TaxTMI 
TaxTMI 
2009 (11) TMI 849
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....titioner No. 2. Petitioner No. 1 engaged one M/s. Patel Engineering Ltd., to execute civil/electrical works of the aforesaid power project. Accordingly, petitioner No. 1 entered into a written contract with the said private company. As per the terms of contract and memorandum of understanding, petitioner No. 1 (NEEPCO) would supply construction materials like cement, steel, M.S. plates, CGI sheets, HR sheets, etc., and the price of these materials would be deducted from the contractor's bill. As per the aforesaid agreement construction materials were supplied to M/s. Patel Engineering Ltd., without charging any sales tax. However, while importing the materials from outside the State of Mizoram M/s. NEEPCO had paid Central sales tax, but, the respondents have considered the supply of construction materials by M/s. NEEPCO to its contractor as a sale and the Superintendent of Taxes, Kolasib Circle has imposed sales tax and has also imposed penalty and interest for delay in deposit of sales tax. W.P. (C) No. 91 of 2008 relates to assessment of sales tax for the period July 1, 2002 to March 31, 2004, whereby sales tax of Rs. 62,31,168 and penalty of Rs. 11,070 have been assess....
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....f 2008 relates to assessment of sales tax for the period July 1, 2002 to March 31, 2004, whereby sales tax of Rs. 62,31,168 and penalty of Rs. 11,070 have been assessed. These amounts have already been paid under protest. W.P. (C) No. 92 of 2008 relates to assessment of sales tax, penalty and interest for the quarter ending of June, September and December, 2005. As per the rectification order dated December 2, 2005, passed by the Superintendent of Taxes, petitioner No. 1 is yet to deposit a sum of Rs. 61,001. W.P. (C) No. 93 of 2008 relates to interest on the sales tax amount for the period July 1, 2002 to March 31, 2004, and the interest has been assessed at Rs. 14,74,389. The assessment orders were challenged before the Deputy Commissioner of Taxes, who upheld the assessment orders. Accordingly revision applications were filed before the Commissioner of Taxes, Government of Mizoram. The Commissioner has no doubt upheld the assessment orders but has set aside the penalty imposed upon the assessee on the ground that penalty was imposed without giving prior notice or hearing of the assessee. The main contention of Mr. Jindal, learned senior counsel for the petitioners, is t....
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....enses shall arrange and supply all materials if not otherwise specifically mentioned, at Appendix VI bought out items and consumable items required for the contract. As per the technical specifications, the contractor shall furnish from time to time test certificates, and samples and materials at his cost to the engineer-in-charge for his approval before use in the work. The contractor is encouraged, to the extent practicable and reasonable to use materials, contractor's equipment, plant and supplies from sources within India. (ii) . . . (iii) The Engineer-in-charge or his representative shall be entitled at any time to inspect and examine any materials intended to be used in or on the works, either on the site or at factory or workshop or other place(s) where such materials are assembled, fabricated, manufactured or at any place where these are lying or from where these are being obtained. For this purpose, the contractor shall afford such facilities as may be required for such inspection or examination. The contractor shall agree with the engineer-in-charge on the time and place for the inspection or testing of any materials or plant as provided in the contract. The ....
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....l return forthwith all materials to the corporation lying on his possession/custody, failing which the engineer-in-charge shall be at liberty to effect recovery at double the issue price against that materials. (vi) to (xii) . . . Supplementary agreement 1.. . . . For the materials listed above of which the corporation has agreed to issue to the contractor for the work under the contract, the contractor shall before 30 (thirty) days of his requirement in accordance with the agreed phased programme of construction of work(s) send a requisition in writing to the engineer-in-charge. The issue of such materials shall be subject to the following terms and conditions: (a) All materials listed above as issued by the Corporation to the contractor for use in the work shall vest in the Corporation, and the contractor shall hold all such items of materials as mere custodian in trust on behalf of the engineer-in-charge. (b) All materials as stated above shall be issued subject to availability at the project store. Such material shall be issued as per requirement of the work as assessed by the engineer-in-charge. The materials issued to the contractor shall be recovered at the above....
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....re different and as such the ratio laid down by the apex court in the aforesaid cases ought not to have been applied by the Commissioner of Taxes. According to the learned counsel, the ratio of law laid down by the apex court in the case of State of Andhra Pradesh v. Rashtriya Ispat Nigam Ltd. reported in [2002] 126 STC 114; [2002] 3 SCC 314 would be applicable in the present case. Since the controversy relates to the interpretation of the words "dealer" and "sale" it would be just and proper to quote the aforesaid definitions, prescribed in the Mizoram Sales Tax Act, 1989, which are as under: "2. Definitions.-(10) 'Dealer' means any person who carries on (whether regularly or otherwise) the business of selling, supplying or distributing goods, directly or indirectly, for cash or for deferred payment, or for commission, remuneration of other valuable consideration in Mizoram, and includes- (a) Government, a local authority, a body corporate, a company, a Hindu undivided family, any co-operative society, or a club or other association of persons which sells goods to its members; (b) a factor, broker, commission-agent, or any other merchantile agent, by whatever n....
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....dealer". The definition of "dealer" has been widened under clauses (a) to (g). Referring to clause (g) Shri Jindal submitted that the words "any other purpose" pre-suppose that the contractor shall be free to utilise the goods in any project of his choice, whereas the contract with M/s. Patel Engineering Ltd., stipulated that the materials supplied by petitioner No. 1 can only be utilised in the project of petitioner No. 2 and, as such, petitioner No. 1 cannot be termed as a "dealer". In my considered opinion the aforesaid proposition of law is misplaced inasmuch as clauses (a) to (g) are additional definition of "dealer" and disjunctive from the main definition that includes any person who carries on business, inter alia, by way of supplying goods. Apparently while executing hydro electric project petitioner No. 1 necessarily has to supply various kinds of goods to the owner of the project. Besides this, supply of goods "directly or indirectly" (emphasis Here italicised. supplied) to the client, is also covered under section 2(10). In my considered opinion, these words would also bring the methodology of supplying goods by petitioner No. 1 through its contractor in execution of....
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...., had agreed to supply from its stores the said iron, steel and cement for the construction work and to deduct the prices of materials so supplied and consumed in the construction from the final bill of the appellant. Clause 10 of the contract is relevant and was as follows: '10. If the specification or schedule of terms provides for the use of any special description of materials to be supplied from engineerin-charge's stores, or if it is required that the contractor shall use certain stores to be provided by the engineer-in-charge as shown in the schedule of materials hereto annexed, the contractor shall be bound to procure and shall be supplied such material and stores as are from time to time required to be used by him for the purposes of the contract only, and the value of the full quantity of materials and stores to supply at the rates specified in the said schedule of materials may be set off or deducted from any sums then due or thereafter to become due to the contractor under the contract or otherwise, or against or from the security deposit, or the proceeds or sale thereof if the same is held in Government securities, the same or a sufficient portion thereof be....
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....n the appellant was supplied iron, steel and cement by the PWD and it had purchased other materials from the market. The prices of iron, steel and cement supplied to the appellant for the work were deducted from its final bill. . . . 11.. Therefore, from the above decisions it follows that in order to be sale taxable to duty, not only the property in the goods should pass from the contractor to the Government, or the appellant in this case but there should be an independent contract-separate and distinct- apart from mere passing of the property where a party purchases or procures goods from the Government. Mere passing of property from the contractor to the Government would not suffice. There must be sale of goods. The primary object of the bargain judged in its entirety must be viewed. In the instant case, clause 10 is significant as we have set out hereinbefore. For the purpose of performance, the contractor was bound to procure materials. But in order to ensure that quality materials are procured, the PWD undertook to supply such materials and stores as from time to time required by the contractor to be used for the purpose of performing the contract only. The value of suc....
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....he contractor on hire charges. Apparently, such machineries are not completely utilised in the construction or execution of the project. In other words, machineries are not consumable items. Besides this, the employer had collected lending charges of the machineries and the machineries always remained the property of the employer. Hence facts of this case, cited on behalf of the writ petitioners, stand on different footing and cannot be applied in the case before me. Hence, I do not find any fault on the part of the respondents for assessing sales tax and imposing interest and penalty for transfer of construction materials to its contractor. As noted earlier, W.P. (C) No. 93 of 2008 relates to imposing of interest on the sales tax amount for the period from July 1, 2002 to March 31, 2004. According to Mr. Jindal, learned senior counsel, although penalty of Rs. 1,170 was imposed while assessing sales tax, the competent authority did not impose interest on the tax amount. However, subsequently the authority has imposed interest at Rs. 14,70,389 under the instruction of Principal Accountant General. According to the learned counsel since the assessing authority performs a quasi-jud....