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TMI Blog2025 (5) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under the Madhya Pradesh Commercial Tax Act, 1994 treating its Build - Operate - Transfer (in short 'the BOT' scheme as works contracts and holding them liable to pay the commercial as well as entry tax. The challenge is on the ground that there was no actual sale or no transfer of property or goods during the relevant assessment years, and that there was no taxable turnover or business activity until the commencement of toll collection, which only started from 07.06.2001. These writ petitions relate to the assessment years 2000-2001. FACTS OF THE CASE 02. The petitioner is a company engaged in the business of infrastructure development and in particular related to the construction and maintenance of roads and highways under the BOT scheme. 2.1. In the year 2000, the petitioner was awarded two separate infrastructure contracts by the State Authorities. The first project was granted by the Public Works Department (PWD), Katni Division, under Agreement No. 6/DL/2000-2001 vide Work Order dated 08.05.2000 for the construction of the Katni Bypass (Pureni- Khirehni) road having a length of 7.6 km. The second project was awarded by the Madhya Pradesh State Industrial Develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as imposed along with a penalty of an equivalent amount. The revision of the petitioner against the said assessment order was rejected by the Additional Commissioner of Commercial Tax, Indore, vide order dated 12.10.2004. For the subsequent year 2001-02, a similar assessment order dated 21.12.2004 was passed on the same reasoning and methodology, which was likewise upheld in revision by order dated 07.04.2005. 2.5. In W.P. No. 372/2005 and W.P. No. 2179/2005, the assessment under challenge is related to entry tax; the petitioner was assessed under the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976, for both assessment years. For the year 2000-01, the assessing authority by order dated 12.02.2004 determined that the petitioner had brought goods worth Rs. 4,36,40,514/- into the local area for use in its construction projects and after allowing permissible deductions, the taxable quantum was computed at Rs. 3,18,96,884/- on which Entry Tax of Rs. 3,30,502/- was levied. Against this liability, the petitioner had already deposited Rs. 2,74,300/-, resulting in a balance demand of Rs. 1,10,892/-. This assessment was confirmed in revision by the Additional Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainable. 3.2. Shri Munshi, learned Senior Counsel, submitted that the assessing authorities have arbitrarily computed taxable turnover by presuming a sale value based on the purchases of materials by the petitioner and by applying speculative margins for profit and expenses. Learned Senior Counsel submitted that the method adopted by the Assessing Officer runs contrary to statutory requirements, which mandate actual or tangible evidence of transfer or sale transactions. 3.3. Learned Senior Counsel submitted that Clause 19 of the Special Conditions of the Concession Agreements explicitly stipulates that any liability arising out of Sales Tax, Stamp Duty or similar levies due to transfer of property if any shall be borne exclusively by the respondent authority concerned and therefore even on assuming without admitting any liability towards such taxes the same stands indemnified by the respondents themselves under the contractual provisions. 3.4. Learned Senior Counsel on the aspect of entry tax placed reliance upon Section 3 of the Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976, submitting that entry tax liability arises only when goods are brought into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts and legal principles. It has been submitted that the activities undertaken by the petitioner under the Build-Operate-Transfer (BOT) model squarely fall within the definition of "works contract" of the Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 and also attract the deemed sale provision under Article 366 (29A) (b) of the Constitution of India. Learned Government Advocate submitted that the petitioner had executed infrastructure works involving supply and incorporation of goods in the course of construction of roads, which amounts to transfer of property in goods for valuable consideration and is accordingly liable to Commercial Tax. 4.1. Learned Government Advocate further submitted that the BOT model does not alter the taxable character of the transaction, and the fact that the State has not made a direct monetary payment is immaterial, as the right to collect toll from users for a specified concession period constitutes deferred consideration. Learned counsel submitted that the petitioner was under a contractual obligation to deliver completed infrastructure works, and the completed facility ultimately vests with the State after the concession period, and thus, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Government, but in BOT, the ownership is temporarily transferred to the contractor for construction of road and said land would be reverted to the Government after completion of construction and concessional period without payment of any consideration. In case, the contractor being an owner invests any amount or material that would not come within the purview of commercial tax or entry tax. 06. The aforesaid submission was rightly rejected by the Assessing Authority. There is no such transfer of ownership or deemed ownership in favour of the contractor during the construction of the road and during the concessional period under the BOT scheme. The Government always remains the owner of the land both in works contracts or in BOT, and only possession is given to the contractor to construct the road and recover the cost of construction from the public or passengers by way of toll. As held by the Division Bench of this Court in the case of Ashoka Infraways Private Limited v/s The State of Madhya Pradesh & Others (Writ Petitions No.2883 of 2008), apart from the Government, no one has the authority to collect the toll or service charges from any person. If that authority has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired for the process of manufacture. For the purpose of construction of a road, the raw material would be cement, concrete, tar, sand, crushed stone, etc., which shall also include diesel used as fuel in D.G. sets for the generation of electricity for running the plant and machinery. 11. Section 2 (t) of the Act of 1994 defines 'sale' means a transfer of property in goods for cash or deferred payment or for other valuable consideration. In a works contract, the contractor, while constructing a road submits a running bill to the Government and the Government pays the bill from time to time, but under BOT scheme, the contractor does not submit bills to the Government instead invests its own money in the purchase of raw materials to construct the road. In lieu of payment of running bills, the Government gives authority to the contractor to recover the cost of construction by collecting a toll during the concessional period. Therefore, instead of payment in cash, there is a provision in the BOT for deferred payment or other valuable consideration. As per this definition, there is a payment of the contractor by way of toll on a deferred period i.e. concessional period. Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it under these rules, the quantity of goods so bought or sold and the description in sufficient detail of the valuable consideration for which the goods were bought or sold. The assessing authority shall fix the value of such consideration in money for the purpose of determining the turnover and assessment of the tax payable under the Act." 14. In the present case, the petitioner, being a dealer, purchased materials for construction of the road and he was liable to specify in the return of turnover, which is required to be submitted under this rule i.e. quantity of goods so bought or sold and its description like details of valuable consideration. The Assessing Authority, thereafter, shall fix the value of consideration in money for the purpose of determining the turnover and assessment of the tax payable under the Act. Therefore, even at the time of relevant assessment year, the money was not paid to the petitioner by the Government, but value of such consideration in money for the purpose of determining the turnover can be fixed by the Assessing Authority because it is a case of deferred payment by State by giving right to recover by way of toll. 15. As per Rule 37 of the Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bypass road, the petitioner was given the right to collect the toll after completion of the construction of the road for which period as above was fixed after considering the total cost of construction of the project and its recovery by way of collection of tolls. After the expiry of the said period, the petitioner shall not have any claim on the road as well as on a toll. 18. It is a settled law that no person has a right to collect a toll or any tax from private persons for using the road. The State Government gave the right to collect the tolls to the petitioner from the vehicles passing through the road for a definite period to recover only the cost of construction, i.e. the sale amount or the contract value. The contract amount is liable to be paid to the contractor as a deferred payment by authorising him to recover the toll tax, and except for this, there is no difference in the work done under the BOT scheme and in the normal works contract. This issue has been considered in detail by the Full Bench of this Court in the matter of Viva Highways v/s Madhya Pradesh Road Development Authority reported in 2017 (2) M.P.L.J. 681 in which it has been held that the works contract ..... X X X X Extracts X X X X X X X X Extracts X X X X
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