TMI Blog2019 (2) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... ified at the time of the execution of the works contract document, it would make no difference to the eligibilty to deduction claimed by the assessee under Rule 9(1)(e) of the Rules, on deemed interstate sale arising upon transfer of property in goods involved in the execution of the works contract. On the findings recorded by the Tribunal, the goods in question had been moved from outside the State solely by reason of the pre-existing works contract and those goods had been applied only solely the execution of that works contract. Therefore, the deemed sale of goods arose, only by way of inter-state sale as the movement of goods was occasioned by the prior contract of sale, namely the works contract - Rule 9(1)(e), though worded differently from section 3-F(2)(i) of U.P.Trade Tax Act, 1948, it does not and it cannot be permitted to convey a different meaning. Since in the present case, the Tribunal recorded a specific finding that there pre-existed works contracts between the assessee and the contractees and further the assessee had purchased the goods from outside the State of U.P., only to execute those pre-existing works contracts, in absence of any further finding that such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner/Chiller Plant. The assessing officer did not grant any benefit with respect to value of goods imported by the assessee for execution of the aforesaid works contract and treated those purchases to be independent of the works contract awarded to the assessee. The first appeal authority granted part relief to the assessee. In that regard, the first appellate authority granted the benefit of deduction of the value of goods involved in the execution of the works contract, to the extent such goods had been dispatched with the endorsement on the goods receipt/ 'biltee', for delivery at site i.e. the place of execution of the works contract. Against the remaining goods that were imported into the state of U.P. and applied in execution of the works contracts without that endorsement, the claim of deduction made by the assessee was disallowed. 5. The said finding recorded by the first appellate authority gave rise to cross-appeals before the Tribunal. The Tribunal has decided these appeals by it's common order which is impugned in the present revisions. According to the Tribunal, no doubt the assessee was awarded and had executed the works contract for installation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the execution of the works contract as a result of sale in the course of inter-state trade or commerce. 7. It is thus submitted, for the purpose of grant of that deduction the assessee had only to establish, the sale made in the inter-state trade or commerce had resulted in the transfer of the property in the goods. Once such fact was established, the value of such goods would be eligible for a deduction equal to that value. Insofar as it remained undisputed and it had been specifically found by the Tribunal that the movement of the goods had been caused solely for and, those goods had been applied only to, the works contract executed by the applicants, there could not arise any further test to be satisfied by the assessee. 8. As to the test of inextricable link referred to by the Tribunal, it has been submitted, in the first place, such a test was not required to be applied and in any case, that test stood satisfied on the finding of the Tribunal that the assessee had to import the goods only to execute the works contract. It being undisputed that the entire goods had imported and had been utilised solely for execution works contract, the principle of inextricable link ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of intra-state or inter-state sale of goods, it is for the contracting parties to conduct their affairs in the manner best suited to the circumstances that may exist, as per their mutual agreement. 13. Once the Tribunal had found that the movement of goods from outside the state had been caused by the pre-existing works contract and that the goods thus imported had been applied solely for execution of those works contracts and there was no allegation or finding that such goods had been imported by the assessee independent of the works contract, the enquiry necessary to decide the dispute should end there. According to the facts found by the Tribunal, the deemed sale was one performed in the course of inter-state sale as the movement of the goods had been occasioned from outside the state, only for the purpose of execution of the works contracts, by the assessee. 14. It would have been a completely different case if the assessee had been found to hold in stock any goods that may have been imported from before and may have been applied to the works contract subsequently. However, neither there is any room for presumption nor such speculation is permissible in the clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, been made by Parliament in exercise of its power under Article 286(3)(b) . (emphasis supplied) 16. Then, in absence of any amendment to the Central Sales Tax Act, 1956, the Supreme Court framed a question noted in para 34 and answered in para 35 and 37 of the report, thus: 34. The question is whether in the absence of an amendment in the Central Sales Tax Act specifically applying its provisions to a transfer of property in goods involved in the execution of a works contract, the provisions of Sections 3, 4 and 5 contained in Chapter II can be held applicable to such a transfer............................................ 35...........................................Since the provisions of Sections 3, 4 and 5 were applicable to such contracts containing two separate agreements, there is no reason why the said provisions should not apply to a contract which, though single and indivisible, by legal fiction introduced by the Forty-sixth Amendment, has been altered into a contract which is divisible into one for sale of goods and other for labour and services.......... ............. 37. For the reasons aforesaid, we are of the view that even in the abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause the question whether a deemed sale resulting from transfer of property in goods involved in the execution of a particular works contract amounts to a sale in the course of inter-State trade or commerce under Section 3 of the Central Sales Tax Act or an outside sale under Section 4 of the Central Sales Tax Act or a sale in the course of import under Section 5 of the Central Sales Tax Act has to be decided in the light of the particular terms of the works contract and it cannot be decided in the abstract. As at present advised, we are not in a position to say that in no case, can there be a sale in the course of inter-State trade or commerce or an outside sale or a sale in the course of import in respect of a deemed sale resulting from transfer of property in goods involved in the execution of a works contract falling within the ambit of sub-clause (b) of clause (29-A) of Article 366 of the Constitution. (emphasis supplied) 18. Having thus dealt with the objection raised on behalf of the State Governments, the Supreme Court then concluded: 41. It must, therefore, be held that while enacting a law imposition a tax on sale or purchase of goods under Entry 54 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... execution of the works contract document, it would make no difference to the eligibilty to deduction claimed by the assessee under Rule 9(1)(e) of the Rules, on deemed interstate sale arising upon transfer of property in goods involved in the execution of the works contract. On the findings recorded by the Tribunal, the goods in question had been moved from outside the State solely by reason of the pre-existing works contract and those goods had been applied only solely the execution of that works contract. Therefore, the deemed sale of goods arose, only by way of inter-state sale as the movement of goods was occasioned by the prior contract of sale, namely the works contract. 22. Rule 9(1)(e), though worded differently from section 3-F(2)(i) of U.P.Trade Tax Act, 1948, it does not and it cannot be permitted to convey a different meaning, in view of the binding principle laid down by the Supreme Court in the case of Gannon Dunkerley-II . Also, in absence of legislative intent to exclude the applicability of that Rule to some cases of inter-state sale (such as the present case), would be to allow such interpretation of the law to arise in conflict with the law laid down in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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