b. M/s. PDS Legal for the petitioner. Mr. V. A. Sonpal-Special Counsel with Mr. B .....

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e of the returns filed by the petitioner. The VAT returns being scrutinised, resulted in the assessment order dated 20th January, 2016 for the period 1st April, 2009 to 31st March, 2010. The value added tax (VAT) was demanded at ₹ 4,26,94,89,037/-, including tax, interest and penalty. On the same day, another assessment order, for the period 1st April, 2009 to 31st March, 2010 under the Central Sales Tax Act (CST), disallowing the deduction claimed by the petitioner and taxing the entire turnover under the MVAT Act was passed. The argument of the petitioner that the sale in the aforesaid contract is in the course of export under Section 5(1) of the CST Act is not acceptable. The whole activity or transaction was determined as taxable local sale. 4. Aggrieved and dissatisfied with this assessment order, four separate appeals were filed. There was another assessment order for the period 1st April, 2010 to 31st March, 2011, in which, identical findings were rendered, but the MVAT demand was ₹ 2,28,50,15,227/-. The deduction claimed under the CST Act was disallowed. The Joint Commissioner, before whom the appeals were brought (the first appellate authority), decided them by .....

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tative in accordance with the contract. Clause 5.13 and 5.14 are, therefore, relied upon. Clause 7.1 is in respect of transfer of ownership, which is expressly relevant. The argument of Mr. Shah, based on this clause, is that if sale also includes the transfer of property in goods, whether as goods or in some other form involved in execution of a works contract, then, in terms of the aforementioned clause, ownership of materials shall be transferred to the ONGC upon the date of issuance of a certificate towards part completion or completion and acceptance of the work. The ownership of construction equipment used by the contractor and its sub-contractors in connection with the works shall remain with the contractor and its sub-contractors. Thus, ownership of materials, which are styled as goods, are then transferred, but the title in the same is not transferred, according to Mr. Shah, until the compliances as above are made. It is in these circumstances, he would submit that if the whole transaction is beyond 12 nautical miles, the materials are procured not in Maharashtra, but imported from outside Maharashtra are not brought in and are never sold in the State of Maharashtra, then, .....

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a judgment of the Hon'ble Supreme Court in the case of Commissioner, Delhi Value Added Tax vs. ABB Limited (2016) 6 SCC 791. Mr. Shah also submits that the tribunal erroneously placed reliance on a Division Bench judgment, to which, one of us (S. C. Dharmadhikari, J.) was a party, in the case of Raj Shipping vs. State of Maharashtra (2016) 89 VST 460 (Bom). 11. On the other hand, Mr. Sonpal would submit that the tribunal concluded that the Division Bench judgment in the case of Pure Helium India Ltd. vs. Commissioner of Sales Tax, Maharashtra (2012) 49 BST 14, pertains to the same issue and was dealing with a contract of ONGC. Mr. Sonpal then submits that there is no inconsistency in the approach of the tribunal for the facts in M/s. J. K. Surface Coatings (supra) are not identical. Mr. Sonpal would submit that in the present case, the tribunal, on par with other matters, brought to tax the goods sold within the State. The goods may have been brought during the execution of the works contract, but still, the title in the same has passed in the State of Maharashtra. The parties are situated in Maharashtra. The goods have moved from the State of Maharashtra. Therefore, there is .....

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hat it is its consistent view that in respect of sales effected to ONGC, in a case where the goods are appropriated to the contract at the supply base at Nhava Sheva, then, such sales are held liable to tax as sales completed within the State of Maharashtra. There are two judgments/orders, which are referred in paras 5 and 6 of the impugned order. The argument of the present petitioner was that the activity carried out by the petitioner is an execution of a works contract. The argument was that the goods are used in execution of the works contract at the site, which is beyond 12 nautical miles from the State of Maharashtra. The transfer of property took place outside the State of Maharashtra and hence not liable to tax. Reliance was also placed on section 4 of the CST Act. Pertinently, section 4 of that Act refers and deals with such cases where a sale or purchase of goods can be said to be taken place out side the State. Thus, Chapter II is titled as Formulation of Principles for Determining a Sale or Purchase of Goods Takes Place in the Course of Inter-State Trade or Commerce or Outside a State or In the Course of Import or Export. That is a matter exclusively covered by the CST .....

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ods was in pursuance of and incidental to a contract for supply of goods used in the execution of the works contract between the assessee and Delhi Metro Railway Corporation Ltd. The terms and conditions of the contract, according to Mr. Shah have a very material bearing and it is on facts that the legal principles would have to be applied. In that regard he relies upon paras 16 to 18 of the Hon'ble Supreme Court judgment. 18. We must first see the facts in the case of Raj Shipping (supra). There, the petitioner was registered as a dealer under both, the MVAT Act and the CST Act. It was engaged in the business known as Bunker Supplies . Bunker supplies mainly consist of supply of petroleum products such as High Speed Diesel Oil, Light Diesel Oil and Furance Oil to various incoming and outgoing vessels within or beyond the port limits of Mumbai Port. The shipping vessel places an inquiry for required quantity of High Speed Diesel with the assessee. Pursuant to the inquiry made by the customer, the assessee gives a quote for their supplies. On approval of quote, the shipping vessel places a purchase order/nomination with the assessee for the required quantity and the name of the .....

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urement, fabrication etc. The dates of commencement and completion of the work are stipulated. Then, there is an access provided to installation site. Then, there are conditions for procurement/ selection of makes and vendors. The contractor has to select the equipment and material from the vendor list and thereafter, there is an approval, which has to be given also for subcontracting arrangement and procurement of plant/equipment/ materials. That is only when the compliance by the contractor of the conditions stipulated in paras 5.2.2 and 5.2.3 of the contract is made. The miscellaneous and the certification following the same would result in the performance of contract/discharge certificate being issued. 20. The petitioner in this case raised specific grounds to challenge the assessment order and the order of the first appellate authority. The petitioner pointed out that it is responsible for the goods imported and procured until their use for executing the contract and during the course of which, an approval has to be granted by the ONGC. It is submitted that the goods supplied under the contract with ONGC for carrying out turnkey project on offshore sites is beyond 12 nautical .....

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