TaxTMI 
TaxTMI 
1999 (7) TMI 633
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....sing hessian cloths and iron bale-hoops amounts to works contract as defined under section 2(t) of the Andhra Pradesh General Sales Tax Act, 1957 or not ? 3.. The brief facts of the case are that the petitioners and the appellants are dealers in cotton, owning cotton pressing factories. During the relevant assessment years, the dealers not only purchased cotton kapas and ginned the same and sold the ginned cotton but also engaged in executing the work of pressing of cotton lint for arranging into bales relating to the cotton brought by the customers. For executing such work the dealers purchased the material like hessian cloth, iron bale-hoops, etc., from outside the State as well as within the State and used such material in executing the....
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....in the definition of section 2(t) of the Act. It was the contention of the learned counsel that in the process of converting the cotton lint into bales, no new product is coming out and the cotton lint continues to be as such. Therefore, there was no justification in holding that the work carried on by the dealers amounts to works contract. According to the learned counsel this is only a service contract and the material used by the dealers are only incidental to the services rendered by them and as the work carried on by the dealers is not fitting into the definition of "works contract" as defined under section 2(t) of the Act, hence the disputed turnover is not exigible to tax. The learned counsel also referred to the definition of "works....
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....ellate Tribunal. 7.. The learned Special Government Pleader for Commercial Taxes on the other hand contended that the activity of the dealers clearly amounts to works contract. It was contended that in the process of carrying out the works contract no new article need be produced or manufactured. It was contended that the term "fitting out" is to be construed supplying synonymous meaning as are applicable to the other terms that are used along with the said term "fitting out". If so applied it should be understood that no new article is required to be produced as a result of the work done by the dealers. The learned counsel also contended as rightly held by the Appellate Tribunal the activity of the dealers clearly amounts to "fitting out"....
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....ly things fit and necessary"; "Improvement" as per the Oxford dictionary, means "something that improves, especially an addition or alteration that adds to value"; "Repair" as per Oxford dictionary means "restore to good condition after damage or wear". Admittedly the activity of pressing cotton lint and converting the same into bales by using hessian cloths and iron hoops could not be considered as falling under the terms "improvement or repair" as there is no improvement or repair to the cotton supplied by the customers to the dealers for pressing the same and converting into bales. Then we are left with other term "fitting out". The meaning given to it shows "to supply things fit and necessary". Here the dealers are supplying hessian clo....
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....sent cases, it is nobody's case that there is a sale of material used by the dealers while executing the work of converting the cotton lint into bales. The dispute is only whether it amounts to works contract or not. This depends upon the interpretation of the term "fitting out" occurring in section 2(t) of the Act. As we have already noted the meaning of the said term is "to supply things fit and necessary". Here admittedly the dealers are supplying the hessian cloth and iron hoops while converting the cotton lint into bales. Therefore, the said term perfectly applies to the activity of the dealers in question. Further the term "fitting out" is used along with the terms "improvement and repair" which terms do not mean that the resultant of....