TaxTMI 
TaxTMI 
2021 (9) TMI 470
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....ST) on the same transaction. 2. While admitting the petition on 29th July, 2009, the following substantial questions of law were framed by this Court: "1. Whether in the particular facts and circumstances of the case the Full Bench, Orissa Sales Tax Tribunal has acted in accordance with the statutory provision and the settled position of law while disallowing the claim of sales u/S.6(2) of the CST Act and treat it as intra state sale when the selfsame turn over has been assessed under the CST Act for the selfsame year by the STO, Rourkela II Circle? 2. The Full Bench, Orissa Sales Tax Tribunal having been satisfied with the fact that conditions do not exist for imposition of penalty u/S.12(5) of the Orissa Sales Tax Act, 1947, whether the Tribunal is legally justified in not deleting the penalty imposed entirely?" 3. The background facts are that the Petitioner and TRL entered into three separate contracts on 25th August, 1992. One was for supply of indigenous equipment including all accessories for the 100 TPD Rotary Kiln. The second was for erection, testing and commissioning of the Rotary Kiln. The third was for the system engineering and design of the 10....
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....different states was with object of making the 100 TPD Rotary Kiln which alone was the subject of the contract. Here the 100 TPD Rotary Kiln took stupe only when all the component and materials of the equipment are brought to the site in Orissa and assembled. It was made over thereafter to the purchaser by appropriation to the contract." 7. On this basis notwithstanding that the Petitioner had paid CST on the above transaction, the STO by the impugned assessment order determined the tax payable under the OST Act at 4% amounting to Rs. 51,25,273.56. Further, surcharge and penalty were also levied. 8. The Petitioner's appeal against the above order was dismissed by the ACST by the order dated 27th November, 1995. The conclusions reached by the ACST were as under: "(i) The contract for supply and commissioning is a composite one held out to the appellant through two instruments. One is inextricably linked with the other in as much as by supply alone the contractee's entrustment would not be fulfilled. Nor is erection and commissioning possible without supply. After all the contractee was not interested in mere supply of goods but wanted 100 TPD Rotary Kiln installed in the....
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....divisible in order to evade payment of tax under the OST Act. In order that there should be a sale of goods qua goods which is liable to sales tax as a part of the contract for work there must be a contract in which there is not merely transfer of title of goods as an incident of the contract, but there must be a contract, express of implied for sale of very goods. Prior to the constitution (46th) Amendment Act and in view of the decision of the Hon'ble Supreme Court of India in case of State of Madras Vs. Gannon Dunkerley & Co (1958) 9 STC 353 (SC) the real question that was to be decided was whether the contract was primarily a contract for supply of materials at the price agreed to between the parties for the materials so supplied and the works and service rendered was incidental to the execution of the contract. If it was so the contract was for sale of materials. If on the other hand the contract was primarily a contract for work and labour and supply of material was incidental to the execution of such contract it could not be said there was a contract for sale of materials. It would be a works contract. But after 46th Amendment of the constitution the position has been altoge....
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....State but the deemed sale of the Rotary Kiln. Further, most of the goods have been claimed to have been sold inter-State by way be subsequent inter-State sales and exemption of such sales from levy of CST as per the provisions of Sec.6(2) of the CST Act." 13. The Tribunal then proceeded to discuss Section 6(2) of the CST Act and its applicability. Ultimately, the Tribunal concluded as under: "In the absence of documentary evidence, it is established that M/s.L&T has taken delivery of goods from the common career in Orissa in course of 1st inter-State movement of goods, thereby bringing such movement to an end and thereafter delivered the goods to M/s.TRL who in his turn delivered the goods to M/s.L&T to assemble and erect the 100 Rotary Kiln and such assembly, erection etc of the equipments in a phased manner amounts to works contract and is exigible to sales tax at the rate of 4% the rate of tax applicable for goods deemed to have been sold in course of execution of works contract." 14. This Court heard the submissions of Mr.Sidhartha Ray, learned counsel appearing for the Petitioner and Mr.Sunil Mishra, learned A.S.C. for the Department. 15. The first issue be c....
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....parts and components so manufactured by other units are sent directly to the executing unit for being incorporated into the main machinery/system while some parts and components are despatched directly to the work-site. Tiruchi unit was supposed to be the executing unit. But some parts and components required for the boiler system and other equipment (which was the responsibility of the Tiruchi unit to manufacture) were being manufactured at the Hyderabad unit. At the request of the Tiruchi unit-or on the instructions of the Head office, as the case may be - the Hyderabad unit manufactured those parts and components and dispatched some of them to Tiruchi and some of them directly to Angul in Orissa (work-site). The consideration stipulated in the supply contract was payable in the manner provided therein." 17. The Supreme Court disagreed with the view of the Tribunal that the transaction was not an inter-State sale since the goods sent (by rail or road) did not answer the description of the goods mentioned in the annexure to the LOI/supply contract. The Supreme Court observed as under: "Obviously, the annexure mentions only the major items of machinery and equipment. Th....