2023 (12) TMI 1204 - HC - VAT and Sales Tax

Machinery and equipment used in construction qualify for concessional tax treatment under Section 8(3)(b) CST Act 1956

Chhattisgarh HC allowed petitioner's application to include trucks, trippers, dumpers, JCBs, cranes, dozers, and mixers in registration certificate under ... Addition of Truck, Tripper, Dumper, JCB, Crane, Dozer, etc. to the registration certificate - Rule 13 of the Act, 1957 read with Section 8(3)(b) of the Act, 1956 - HELD THAT:- A registration certificate was issued to the petitioner according to Rule 5(1) of CST (R&T) Act, 1957 on 09.02.2011. It is not in dispute that the petitioner is indulged in the construction of roads etc. and in that process, he had plied various types of equipment, machinery including Trucks, Trippers, Dumpers, JCBs, Cranes, Dozers, Mixers etc. whereas, in the registration certificate, these articles were not included earlier, therefore, he moved an application to include these commodities which was declined by the Commercial Tax Officer, Durg and only Soil (Murum) was allowed to be included in the certificate as the same is the raw material used for construction of the road - Section 8(3)(b) of the Act, 1956 says that a dealer would be entitled to get a rebate in the tax for goods of the class or classes specified in the certificate of registration according to rules made by the Central Government to be used by him in manufacture or processing of goods for sale or mining or in general or distribution of electricity. The Hon’ble Supreme Court in J.K. Cotton [1964 (10) TMI 2 - SUPREME COURT] while dealing with Section 8(3)(b) of Act 1956 and Rule 13 of the Act, 1957 has clearly held that the intention must be to use the goods as raw materials, as processing materials, as machinery, as plant, as equipment, as tools, as spare parts, as stores, as accessories, as lubricants, as fuels etc. and the restricted interpretation is not warranted. The Hon’ble Supreme Court further held in no uncertain terms that articles used in the process of manufacture would be liable for concessional tax, even though such articles may not be incorporated in the manufactured end-product. The High Court of Patna in the matter of M/s Larson & Toubro [1994 (12) TMI 313 - PATNA HIGH COURT] and the High Court of Calcutta in the matter of Nagarjuna Constructions [2014 (3) TMI 1043 - CALCUTTA HIGH COURT] while dealing with similar issues included machinery, plant, equipment, tools, spare parts, stores, accessories, fuels, lubricants etc. in the registration certificate according to the provisions of Section 8(3)(b) of Act, 1956 and Rule 13 of Act, 1957. Thus, the authorities have committed an error of law in rejecting the application moved by the petitioner to include the articles mentioned in the application - the order passed by Deputy Commissioner, Commercial Tax, Durg is hereby set aside and the application moved by the petitioner under Section 8(3)(b) of the Act, 1956 is hereby allowed. Issues Involved:1. Validity of the order passed by the Deputy Commissioner of Commercial Tax, Raipur.2. Inclusion of various articles in the registration certificate under Section 8(3)(b) of the Central Sales Tax Act, 1956.3. Interpretation of Section 8(3)(b) of the Central Sales Tax Act, 1956 and Rule 13 of the Central Sales Tax (R & T) Act, 1957.Summary:Issue 1: Validity of the Order by Deputy CommissionerThe petitioner challenged the order passed by the Deputy Commissioner of Commercial Tax, Raipur dated 07.06.2012, which dismissed the revision preferred by the petitioner and affirmed the order by the Commercial Tax Officer, Durg dated 19.04.2011.Issue 2: Inclusion of Articles in Registration CertificateThe petitioner, engaged in the execution of a works contract, applied to include various articles in the registration certificate under Section 8(3)(b) of the Central Sales Tax Act, 1956. The Commercial Tax Officer partly allowed the application by adding only Soil (Murum) and rejected the inclusion of other articles like Cement, Sand, Boulder, Gitti, Steel, etc. The Deputy Commissioner upheld this decision, stating that items like Truck, Tripper, Dumper, JCB, Crane, Dozer, etc., are not directly used in the execution of the works contract.Issue 3: Interpretation of Section 8(3)(b) and Rule 13The petitioner argued that according to Section 8(3)(b) and Rule 13, goods used in the manufacture or processing of goods for sale, including equipment and machinery, should be included in the registration certificate. The petitioner cited judgments from the Supreme Court and High Courts, emphasizing that goods used in the manufacturing process qualify for special treatment even if not directly incorporated into the end product.The court referred to the Supreme Court's judgment in J.K. Cotton Spinning & Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur, which held that goods intended for use in the manufacturing process qualify for special treatment under Rule 13. The court also considered similar judgments from the High Courts of Patna and Calcutta, which supported the inclusion of machinery and equipment in the registration certificate.On the other hand, the State argued that the registration certificate issued under Rule 5(1) of CST (R&T) Rules, 1957 cannot be amended to include articles not part of the original contract. They contended that items like trucks and cranes are not directly involved in construction and thus should not be included.Conclusion:The court found that the authorities had committed an error of law in rejecting the petitioner's application to include the articles. The court set aside the order of the Deputy Commissioner and allowed the application under Section 8(3)(b) of the Act, 1956, making the amendment effective from the date of the application.With the aforesaid observations, the petition was allowed.