TaxTMI 
TaxTMI 
2017 (5) TMI 1396
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.... is stated that the work involved distinct transactions by way of importing high- tech equipments, inter-state purchases etc. It is submitted that without taking into consideration the fact that the procurement of the materials were either by way of inter-state supplies or by import, assessment orders were passed by the second respondent for the month of August and September 1999, which are produced as Exts. P1 and P2.The second respondent also issued penalty notices under Section 45A of the KGST Act, alleging suppression of taxable turnover. Though replies were submitted, penalty had been imposed on the petitioner by Ext. P5 order. A revision filed against Ext.P5 was dismissed as per Ext. P6 order. It is stated that as against the assessment orders, appeal was filed and the matter had been remitted back to the assessing authority for a fresh disposal. 3. Petitioner submits that though another revisional remedy is available, in the light of the view taken by the authorities which are contrary to settled position of law, it is necessary that this Court should consider the original petition on merits. Petitioner places reference to the judgement of the Apex Court in Builders Assoc....
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....es not alter the nature of inter-state sale or import coming under Sections 3 and 5 of the CST Act, because the inter- state movement of the goods terminates at the work site of the assessee as far as the supplier is concerned. It is further found that the goods so delivered at the work site by the outside supplier is the property of the assessee and the title to the goods so delivered at work site passes to the awarder only at the completion of the works contract and the key is delivered to the owner. It is found that inter-state sale envisaged under section 3 (a) of the CST Act and the subsequent transaction that is, execution of works contract with the goods so delivered at work site is as a result of deemed sale mentioned in the Explanation 3A of Section 2(xxi) of the KGST Act. Further it is observed that the owner had no intention to purchase goods inter-state. It is stated that C Form is not issued by the owner for the purchase of goods. All materials are to be provided by the contractor and all taxes are to be paid by the contractor. The lump sum prize agreed for the contract includes the tax also and therefore the assessee is trying to evade payment of tax actually collecte....
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....ther as goods or in some other form) involved in the execution of a works contract falling within the ambit of Article 366(29-A)(b) is leviable on the goods involved in the execution of a works contract and the value of the goods which are involved in execution of the works contract would constitute the measure for imposition of the tax. In order to determine the value of the goods which are involved in the execution of a works contract for the purpose of levying the tax referred to in Article 366(29-A)(b), it is permissible to take the value of the works contract as the basis and the value of the goods involved in the execution of the works contract can be arrived at by deducting expenses incurred by the contractor for providing labour and other services from the value of the works contract. The charges for labour and services which are required to be deducted from the value of the works contract would cover (i) labour charges for execution of the works, (ii) amount paid to a sub- contractor for labour and services; (iii) charges for obtaining on hire or otherwise machinery and tools used for execution of the works contract; (iv) charges for planning, designing a....
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.... mandated; (4) The goods were custom made, for use by DMRC in its project; (5) Excise duty and customs duty exemptions were given, specifically to the goods, because of a perceived public interest, and its need by DMRC; (6) The Project Authority certificate issued by DMRC the name of the sub-contractors as well as the equipment/goods to be supplied by them were expressly stipulated; (7) DMRC issued a certificate certifying its approval of foreign suppliers located in Italy, Germany, Korea, etc. from whom the goods were to be procured. (8) Packed goods were especially marked as meant for DMRC's use in its project." Before us there was no attempt to assail the aforesaid features and to even remotely suggest any factual error on the part of the High Court in noting those features. 18. The salient features flowing out as conditions in the contract and the entire conspectus of law on the issues as noticed earlier, leave us with no option but to hold that the movement of goods by way of imports or by way of inter-State trade in this case was in pursuance of the conditions and/or as an incident of the contract between the ....
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....e assessee has not billed the goods to the awarder in Kerala to claim the transaction as interstate sale. Further, the assessee brought the goods to Kerala, stocked it in the godown at their risk and later appropriated it in the works contract. It was therefore held that the transfer of property in goods takes place in Kerala when the goods are appropriated to the contract. It is held that a trader making interstate purchase or bringing goods on stock transfer and selling the same later becomes liable for payment of tax under the KGST Act on sale of such goods and the position is not different as far as contractors are concerned who brings goods from outside the State either as stock transfer or as interstate purchase, stock it in their godown and later use it in the execution of works contract. The Apex Court in Binani Bros. (P) Ltd. v. Union of India and others {1974 33 STC 254 (SC)} held at paras 14, 15, 16 as under:- "14. Be that as it may, in the case under consideration we are concerned with the sales made by the petitioner as principal to the DGS&D. No doubt, for effecting these sales, the petitioner had to purchase goods from foreign sellers and it was the....
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....was no absolute obligation on the DGS&D to procure these facilities. And, it was the obligation of the petitioner to obtain the import licence. Therefore,even if the contracts envisaged the import of goods and their supply to the DGS&D from out of the goods imported, it did not follow that the movement of the goods in the course of import was occasioned by the contracts of sale by the petitioner with DGS&D." 10. In Siemens Ltd v. State of Kerala and another {[2001] 122 STC 1 (Ker)}, a Division Bench of this Court read over Explanation 4(c) to Section 2 (XXI), of the KGST Act, and it was declared that the said provision will not take in sales under Sections 3, 4 and 5 of the Central Sales Tax Act if the assessee is able to prove on the basis of materials that the property in goods transferred in accordance with the principles under Sections 3, 4 and 5 in which event the explanation will not apply. 11. In the light of the above principles, it is rather clear that the liability to pay tax would arise only if the goods are used in a works contract and in the light of the principles mentioned above. 12. The impugned order in the case is a penalty order which had been confirmed ....