THE HON'BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY
TREVC No.30 of 2007
ORDER: (per Hon'ble Sri Justice P.SAM KOSHY)
The instant Tax Revision Case has been filed assailing the
order passed by the Sales Tax Appellate Tribunal (for short 'the
Tribunal') in T.A.No.65 of 2000, decided on 07.03.2007. Vide the
said impugned order, the Tribunal has affirmed the order passed
by the Deputy Commissioner (CT), Punjugutta Division,
Hyderabad, in R.R.No.64/98-99, dated 02.12.1999. The Deputy
Commissioner (CT) vide the said order dated 02.12.1999, had
affirmed the order passed by the Commercial Tax Officer dated
12.09.1996. The assessment year involved in the present case is
the year 1993-1994.
2. Heard Sri S.Suri Babu, learned counsel for the petitioner
and Sri K.Raji Reddy, learned Standing Counsel for Commercial
Taxes appearing for the respondent.
3. The brief facts which led to the filing of the present Tax Revision Case is that the petitioner is a Works Contractor. The assessment of the petitioner under the APGST Act, 1956, was 2 done showing a gross turnover and net turnover of Rs.8,63,94,049/- and Rs.1,88,87,056/-, respectively. Meanwhile, there was an exempted turnover on the part of the petitioner to an extent of Rs.6,75,06,993/-. The two turnovers for which the exemption has been claimed by the petitioner is, first being an amount of Rs.11,31,930/- representing the value of goods brought from other sides and used in execution of works and second being an amount of Rs.68,56,528/- representing the value of goods supplied by the contractee M/s. Magunta Acqua Farms Ltd relating to the construction of buildings and associated works. The third transaction and which has become an issue is that of Rs.63,55,425/- representing the value of goods (cement and steel) supplied by the contractee relating to construction of buildings and associated works for GSLV at SHAR.
4. The issue raised by the petitioner in all these proceedings up till now is non-granting of exemption to the petitioner by the respondent. The authority ought to have considered that taking the goods from another site would not amount to sale and there is no transfer of property either. It is only shifting of the materials from one site to another and thus no taxable event has 3 taken place in the said place. The authority concerned further ignored the fact that the steel and cement used by the petitioner for execution of the contract that was awarded to them was supplied by the contractee.
5. Learned counsel for the petitioner contended that they have participated in an NIT in respect of certain civil work of perennial nature. In other words, it was contended that the cement and steel used by the petitioner are in fact that which has been supplied by the establishment for which they were carrying out the contract i.e. M/s.Magunta Acqua Farms Ltd and M/s.SHAR, Sriharikota Advance Research Centre.
6. It is the further contention of the learned counsel for the petitioner that the fact that the petitioner has been provided with cement and steel by the aforementioned two establishments i.e. M/s.Magunta Acqua Farms Ltd and M/s.SHAR, Sriharikota, therefore, it would be the aforesaid two establishments which would be the first purchaser and it is only thereafter, that the petitioner herein has used the cement. As such, the petitioner would be the second purchaser under the provisions of the APGST Act, 1956, and the schedule attached thereto. The said products cement and steel, is a single point taxation item, the 4 said tax always has to be paid by the first purchaser and not by the subsequent purchaser. For this reason, also the impugned order is liable to be set aside/quashed.
7. Learned counsel for the petitioner referring to the order of the Assessing Officer contended that the Assessing Officer has rightly appreciated the fact that cement and steel required for the execution of the contract of the petitioner was one which was made available by the company awarding the contract to the petitioner. Therefore, it has to be considered as a second sale. It has been contended that, the liability of payment of tax would therefore be upon the first seller, which in the instant case is M/s.Magunta Acqua Farms Ltd and M/s.SHAR who had purchased the said raw materials and supplied the same to the petitioner for execution of the work.
8. Learned counsel for the petitioner contended that the deemed sale at the hands of the dealer would become the second subsequent sale and therefore, the liability of payment of tax would be that on the first seller and not upon the petitioner herein. According to the learned counsel for the petitioner, M/s.SHAR, Sriharikota, must have purchased the goods from the local market and supplied the goods to the petitioner. 5 Therefore, if at all, if the said goods have been purchased by M/s.SHAR, Sriharikota, and that by M/s.Mangoota Aqua Farms Limited, the liability of payment of tax also would be upon them alone and that it cannot be passed over to be paid by anybody else.
9. According to the learned counsel for the petitioner, the revisional authority and also the Tribunal both have erred in as much as ignoring the facts which were appreciated by the Assessing Authority while granting exemption.
10. Per contra, learned counsel for the respondent-Department opposing the case submits that there is hardly any scope left for this High Court to interfere with the impugned order. The revisional authority and also the Tribunal both have considered the contentions of the petitioner and have reached to the conclusion that cement and steel supplied by the two establishments i.e. M/s.Magunta Acqua Farms Ltd and M/s.SHAR, Sriharikota, were in fact all along for and on behalf of the petitioner. The value of goods, particularly, cement and steel used by the petitioner also was that deducted from the total bills raised by the Department.
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11. It was also the contention of the learned counsel for the respondent-Department that since the value of the goods was being deducted from the consideration payable to the petitioner for the work executed, it would be a case where the liability of payment of tax in the given circumstances would lie upon the petitioners who were the contractors. The categorical finding by the Deputy Commissioner (CT) also was that the provisions of Section 15 of the CST Act, 1956, would not be attracted here as there was no evidence and no possibility that the cement and steel used by the petitioner for the execution of the work had suffered tax in the hands of the contractees i.e. M/s. Magunta Acqua Farms Ltd and M/s.SHAR, Sriharikota. The similar stand has been taken by the Tribunal while refusing the exemption sought for.
12. For the purpose of proper adjudication of the dispute, what is required to be taken note of is the finding given by the Deputy Commissioner (CT) while considering the revision. So far as the order passed by the Deputy Commissioner (CT), it found that the value of the goods supplied by the contractees was being deducted from the consideration payable to the works executed. 7
13. Today when the matter is taken up for hearing, it was repeatedly asked from the learned counsel for the petitioner to show that the amount of cement and steel which according to the petitioner has been supplied by the contractee had suffered tax in the hands of M/s. Magunta Acqua Farms Ltd and M/s.SHAR, Sriharikota, the learned counsel for the petitioner was not in a position to make any satisfactory explanation, nor he had accurate materials to substantiate the said contention.
14. The Tribunal also has reached to the specific conclusion that the value of goods supplied by M/s. Magunta Acqua Farms Ltd and M/s.SHAR, Sriharikota, did not suffer tax and since the product had not suffered tax, being receiver of the said goods, the petitioner would therefore, be the first purchaser and the petitioner would be liable to pay tax as well. The Tribunal went on to hold that the petitioner was not in a position to even controvert the findings of the revisional authority with recorded evidence that the product have not been subjected to tax earlier.
15. It would be relevant at this juncture to take note of the finding arrived at by the Tribunal in paragraph Nos.21 and 23 which for ready reference is reproduced herein under: 8
"21. From the above it is clear that the revisional authority held that the subsequent usage of goods in the execution of works by the contractor amounts to a deemed sale taxable in the hands of the appellant as the said goods have not been subjected to tax. It is not the case of the appellants that the goods received from M/s. Magunta Acqua Farms Limited and SHAR are tax suffered. If the goods are not tax suffered already, they have to be taxed as deemed sale in the face of the legislative intention of single point taxation as held by the Hon'ble High Court in the case of ITC Classic Finance & Services, Secunderabad vs. Commissioner of Commercial Taxes, A.P., Hyderabad reported in 20 STC p.150. This case was rendered in tune with the statutory provisions as obtained prior to introduction of Section 5F and Section 5E in the APGST Act. The ratio of the judgment is extracted below: "The Constitution of India has chosen to treat sales and deemed sales as belonging to one category (vide Clause 29-A) of Article 366) and they cannot be treated separately for the purpose of taxation after the definition of sale was amended by Act 18 of 1985. As the basic norm regulating the tax structure under the Act is confined to levy of tax at a single point. Levy of tax on a second sale in respect of goods which have already suffered tax is impermissible and therefore, a deemed sale likewise cannot be subjected to tax if the goods relatable to such deemed sale have already suffered tax. Same goods cannot be subjected to tax twice - once as sale and secondly as deemed sale in the fact of the legislative intent of single point taxation".
22........
23. Point c): Their Lordships in the case of M/s. Gannon Dunkerley & Co., and Others vs. State of Rajasthan and Others reported in 88 STC p.204 held as follows.
"Though the tax is imposed on the transfer of property in goods involved in the execution of a works contract, the measure for levy of such imposition is the value of the goods involved in the execution of a works contract. We are however, unable to agree with the contention urged on behalf of the contractors that the value of such goods for levying the tax can be assessed only on the basis of the cost of acquisition of the goods by the contractor. Since the taxable event is the transfer of property in goods involved in the execution of a works contract and the said transfer of property in such goods takes place when the goods are incorporated in the works, the value of the goods which can constitute the measure for the levy of the tax has top be the value of the goods at the time of incorporation of the goods in the works and not the cost of acquisition of the goods by the contractor". In view of the above ratio of the Hon'ble Apex Court, the assessable value under Works Contract is the value of goods at 9 the time of incorporation. Held accordingly, In the circumstances, we are of the view that the revision does not warrant interference in as much as no evidence is brought to our notice in support of the appellant's case. The appeal is accordingly liable to be dismissed."
16. From bare perusal of the aforesaid factual matrix of the case and the finding arrived at by the Tribunal, we are of the considered opinion that there is a consistent and concurrent finding of fact by the two forums below. First, the Deputy Commissioner (CT) in the course of deciding the revision and secondly by the Tribunal while deciding the Tax Appeal. Moreover, during the course of hearing of the instant Tax Revision Case also the petitioner was not in a position to bring before this Court any cogent material to dispute or disprove the concurrent finding, except for the oral submissions made so far as the petitioner receiving the cement and steel would amount to second sale or prove the contention that the product received by the petitioner had already suffered tax at the hands of the contractee.
17. The Tax Revision Case thus being devoid of merits, deserves to be and is accordingly dismissed. There shall be no order as to costs.
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As a sequel, miscellaneous petitions, pending if any, shall stand closed.
__________________________________ P.SAM KOSHY, J ___________________________________ LAXMI NARAYANA ALISHETTY, J Date: 09.10.2023 GSD/kkm