TaxTMI 
TaxTMI 
2013 (11) TMI 771
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....Case No.01/2011/State/remand u/S.62 (1) of the Commercial Tax Act, 1994 rejecting the revision petition of the petitioner. The Divisional Dy. Commissioner held that petitioner was liable for payment of tax u/S.9 and 9-B of the Act on the value of dyes and chemicals used/consumed by the petitioner in the job work contract of processing of grey cloths and Divisional Dy. Commissioner has treated it as transfer on property under the works contract. 02. Briefly stated the facts of the case are that the petitioner is a registered dealer under the M.P. Commercial Tax Act, 1994 (Hereinafter called The Act for brevity) and engaged in the processing business of the grey cloths for itself (company) and for others on job work basis. The petitioner h....
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.... the job work on the grey cloth. Primarily Counsel argued that chemicals used in process of grey cloths had not been consumed and could not be termed as being transferred. To substantiate his arguments, Counsel stated that there are other materials like water, electricity and manpower, which are also used/consumed in processing of the grey cloths but not liable to tax besides dyes chemicals are akin to washing and cleaning, and, therefore, do not involve 'transfer' of any property as alleged. Moreover grey cloth is sent to the petitioner by the owner for, processing only; and that the cloth was returned back and no transfer of property i.e. dyes and chemicals can be said to have taken place. Thus Counsel submitted that basic ingredients for....
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....e with a view to empower the State to bifurcate the contract and to levy sales tax on value of the material involved in the execution of works contract notwithstanding; that the value, may represent a small percentage of the amount paid for the execution of works contract. Even if the dominant intention of the contract is the rendering service it will amount to a works contract. After the 46th amendment the States would now be empowered to levy sales tax on the material used in such contract. Counsel further relied on Rainbow Colour Lab. Vs. State of M.P. (2000) 25 TLD 303 and Builders Association of India Vs. Union of India (1989) 3 TLD 189 (SC) and Bharat Sanchar Nigam Ltd. and others Vs. Union of India (2006) 36 TLD 268 (SC) to submit....
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....ed sales" under Clause (ii) of Section 2(t) of the M.P. Vanijik Kar Adhiniyam 1994 and since Counsel for the respondent/State prayed that since "46th amendment of Constitution of India will prevail over the old decisions, therefore, the petition filed by the petitioner is without merit and same be dismissed as such. 05. Considering the above submissions, impugned order and record, we find that the sole question that arises for our consideration in this appeal is whether after the 46th amendment in our Constitution the job work or processing work involves transfer of ascertained property upon execution of the work and whether the tax u/S.9 and S.9-B of the Act are leviable on dyes and chemicals consumed in the processing are "deemed sale"....
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....herefore, the value of the material used in the works contract is a deemed sale under Clause (ii) of S.2(t) of the M.P. Vanijyik Kar Adhiniyam, 1994. 06. Considering these facts, we can safely conclude the tax liability is drawn in the ambit of definition of sales in clause (i) and (ii) of S.2(t) of M.P. Vanijyik Kar Adhiniyam, 1994 and, therefore, material used and transferred in the same form or otherwise, it is deemed sales and is liable to tax under the provisions of Act that those materials like fuel, water, labour, which are consumed but not transferred to the contractee are not deemed sales whereas material which are transferred in the same form or in other form are deemed sale, according to the case of Gannon Dunkerley (supra) an....