Turnkey works contract treated as inter-State sale where goods moved from outside the State with Form C support.

A turnkey works contract involving supply, erection and commissioning was treated as an inter-State sale because goods moved from outside Orissa to the work site on the strength of Form C, with the assessee as consignor and the contractee as consignee. On those facts, the movement of goods was held not to amount to an intra-State sale or an indivisible local sale taxable under the Orissa Sales Tax Act, 1947. The Tribunal's characterisation of the transaction under the Central Sales Tax Act was upheld, and the request for reference was rejected in favour of the assessee.

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Issues: Whether the Tribunal was right in treating the transaction as an inter-State sale and outside the taxing net under the Orissa Sales Tax Act, 1947, so as to decline reference of the proposed questions of law.

Analysis: The transaction was examined as a turnkey works contract involving supply, erection and commissioning of equipment. The Tribunal found that goods were moved from outside Orissa to the work site in Orissa on the strength of Form C, the assessee acted as consignor and the contractee as consignee, and the supply and erection obligations were interlinked. On those facts, the movement of goods could not be treated as an intra-State sale or as giving rise to an indivisible local sale liable under the Orissa Sales Tax Act, 1947.

Conclusion: The Tribunal's view that the transaction constituted an inter-State sale under the Central Sales Tax Act and not an intra-State sale under the Orissa Sales Tax Act, 1947, was upheld, and the request for reference was rejected in favour of the assessee.

Final Conclusion: The refusal to call for a reference was sustained because the substantive tax characterization adopted by the Tribunal was found to be correct.

Ratio Decidendi: Where goods move from outside the State to the work site on the strength of Form C in execution of a turnkey contract, the transaction may be treated as an inter-State sale rather than an intra-State sale under the local sales tax law.

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