TMI Blog2021 (9) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... and service contract executed between the parties. Merely because the component parts were brought from different places outside Orissa and assembled in Orissa, it cannot be said that it was an intra-State sale and that a colourable device was deployed to avoid paying sales tax under the OST Act. This is contrary to the facts. The documents placed on record clearly show that components either manufactured in the Petitioner s own facilities outside Orissa or brought from outside Orissa were transported to Orissa for erection, testing and commissioning of the 100 TPD Rotary Kiln - there was no occasion for the Tribunal to have gone into a lengthy discussion whether it amounted to a works contract when the focus ought to have been on whether it was an intra-State sale as contended by the State. The goods were indeed supplied in course of inter-State rate, and received by TRL in Orissa. The movement of the goods originated from outside the State. This was not an intra-Sate sale by any stretch of imagination. The Court is unable to agree with the conclusion reached by the authorities at all levels, i.e., STO, ACST - application disposed off. - STREV No. 469 of 2008 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner at its factory in Maharashtra and some of them were brought from other manufacturers located outside Orissa and despatched to TRL by way of transfer of documents with the title to the goods passing when the goods were in transit. 4. The trigger point for the dispute was an order dated 28th October, 1994 passed by the Sales Tax Officer (STO), Rourkela for the assessment year ending 1993-94. The STO held that the Petitioner had failed to get itself registered under the Orissa Sales Tax Act (OST Act) leading to a notice under Section 12 (5) of the OST Act being issued to it. Before the STO, it was contended by the Petitioner that out of the three contracts, the one for system engineering and design was purely a service contract and did not attract the provisions of either the OST Act or the Central Sales Tax Act (CST Act). The supply of indigenous equipment was in the course of inter-State trade for which the Petitioner was separately registered. The jurisdiction for levying CST on such transaction was, under Section 6(2) of the CST Act, with the STO, Rourkela-II Circle, Rourkela. The agreement for erection and commission was purely a labour and service agreement. 5. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Orissa and appropriated to the contract. (iii) The inter-state journey of the goods was breached when the appellant himself took delivery of the same in order to fabricate the items necessary to be appropriated for compliance of contract. (iv) The goods were not sold qua-goods but were pleased on to the contractee on the theory of accretion. 9. The Petitioner then went before the Full Bench of the Tribunal which initially by an order dated 7th October, 2002 dismissed the appeal, rejecting the contention of the counsel for the Petitioner that the contractee, i.e., TRL had received the materials brought from Maharashtra to the State of Orissa and stored in its own godown and therefore, it was an inter-State sale and not an intra-State sale. The Tribunal observed that it could not find out any documentary evidence to show that as goods were received by the contractee. 10. Aggrieved by the above orders, the Petitioner filed ST Revision No.23/2003 in this Court. By order dated 12th March, 2008, this Court remanded the matter to the Tribunal for re-hearing after examining the documents produced by the Petitioner before it. It was directed that the Tribunal should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up the 100 TDP Rotary Kilns is a highly sophisticated activity which requires very high degree of skill. Drawing, design, supply, erection testing commissioning is one single indivisible process and the kiln comes into existence when the erection is complete. Erection, installation or commissioning is thus a fundamental and integral part of the contract. It is, therefore, not a sale of equipments simpliciter but works contract involving deemed sale of the equipments and supply of labour and services in course of execution of the work. Moreover the contract entered into by the parties is a contract for design, supply, erection, etc of unascertained/future goods. At the time of execution of contract the goods are not in existence. In case of unascertained or future goods at the time of their appropriations to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation. In case of the present contract the appropriation to the contract has been made after installation/erection of 100 TDP rotary kiln and demonstration. Therefore, the present contract is a works contract involving deemed sale of goods after accretion/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India AIR 1996 SC 1854, the Supreme Court was considering a similar question which arose in the background of Bharat Heavy Electrical Limited (BHEL) being awarded a Letter of Intent (LOI) by the National Aluminium Company Limited (NALCO), Bhubaneswar for setting up of five captive power plants (120 MW each) at its Aluminium smelter complex at Angul, Orissa. Pursuant to the LOI, BHEL instructed its several units in Haridwar, Jhansi, Bhopal, Bangalore, Ramachandrapuram (Andhra Pradesh- near Hyderabad), Ranipet and Tiruchi (Tamil Nadu) and so on to manufacture the requisite machinery and equipment. There was a separate supply and service contract executed between the parties. The execution of the work order involved manufacturing of some of the components and parts in places outside Orissa and then bringing them to the work site at Angul, Orissa to be incorporated into the captive power plant being erected in Orissa. BHEL paid Central Sales Tax on the value of entire boiler systems manufactured by Tiruchi unit in Tamil Nadu which ultimately became part of the captive power plant. When the sales tax authorities in Orissa sought to levy OST BHEL protested stating that simultaneous t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other goods than the goods agreed upon. Having thus erroneously excluded Section 3 of the Central Sales Tax Act, the Tribunal went to Section 4 and held that in the circumstances, the sales must be held to have taken place inside the State of Orissa. The discussion about endorsement of goods by NALCO to BHEL in Orissa and so on is rather ambiguous. 18. On the same basis, as far as the present case is concerned, merely because the component parts were brought from different places outside Orissa and assembled in Orissa, it cannot be said that it was an intra-State sale and that a colourable device was deployed to avoid paying sales tax under the OST Act. This is contrary to the facts. The documents placed on record clearly show that components either manufactured in the Petitioner s own facilities outside Orissa or brought from outside Orissa were transported to Orissa for erection, testing and commissioning of the 100 TPD Rotary Kiln. 19. There was no occasion for the Tribunal to have gone into a lengthy discussion whether it amounted to a works contract when the focus ought to have been on whether it was an intra-State sale as contended by the State. The goods were inde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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