TaxTMI 
TaxTMI 
2024 (10) TMI 559
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.... by an order of assessment dated 29.12.2006 passed by the Assistant Commissioner of the Commercial Tax. In Writ Petition No. 3029 of 2007 02. Petitioner has filed this petition challenging the order dated 14.11.2006 passed by the Additional Commissioner, Commercial Tax under the Commercial Tax Act and Entry Tax Act and order dated 30.01.2006 passed by the Assistant Commissioner of the Commercial Tax for the assessment year 01.04.2002 to 31.03.2003. In Writ Petition No. 1414 of 2009 03. Petitioner has filed this petition challenging the order dated 14.11.2008 passed by the Additional Commissioner, Commercial Tax under the Commercial Tax Act and Entry Tax Act and the order dated 26.12.2007 passed by the Assistant Commissioner of the Commercial Tax for the assessment year 01.04.2004 to 31.03.2005. 04. Since the controversy involved in these cases is identical in nature, therefore, all these writ petitions filed by the petitioner are finally heard and decided by this common order. For the sake of convenience, facts of Writ petition No. 2883 of 2008 are being taken for disposal of all the aforesaid writ petitions. Facts of the case 05. The petitioner is a private limited company ....
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....raways Pvt. Ltd., Nasik i.e. the petitioner was promoted to implement the whole project including the collection of toll. An agreement dated 03.01.2002 was executed between M/s Ashoka Buildcon Ltd. and M/s Ashoka Infraways Pvt. Ltd. (hereinafter referred to as "the petitioner"). The petitioner constructed the Dewas by-pass and toll tax barriers and started recovering the toll from the vehicles passing through on the said road. Assessment proceedings and impugned orders 09. For the period from 01.04.2003 to 31.03.2004, the Assistant Commissioner of Commercial Tax assessed the petitioner under the Commercial Tax Act. The petitioner appeared before the authority by contending that the nature of work executed by it was not in the nature of the works contract since there was no monetary consideration for the work executed by the petitioner was paid by the Government of M.P. nor there was any transfer of property by the Government of M.P. It was also submitted that the petitioner was not only given the work to construct the by-pass road but also directed to perform other obligations like, maintenance of by-pass, operation of the Toll Naka, plantation and other activities. The petitione....
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.... order of Assessment Officer by holding that the BOT contract awarded to the petitioner is in the nature of works contract hence, the present petition before this Court. Submissions of the petitioner 11. Shri P.M. Choudhary, learned senior counsel appearing for the petitioner argued that the learned authorities have wrongly held that the BOT contract is a works contract, whereas there is a vast difference between both the contracts. In a normal works contract, the Government pays the contract money to the contractor for the construction of any building for civil work and after construction, the same is liable to be transferred to the State Government, therefore, in a normal works contract, the contractor being a dealer is liable to pay the commercial tax as well as entry tax on the goods consumed in the construction work. But the awarding of construction work by the Government of M.P. under the BOT scheme is altogether a new concept under which the Government do not pay the construction cost of the building, road or bridge (as the case may be), the contractor himself arranges the finances and construct and maintain the same for the concessional period and thereafter transfer to t....
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....nt occurs when the customs barrier is crossed. The import would be completed only when the goods are to cross the customs barrier and that is the time when the import duty is to be paid and that is what has been termed in the Act. Submissions of the State 15. The respondent / State has filed the reply in support of the impugned orders. In terms of the agreement executed with the petitioner, the Government of M.P. handed over the land on a license basis for a concessional period. This will not amount to a transfer of ownership or the lease of the land to the entrepreneur. The toll collection period was fixed for 10 years after considering all costs and expenses to be incurred in the construction of the Dewas by-pass road and collection of charges. The agreement clearly shows that the entrepreneur has constructed the Dewas Bypass road on a BOT basis for the State Government in its land by executing the works contract. The valuable consideration of the construction of the by-pass road is included in the toll tax amount which has been retained by the Entrepreneur for 10 years and after recovering the entire cost from the toll amount, the entrepreneur shall not have any right to collec....
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....r was liable to pay the commercial tax under the Commercial Tax Act as well as the Entry Tax Act. Therefore, the only issue which requires consideration is whether the BOT contract is a works contract or not the commercial tax under the Commercial Tax Act as well as the Entry Tax Act. 19. Admittedly, the petitioner is a registered dealer under the Commercial Tax Act by holding a certificate No. TIN 23030903601. After the repeal of the Adhiniyam, 1994 by MP VAT Act, 2002 w.e.f. 01.04.2006, the petitioner continued to be a dealer under this new Act. The petitioner has been assessed for the period of 01.04.2003 to 31.03.2004, as a dealer who executed the works contract of Dewas By-pass road on a BOT basis. The petitioners contend that no sale of goods was effected in constructing a Dewas By-pass road of the BOT scheme of this State Government, therefore, there is no liability of payment of tax on the goods transferred and consumed in the execution of works contract under the Entry Tax Act and Commercial Tax Act. 20. The definition of a dealer is given under clause (h) of Section 2 of M.P. Vanijyik Kar Adhiniyam, 1994 which is extracted as under for ready reference: "(h) "dealer" m....
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....ontract, of property in any goods for cash, deferred payment or other valuable consideration; (ii) a transfer of property in goods whether as goods or in some other form, involved in the execution of a works contract; (iii) a delivery of goods on hire purchase or any system of payment by installments; (iv) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (v) a supply, by way of or as part of any service or in any other manner whatsoever, of goods being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration; and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and purchase of these goods by the person to whom such transfer, delivery or supply is made, *[but does not include a mortgage, hypothecation, charge or pledge]; (vi) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or oth....
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....ver of goods supplied in the course of execution of works contract referred to in sub-section (2) or sub-section (3) shall be allowed to the contractor or to the sub-contractor on the production of proof required to be furnished under the said sub-section." 22. Definitions under the M.P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976: "(1) "Value of goods" in relation to a dealer or any person who has effected entry of goods into a local area shall mean the purchase price of such goods as defined in [clause (q) of Section 2 of the Vanijyik Kar Adhiniyam] [and shall include excise duty and/or additional excise duty and/or customs duty, if levied under the Central Excise and Salt Act, 1944 (No. 1 of 1944), the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (No. 58 of 1957) or the Customs Act, 1962 (No. 52 of 1962), as the case may be] or the market value of such goods if they have been acquired or obtained otherwise than by way of purchase;" (f) "2. All those expressions, other than expression "goods" and "sale" which are used but are not defined in this Act and are defined in the [Vanijyik Kar Adhiniyam] shall have the meanings assigned to them ....
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.... was required to make all arrangements for the money for the construction of the by-pass road, the petitioner was given the right to collect the toll after completion of the construction of the road for which 10 years was fixed. The period of 10 years was calculated after considering the total cost of construction of the project and its recovery by way of collection of toll. After the expiry of the said period, the petitioner shall not have any claim on the road as well as on a toll. 25. It is a settled law that no person has a right to collect a toll or any tax from private persons for using the road. The State Government gave a right to collect the toll to the petitioner from the vehicle passing through the road for a definite period to recover the only cost of construction i.e. the sale amount or the contract value, therefore, the Dy. Advocate General for the State has rightly contended that in this case, the contract amount or sale price is liable to be made to the contractor as a deferred payment by authorizing him to recover the toll tax and except this, there is no difference in the work done under the BOT scheme and in the normal works contract. This issue has been conside....
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....the Adhiniyam 'Works Contract' means an agreement in writing for the execution of any work specified therein; it is clear that a work to constitute and to be construed as 'Works Contract' must be strictly covered by the works specified in the said definition and that no other work should be treated as "Works Contracts'. 17. Learned counsel for the respondents in the above context submitted that, Water Treatment Plant, essentially consists of building and water tanks. It was therefore submitted that the name "Water Treatment Plant" used in the contract between the parties, by itself would not exclude the said work executed by the appellant, from the category or definition of 'Works Contract. It has been submitted that the Water Treatment Plant was construction of such buildings and tanks, the details of which are given in (Annexure R-3). It was submitted in the above context that all the components of Water Treatment Plant basically consisted of building or storage tanks. In the above context photographs (Annexure R-4) to (Annexure R-9) are also filed, to indicate the nature of work and construction relating to the Water Treatment Plant executed by the appe....
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....ore, it appears that the definition of 'Works Contracts' as siven in section 2 (1) (i) of the Act, applies to all works of construction, repairs or maintenance of all types of buildinss, superstructures, reservoirs, tanks etc. 21. Therefore, all types of buildinss tanks whatever be its technical nomenclature would be covered under the sald definition of 'Works Contract'. In Ghanshim Das v. Debi Prasad, AIR 1966 SC 1998 the Supreme Court with reference to U.P. Zamindari Abolition and Land Reforms Act, observed: "The word building has not been defined in the Act and is, therefore, to be construed in its ordinary grammatical sense unless there is something in the context or object of the statute to show that it is used in a special sense different from its ordinary grammatical sense. So construed according to the dictionary meaning, the existence of a roof is not always necessary for a structure to be regarded as a building. Residential buildings ordinarily have roofs but there can be a non-residential building for which a roof is not necessary. A large stadium or an open air swimming pool constructed at a considerable expense would be a building as it is a permane....
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....tion/upgradation of rural roads in Madhya Pradesh under the Pradhan Mantri Gram Sadak Yojna scheme. Clauses 4.2, 4.3, 4.5, 4.6 and 7.1 are relevant, which provides construction, supervision to check quality of materials and works, measurement of works, scrutinize the claim raised by the contractor and held the management to clear the payment. The petitioner was to monitor progress of the work with certain services as enumerated in clause 4.6 and to submit various reports as enumerated in Clause 7.1 of the scheme. The aforesaid all the works are related to the works contract. Clause 2 of the terms of reference provides objectives for providing consultancy services, which reads thus: 2. Objectives-The objectives of the proposed Consultancy Services are: i. Proper management of civil works contract as 'Engineer' in terms of civil works contract including field measurements and quality assurance work. ii. Comprehensive supervision of project implementation activities carried out by the ii Contractors to ensure complete compliance with the drawings, technical specifications and various stipulations contained in the Contract Documents. iii. Efficient construction supervis....
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.... construction, repairs and maintenance of road then it becomes a works contract, as defined in section 2 (1) (i). Similarly, definition of "works contract", also includes an agreement in relation to all other matters relating to execution of any of the said work i.e., road. In other words, if in execution of main work as in this case road, any other agreement is entered into by State Government with any person for accomplishing execution of road work then the said agreement would also be regarded as "works contract within the meaning of section 2(1)(1) ibid. 19. In my considered view, therefore, the agreement in question (Annexure P-1) being in the nature of providing all kind of consultancy services by the petitioner to State Government which are necessary for construction and development of road and hence, it becomes a "works contract" as defined under section 2(1) ibid. In other words, It is a contract which falls in second category of "works contract" in its inclusive definition namely "all other matter relating to execution of any of the said work" i.e., road." It is apparent that in this case the learned Single Judge considered the effect of existence of other agreements ....
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.... for creation of any escrow account in works contract, in works contract the payment is made against the running account bills prepared by the contractor and submitted to the employer periodically whereas in concession agreement, the Concessionaire has to utilize and arrange the funds, the concessionaire under the agreement after completion of construction recovers the amount invested by him for completion of the project by way of toll, no State support agreement is executed in case of a works contract whereas it takes place in a case of concession agreement. The Concessionaire is not liable to pay value added tax, sales tax and other taxes under the concession agreement which are otherwise payable under the works contract. The Bench considered that 17 concession agreements were entered into between the parties in case of Jabalpur Corridor (supra). A EPC contract was also entered into. On the basis of these "salient features" the Bench came to hold that concession agreement cannot be treated as a works contract. In addition, it was held that parties have clearly understood the agreement to be a concession agreement and decided to resolve their dispute as per the Act of 1996. 48. ....
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....uilding and other entities. In addition, the Concessionaires can operate the contract. Apart from this, it is noteworthy that the definition of 'works contract' is totally silent about the mode and method of payment. It is also silent as to how the work relating to construction, repair or maintenance should be carried out. The definition of 'works contract' contains the word "construction", "repair" and "maintenance". These words can be further divided and bifurcated. The definition of word "construction" in the concession agreement mentioned above is an example of the same. Its a matter of common knowledge that there cannot be any construction activity without undertaking the exercise of investigation, engineering, design, procurement, etc. The aforesaid ancillary activities are essential part of a construction activity. Likewise, the word repair or maintenance can be subdivided in various sub heads. However, such division or elaboration will not change the basic nature of the activity. Thus, we are not able to agree with the view taken in Jabalpur Corridor(Supra) that definition of works contract has a restrictive meaning and has a limited conotation. The design a....
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....contract' alone will determine whether a particular agreement falls within its ambit or not. For this reason, the argument of Shri Naman Nagrath based on relevant provisions of IT Act and railway contract must fail. 52. Similarly, in the case of R.V. Infrastructure Engineers Pvt. Ltd. (supra), this court had no occasion to test the agreement on the anvil of definition of works contract. In the said case, the question was whether the particular agreement is a lease or licence within the meaning of Transfer of Property Act and Easement Act. The question was relating to payment of stamp duty and registration under the Indian Stamp Act and Registration Act. The aforesaid judgment is of no assistance to the applicants. 53. In the case of Kunhayammed (supra), it was held that while hearing a SLP, the Supreme Court is not exercising its It is merely exercising discretionary jurisdiction to grand its appellate jurisdiction appeal. The petitioner is still outside the gate of entry though aspiring to enter the appellate arena of Supreme Courts Whether he enters or not would depend on the fate of his petition for special leave. It is further held that neither the principle of res judi....