TMI Blog2023 (5) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Article. Hon ble Court held that the expression goods (whether as goods or in some other form) appearing in sub-clause (b) of 366 (29A) of the Constitution has the effect of enlarging the term goods by bringing within its fold goods in all different forms. Adopting Larsen and Toubro, there exists no reason to differ from the findings that term works contract cannot be confined to a contract to provide labour and services alone and any contract which is undertaken to bring into existence some element of works involving supply of goods would be sufficient to hold the said as works contract . The Apex Court in the case of Larsen Toubro has held that in performance of contract for construction of building, goods like cement, concrete, steel, bricks etc. are intended to be incorporated in structure and even though they lost their identity as goods. Hence it is liable to tax under Article 366 (29A) (b) of Constitution as was introduced vide 46th Amendment of 1982 Act. The very basis of 46th Amendment was the decision of Hon ble Supreme Court in THE STATE OF MADRAS VERSUS GANNON DUNKERLEY CO. (MADRAS) LTD. [ 1958 (4) TMI 42 - SUPREME COURT] wherein the Constitution B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... traction of sand stone etc. by using explosive material procured by them under license from LE-3 issued under Explosive Rules, 2008 by transporting the same to the place of their customers. The Department received an intelligence that the respondent assessee were neither registered under service tax regime nor were paying the service tax despite the fact that the nature of service being rendered by them is not covered under the negative list introduced w.e.f. 01.07.2012. Even the excavation and removal of overburden by way of blasting of explosives for preparation of agricultural land and digging of well have also been made taxable. Department noticed that the respondent - assessee was not discharging the tax liability, rather was found evading the payment of service tax. 3. Department also observed that the assessee was having an explosive license for procuring explosive from the seller, storing the same and for subsequently using these explosive, through mine s blasters, at the site of customer, for excavation of sand stone. It was found that explosive material was issued from respondent s magazines under Form RE-13 (pass for use of explosives) as per the requirement/consump ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent in the present case was providing the taxable blasting services, consumption of explosive while providing such service cannot convert the nature of the said service to being a works contract. 7. Ld. D.R. further impressed upon that, irrespective the respondent - assessee was paying VAT on the explosive while it being sold to the customers, but the payment of VAT, if wrongly made, is not the proof of sale. Any service cannot be called as works contract service just because service provider has paid VAT on goods consumed during provision of service. Ld. D.R. has relied upon the decision in the case of Idea Mobile Communication Ltd. vs. CCS Cochin reported as 2011 (23) STR 433 (S.C.). 8. Ld. D.R. also relied upon the decision in the case of M/s. Shikhavat Explosives vs. State of Rajasthan reported in 2004 (137) STC 326 (Raj.) as was decided on 21.01.2003 wherein it was held that when a job of blasting is undertaken, the use of explosives in such job can neither be termed as sale within the meaning of Rajasthan Sales Tax Act nor it could be subjected to be levy of tax. It is submitted that Commissioner (Appeal) has wrongly held the services to be classifiable under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contract, then value adopted for payment of VAT shall be the value of goods transferred and only the balance would be regarded as the value of service on which tax is payable. With these submissions, it is mentioned that the demand in question was wrongly confirmed by the Original Adjudicating Authority and has rightly been dropped by ld. Commissioner (Appeals). 11. In addition ld. Counsel submitted that since the assessee-respondent has been paying VAT on all bills in question, that too, at a higher rate of 14.5% as compared to service tax rates applicable during the period of demand, the intent to evade duty on part of the assessee has wrongly been alleged. Hence the extended period for issuing the Show Cause Notice has wrongly been invoked. The demand has rightly been dropped even on the grounds of limitation. Impressing upon no infirmity in the order of Commissioner (Appeals), the appeal filed by the department is prayed to be dismissed. 12. Having heard the rival contentions, perusing the record and after going through the relevant case law relied upon by the parties, we hereby observe and hold as follows:- The original adjudicating authority has confirmed the propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of clause (29A) is read with sub-clause (b) along with latter part of this clause, it reads like this : tax on the sale or purchaser of the goods includes a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. The definition of goods in clause (12) is inclusive. It includes all materials, commodities and articles. The expression, goods has a broader meaning than merchandise. Chattels or movables are goods within the meaning of clause (12). Sub-clause (b) refers to transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. The expression in some other form in the bracket is of utmost significance as by this expression the ordinary understanding of the term goods has been enlarged by bringing within its fold goods in a form other than goods. Goods in some other form would thus mean goods which have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffer from the findings that term works contract cannot be confined to a contract to provide labour and services alone and any contract which is undertaken to bring into existence some element of works involving supply of goods would be sufficient to hold the said as works contract . The Apex Court in the case of Larsen Toubro (supra) has held that in performance of contract for construction of building, goods like cement, concrete, steel, bricks etc. are intended to be incorporated in structure and even though they lost their identity as goods. Hence it is liable to tax under Article 366 (29A) (b) of Constitution as was introduced vide 46th Amendment of 1982 Act. 16. We observe that the very basis of 46th Amendment was the decision of Hon ble Supreme Court in Gannon Dunkerley s reported in AIR 1958, SC, 560 (1983) 1 SCC 364 wherein the Constitution Bench had laid down dominant intention test to find out as to whether a particular contract involved transfer of property in goods. The Court was of the opinion that if the dominant intention of a contract was not to transfer the property in goods, but it was Works Contract, or for that matter, a contract in the nature of ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose contracts which are covered by the six sub-clauses of Clause (29A) of Article 366 are separable and may be subjected to sales tax by the States under Entry 54 of List II and there is no question of the dominant nature test applying. It is necessary to note that Associated Cement did not say that in all cases of composite transactions the 46th Amendment would apply 19. Thereafter came the decision of Hon ble Apex Court in the case of M/s. Larsen Toubro (supra). The Court after extensive and elaborate discussion once again specifically negated the argument predicated on dominant intention test in the following words:- 64. Whether contract involved a dominant intention to transfer the property in goods, in our view, is not at all material. It is not necessary to ascertain what is the dominant intention of the contract. Even if the dominant intention of the contract is not to transfer the property in goods and rather it is the rendering of service or the ultimate transaction is transfer of immovable property, then also it is open to the States to levy sales tax on the materials used in such contract if it otherwise has elements of works contract. The view taken by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From the entire above discussion dominant intention test to ascertain the factum of sale no more holds a good law. These facts and the above discussion are sufficient for us to have no reason to differ from the following finding of Commissioner (Appeal) in the order under challenge:- I find that the department has classified blasting services under site formation clearance, excavation earth moving is also not correct, instead, it was correctly classifiable under works contract services chargeable to tax under section 65(B) (44) of FA, 1994. The services are to be classified under works contract to be valued in terms of service tax (determination of value) Rules, 2006 as amended time to time. The valuation is to be done under Rule 2 A (i)of the aboive said Rules, 2006. I find that VAT was never been paid in advertently but was paid knowingly well that it was payable. It was paid considering the definition of works contract as defined under section 2 (44) of RVAT Act, 2003 read with rule 22 of RVAT Rules, 2006. In Nutshell a conjoint reading of the provision of Rajasthan VAT Act, 2003, RVAT Rules, 2006, the decision of Honourable Apex Court of Gujarat AAR, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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