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TMI Blog2023 (5) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal was bound by its earlier orders in the cases of applicant itself as they have attained finality and, on the principle of "consistency", the Tribunal should not hold otherwise than what has been settled by its earlier Benches? 2 As would be seen from the reading of references, the aforesaid questions have arisen for determination of this Court in the background and context of following facts: M/S Power Grid Corporation of India Ltd. ["the assessee"] is a Government of India undertaking engaged, inter alia, in establishing its own grid stations and laying wires for transmission of electricity. It is in the execution of its aforesaid works, the assessee purchased some goods, material and machinery etc. from outside the State. The assessee has taken registration under the Central Sales Tax, 1956 ["the CST Act"]. The modus operandi adopted by the assessee for construction of its grid stations and laying wires etc. for transmission of electricity indicates that it first buys goods, material and requisite machinery from outside the State and thereafter hands over the same to the contractors for consumption, fixation and laying out in the works of the assessee. As is claimed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee that the goods owned by it were only handed over to the contractors for use and fixation and, therefore, their possession and ownership always remained with the assessee. It was, thus, argued that there was no transfer of property in goods and that no project was completed by the contractors during the year when the material/goods were supplied. It was the contention of the assessee that since the goods and material were used in self works or the works of the Corporation, as such, there was no question of executing any works contract by the Contractors. It was urged that there could be no sale of any goods or material to itself. The Tribunal considered these appeals and the grounds of challenge urged on behalf of the assessee in extenso and, after analyzing the rival contentions, came to the opinion that, in view of the admitted facts that the assessee had purchased goods from outside the State against C-Forms and handed over the same to the contractors for using them in the works contract, it was a foregone conclusion that the goods had been utilized by the assessee through its contractors in works contract. The pivotal question which had arisen for consideration before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the C-Forms. The registration certificate of the assessee granted under the CST Act clearly refers to the nature of business as "works contract". Under column (A) of the said certificate of registration, the assessee is registered for import of tower material, conductors, sub-station material, steel, cement etc. for use in laying transmission lines and construction of sub-stations and other allied works. It has also come on record and which fact is neither denied by the assessee, nor any contrary material has been placed on record by the revenue that, on execution of the works involving use of aforesaid material, all the works, assets, along with material used therein would ensure to the benefit of State/utilities or organizations for valuable consideration viz. transmission charges. It is thus evident that the works contracts executed by the assessee through sub-contractors are meant for and transferred to other utilities or organizations. It is, thus, the case of the respondents that the goods involved in the execution of the works contract get transferred to State/utilities or organizations for which these works are executed by the assessee. The entire transaction of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge is payable in respect of residential accommodation, food and drink, the sale price of food and drink included therein shall be determined in such manner as may be notified by the Government notification in the Government gazettee; (ii) All materials, articles and commodities, whether or not to be used in construction, fitting out, improvement or repair of movable or immovable property; (iii) Growing crops, grass, trees, plants including the produce thereof and other thing attacked to, or forming part of the land which are agreed to be served before sale or under contract of sale; and, (iv) Right to use any goods for any purpose, whether or not, for a specific period". 9 The definition of "sale" as it existed during the accounting year 1996-97 after it was amended by the Act No. XX of 1981 was as under: "Sale" with all its grammatical variations and cognate expressions means any transfer of property in goods (otherwise than by mortgage, hypothecation, charge or pledge) by any person for cash with or deferred payment or for any other valuable consideration and includes a transfer of property in goods or in some other form: (i) involved in the execution of works contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given in Section 2(L) of the GST Act. Even the transfer of property in goods or in some other form for cash or deferred payment or for any other valuable consideration involved in execution of works contract had also been brought within the purview of term "sale". 11 In light of the above, when we examine the case of the assessee in respect of the accounting year 1996-97, we clearly find that, handing over of the goods and material to the contractors for construction and laying of power grids, sub-stations and transmission lines of the assessee did not involve the transfer of right to use goods. Not only the ownership and dominion over the goods handed over to the contractors remained vested with the assessee, but the transfer or handing over of the goods and material to the contractors was without any consideration. It can, thus, be safely concluded that the transaction between the assessee and its contractor involving transfer of goods was not supported by any valuable consideration and, therefore, cannot be construed as a transfer of right to use goods so as to bring it within the purview of term "sale" as defined under Section 2(L) of the GST Act. So far so good, but an im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of food or other eatables or any drink (Whether or not intoxicating) supplied or served by way of or as part of any service or in any manner whatsoever, with or without any amenity (in a hotel, restaurant or any other place of eating by whatever name called); Provided that where a composite charge is payable in respect of residential accommodation food and drink, the sale price of food and drink included therein shall be determined in such manner as may be notified by the Government notification in the Government gazette;] [(i-a) services in the form of lodging facilities provided by hotels, services provided by beauty saloons, private nursing homes, services provided by photographers and advertisers rendered by way of or as part of any contract or in any other manner whatsoever involving skill and labour and such transaction shall be deemed to be a sale by the persons making the same]. (i-b) services provided in the shape of works contract, whether divisible or indivisible involving the transfer of property or not and such transaction shall be deemed to be the sale by the person making the same. (ii) all materials, articles and commodities, whether or not to be used in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods at each of such places] 15 When we examine the controversy at hand in the light of amended definitions of "goods" and "sale", we find that, from 15.05.1997, the services provided in the shape of works contract, whether divisible or indivisible, involving transfer of property or not, were brought within the definition of "goods" and such transaction deemed to be a "sale" by the person making the same. The right to use any goods for any purpose, whether or not, for a specific period which was earlier also existing in the definition of "goods" remained unchanged. 16 So far as the definition of "sale" is concerned, the transfer of property in goods involved in execution of works contract came to be deleted. There was no other substantial change in the definition of "sale" so far as our purpose is concerned. 17 By the conjoint reading of amended dentitions of "goods" and "sale", we can safely say that w.e.f 15.05.1997, the services provided in the shape of works contract were also brought within the definition of "goods" and the transaction involving providing of such services, a deemed sale by the person making it. 18 In the instant case, as have already noted, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... works contract was a sale only up to 15.05.1997. The position, however, changed by deletion of clause (i) of Section 2(L) by the Act No. X of 1997 w.e.f 15.05.1997. The accounting years in question are from 1996-97 to 2001-02 and, therefore, except for the month of April and 15 days of May of the accounting year 1996-97, the transfer of property in goods involved in the execution of works contract was not a sale within the meaning of the term used in the GST Act and therefore, not exigible to sales tax under the Act. That would clearly mean that what is being taxed by the respondents is the transaction between the assessee and the contractors. 22 Indisputably, the goods in question were purchased by the assessee from outside the State against C-forms for which it had necessary registration under the CST Act. These goods which on purchase had vested in the assessee were handed over/delivered or conveyed to the contractors engaged by the assessee for erecting and establishing transmission lines, sub-stations and grid stations etc. Notwithstanding the handing over of the goods and material to the contractors, there was no transfer of property in goods from the assessee to the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 7 of the CST Act, is necessarily a dealer liable to pay tax under the Act. A dealer, in terms of Section 2(b) of the CST Act, is a person who carries on business of buying, selling, supplying or distributing goods, directly or indirectly, for cash, or for deferred payment, or commission, remuneration or any other valuable consideration. In terms of Section 8 of the CST Act, every dealer, who in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section 3, which would include goods used in the generation or distribution of electricity or any other form of generation, shall be liable to pay tax under the CST Act which shall be 3%/4% of his turn over or at the rate applicable to the sale or purchase of such goods inside the appropriate State under the sales tax law of that State, whichever is lower. Section 8(4) clearly provides that such concessional rate of tax would be available to the dealer who furnishes to the prescribing authority in a prescribed manner a declaration duly filled and signed by him. The C-form is a prescribed form for furnishing such declaration. 27 The argument that the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29 We are aware that the aforesaid observations of ours may not directly impact the outcome of the references, but we are sure that if the Authorities under the GST Act lift the veil, they would certainly find that the two agreements styled as labour contract and supply contract are, in essence, a single composite contract to execute the works of the assessee by the contractor. If that exercise is done by the Authorities under the GST Act, the contractor, who has executed the works contract of the assessee, may fall in the GST net. In that eventuality, even the assessee, who is supposed to deduct the tax at source while making payments to the contractors could also be held liable. Be that as it may, with the aforesaid observations, we leave it to the Tax Authorities to act in the matter in appropriate manner. 30 Mr. Subash Dutt, learned counsel appearing for the assessee has placed before us voluminous case law to substantiate his submissions that none of the transactions entered into by the assessee is exigible to sales tax under the GST. We, however, do not find it necessary to advert to and discuss all these judgments for the reason that we are clear from the reading of defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting/establishing transmission lines, sub-stations and power grids for itself did not amount to "sale" as it was defined under Section 2(L) of the GST Act during the relevant period and, therefore, not exigible to sales tax under the GST Act. As a necessary corollary, the assessee may not be a dealer liable to pay tax under the GST Act in respect of aforesaid transaction. (ii) Answer to question No.2: That not only the Tribunal but all the Authorities subordinate to it are bound to follow and comply with the law laid down by the Tribunal. This is necessary to maintain judicial discipline and avoid uncertainty in law. The Tribunal may, in appropriate cases, take a view different from the one taken by it earlier if there is change in law or the fact situation in the context whereof the law was declared by it earlier. The Assessing Authorities or the Statutory Appellate Authorities under the GST Act cannot and should not take a view on question of law contrary to the view taken by the Tribunal. Such conduct of the Authorities shall be gross impropriety and indiscipline which may call for initiation of appropriate departmental action. 29 We, however, make it clear that change in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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