TaxTMI 
TaxTMI 
2026 (3) TMI 9
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.... For the State: Mr. Vikash Kumar, SC-11. (In Civil Writ Jurisdiction Case No. 1716 of 2023) For the Petitioner: Mr. Tarun Gulati, Sr. Advocate, Mr. D.V. Pathy, Sr. Advocate, Mr. Siddhartha Prasad, Advocate, Mr. Pramod Kandpal, Advocate, Mr. Sadashiv Tiwary, Advocate, Ms. Shivani Dewella, Advocate, Mr. Hiresh Karan, Advocate For the State: Mr. Vikash Kumar, SC-11. CAV JUDGMENT (PER: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD) There are seven writ applications listed together for hearing. At the outset, learned counsel for the petitioners as well as the State have jointly submitted that the three writ applications, i.e. CWJC No. 3600 of 2020, CWJC No. 11625 of 2019, and CWJC No. 1716 of 2023, are required to be heard together as they involved identical questions for adjudication. 2. Learned counsel(s) have pointed out the order dated 17.02.2023, wherein the joint submissions of the parties have been recorded by the then learned coordinate Bench. So far as the other four writ applications (CWJC No. 3800 of 2019, CWJC No. 13258 of 2019, CWJC No. 13286 of 2019 and CWJC No. 13854 of 2019) are concerned, they do not involve the same legal issues but were ordered to ....
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....he notice of demand dated 28.09.2022 (as contained in Annexure-5 Series) issued by the respondent no. 2 in pursuance of the order of assessment by quashed. iii) for granting any other relief(s) to which the petitioner is otherwise found entitled to." Brief Facts of the Case (CWJC No. 3600 of 2020) 8. The petitioner is a Public Limited Company engaged in execution of works contract. It was awarded a contract for construction of steel super structure and other ancillary works of rail, road, bridge across river Ganga at Patna by the Central Railways. A copy of the contract dated 10.02.2009 has been brought on record as Annexure '2' to the writ application. The contract comprises of Schedule A-I, A-II, Schedule B, Schedule C-II and Schedule C-III. Schedule A is in respect of fabrication; Schedule B is for contingency items; Schedule C-I is for supply of cement; Schedule C-II is for supply of reinforcement steel and Schedule C-III is for supply of structural steel. 9. It is the case of the petitioner that in terms of the contract and the letter of award, the petitioner submitted its bills to the East Central Railway (the contractee) and the contractee paid in terms of ....
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....s and is liable to tax at the rate of 13.5% instead of 5%, the expenditure incurred in the conversion of structural steel into steel structure forms part of the cost of production and that the same form part of the cost of supply of structural steel. The order dated 09.01.2020 along with notice of demand dated 25.01.2020 are Annexure '7 series'. 14. It is the case of the petitioner that the contract has been awarded to the petitioner for construction of the rail, road, bridge and for that purpose, petitioner purchased structural steel which are nothing but iron and steel of the description given in Section 14(iv) of the Central Sales Tax and those have been fabricated to make railway bridge. Further, petitioner's case is that respondent no. 2 wrongly reached to the conclusion inter alia that structural steel has been converted into a steel structure which is transported to the worksite and placed on the pillars. The petitioner's case is that the moment structural steel is affixed on the pillars, the same becomes immovable property which by itself is out of the purview of taxation. Findings of the Respondent No. 2 15. On perusal of the explanations furnished by the ....
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.... account of labour charges towards fabrication, transporting, erection of steel structures, cutting, strengthening and testing of steel structure. The copy of the agreement with the sub-contractor and proof of payment under different heads were also produced before respondent No. 2. 17. The respondent no. 2 perused the works agreement executed by the petitioner with the East Central Railways and found that Schedule A-I and Schedule A-II contained descriptions of the items such as fabrication, cutting, standing, etc. and it involves labour as well as goods component. From RT-VII, the respondent no. 2 found that the petitioner had got the assembly, erection, launching and fabrication work through a sub-contractor. RT-VI shows that a sum of Rs. 1,72,15,39,774.61/- has been paid on account of fabrication and related work. The representative of the petitioner admitted that these expenses were incurred in course of conversion of structural steel into steel structure by fabrication work. The respondent no. 2, therefore, took a view that it is the steel structure which has been transferred to the contractee pursuant to the work order under the contract and all expenses incurred for purp....
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....a reported in (1989) 2 SCC 645, Gannon Dunkerley (supra) and B. Narasamma (supra). 21. It is submitted that the goods transferred by the petitioner are structural steel which is evident from the bills raised by the petitioner on East Central Railways. Referring to the judgment of the Hon'ble Supreme Court in the case of Larsen and Tourbo Limited vs. State of Karnataka and Anr. reported in (2014) 1 SCC 708, it is submitted that once the contract provided that the structural steel will be sold, the respondents have no jurisdiction to levy tax on the entire steel structure which is not a commercially traded commodity but part of immovable property. The respondents have lost sight of this principle that the structural steel has been transferred and billed by the petitioner. 22. It is submitted that the respondents have erred in considering the steel structures as commercial distinct goods. The steel structure comes into existence only as immovable property and not as 'goods'. These are not commercially traded goods. It is further submitted that there is no material to show that such large sections of the bridge which come in existence only as a part of bridge when the....
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....s according to learned Senior Counsel, such power is only vested in a regular assessment under Section 25 of the Act that too within the period of limitation as set out therein. It is further submitted that Section 31 is not a substitute of a regular assessment and respondent no. 2 cannot proceed for exercising such power as if the same was the regular assessment. Accordingly, learned Senior Counsel submits that issuance of notice under Section 31 of the Act directing production of evidence for verification is wholly illegal and without jurisdiction. 27. It is further submitted that petitioner has filed its return on 30.12.2015 and has made true and fair disclosure of its turnover. The petitioner has also filed its tax audit report along with the return and after having made such disclosure in the return, it cannot be said that petitioner has concealed, omitted or failed to disclose full and correct particulars of such sale or purchase or input tax credit in terms of Section 31 of the BVAT, 2005. It is submitted that the condition precedent to the exercise of jurisdiction under Section 31 of the Act are not fulfilled as Section 31 of the Act requires the prescribed authority to ....
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....t the works contract was executed by the main contractor. 31. It is submitted that the incomplete structure before it becomes parts of immovable property is not separate goods. It is submitted that for separate goods to emerge which can be taxed as separate goods, the process or manufacture of such goods is essential. It is submitted that while there may have been some change in iron and steel due to the welding, the change is immaterial because it does not lead to any commodity known to the market as separate goods which has distinct name, character and use. Learned Senior Counsel has relied upon the judgment of the Hon'ble Supreme Court in the case of UOI vs. Delhi Cloth and General Mills Co. Ltd. reported in 19771 E.L.T. 199 (SC). It is submitted that in the present case, there is no evidence that huge semi-finished span of the bridge is capable of being sold in the market. It is also submitted that the structural steel has not changed its character of iron and steel and the structural steel is developed for a specific purpose i.e. to be a part of the immovable bridge and cannot be put to any other use. 32. It is further submitted that prior to 08.04.2011, Section 15(a....
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....dabad-II (2025) 152 GSTR 264 relied upon by the respondent no. 2 is not applicable in this case as in the case case, there was a clear finding that the goods are marketable and functional but in the present case, the incomplete span of the bridge is not marketable at all and is of no use. It becomes complete only when it is attached to the bridge and at that stage it is not "marketable goods" but a part of immovable property. Submissions on behalf of the Respondents 35. Respondents have appeared in these matters and filed their counter affidavits. It is their stand that the works contract was awarded to the petitioner for construction of steel superstructure of open web triangulated girder on the bridge over river Ganga in Patna and other ancillary works and for this purpose, it has purchased iron and steel and got the same fabricated into the superstructure and after fabrication brought the superstructure at the site of the bridge and erected it. 36. Mr. Vikash Kumar, learned SC-11 has contested the submissions of learned counsel for the writ petitioners and submitted that the two issues involved in this case are as follows:- (i) Whether sale of "goods -steel sup....
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....riangulated bridge girders, the same invites tax rates applicable to unspecified goods on the value at the time of transfer of property which is triangulated bridge girders. Learned counsel has submitted that the claim of the petitioner that the fabricated triangulated girder or bridge superstructure is nothing but iron and steel as defined under Section 4 of the CST Act has no leg to stand in view of the number of judicial pronouncements wherein it has been held that products made/ manufactured out of iron and steel no longer remain iron and steel. If bridge structure is made out of steel the steel loses its character and becomes a totally different commodity both commercially and technically. 41. Referring to the judgment of the Hon'ble Supreme Court in the case of Devi Dass Gopal Krishan and others vs. The State of Punjab and Others reported in (1966) 17 STC 313, 315, it is submitted that the conversion of iron and steel items like bars, rods, angles, sections, structural etc. into triangulated bridge superstructure involves substantial process of manufacture which results into a totally different commodity, district from iron and steel as defined under Section 14 of CST ....
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....rks contract and satisfies the twin tests which are transformation test and marketibility test. In this regard, learned counsel has relied upon the judgment of Quippo Energy Ltd. vs. Commissioner of Central Excise Ahmadabad-II (2025) 152 GSTR 264. Consideration An introduction of the agreement between the parties 47. The petitioner and the East Central Railways (hereinafter referred to as the 'Railways') entered into a works contract on 10.02.2009, under which the petitioner agreed to execute the work for assembly, erection, launching of (18x123m) + (1x64m) span triangulated steel girder for new rail-cum-road bridge across River Ganga at Patna from Digha Ghat end (South end) including transportation of fabricated components of (17x123m) + (1x64m) span from fabricated workshop at Digha Ghat end and (1x123m) span from fabrication workshops at Pahleja Ghat end of River Ganga to the launching site, including casting of RCC pedestals and final coat of painting at an approximate cost of Rs. 11,91,30,96,686.30/-. Schedule A is in respect of fabrication, Schedule B for contingency items and Schedule C-I of the agreement is related with supply of cement. Schedule C-II relates with ....
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....of the Assessing Officer (R-2) 50. However, the respondent no. 2 did not agree with the applicability of rate of tax by the petitioner at the rate of 5% in its return on taxable turnover of Rs. 20,31,20,116.50/-. Relying upon the judgments of the Hon'ble Supreme Court in the case of B. Narasamma (supra); Devi Dass Gopal Krishan (supra), State of Tamil Nadu vs. Pyare Lal Malhotra and Ors. reported in AIR 1976 SC 800 and Gannon Dunkerley (supra), the respondent no. 2 held that the rate of tax would be 13.5% and not at the rate of 5% as claimed by the petitioner. Against the claim deduction of Rs. 2,06,58,23,290.80/- under Section 35 of the BVAT Act, the respondent No. 2 allowed an amount of Rs. 3,41,49,683.48/- against deductions but rejected the contention of the petitioner with respect to the rest of the amount, which the petitioner was contending that those were related with payment of labour charges on fabrication, transporting, erection of steel structure, cutting, strengthening, testing of steel structure. Respondent no. 2 considered the details provided by the petitioner in Form RT-VII, which showed the execution of work of assembly, erection, launching and fabrication by s....
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....r, allowed an amount of Rs. 20,68,63,672.00/- against the purchase from outside the State. Res-Judicata Principle in Taxation 52. One of the contentions of the petitioner is that for the period 2010-11, the Assessing Officer had allowed the deductions of an amount of Rs. 36,74,85,343/- against the claimed amount of Rs. 67,92,88,164.50/- and had determined the tax on iron and steel at the rate of 4%. 53. It is the contention of the respondent-department that the work of the petitioner includes casting of RCC pedestals, which may be executed using reinforcement steel (Schedule C-II) and cement (Schedule C-I). RCC pedestals as per definition is a short vertical compression member of reinforced cement concrete that transfers load from a column to a footing. 54. In case of Smt. B. Narasamma (supra), the Hon'ble Supreme Court has taken note of the factual position as existing in the said case, wherein it appeared that ".... Different types of steel bars/ rods of different diameters are used as reinforcement (like TMT bars, CTD bars etc). The reinforcement bars/rods need to be bent at the ends in a particular fashion to withstand the bending moments and flexural shear. The mai....
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....der of the Assessing Officer in respect of the year 2010-11 that the Assessing Officer had allowed only Rs. 36,74,85,343.50/- out of the claimed amount of Rs. 67,92,88,164.50/- and this was the amount accepted as the labour charges. In the year 2010-11, the respondent no. 2 taxed Rs. 1,47,52,87,301.50/- at the rate of 4% and taxed Rs. 2,65,89,410/- at the rate of 12.5%. The gross receipt as per the trading account of the assessee for the year ending 31.03.2011 was shown at Rs. 1,86,27,72,645/-. The Assessing Officer also recorded that in execution of the works contract, the taxable materials such as iron and steel and other miscellaneous unspecified consumables were valued at Rs. 1,47,52,87,301.50/- and other miscellaneous unspecified consumables were Rs. 2,65,89,410/-. 58. What is culled out from the order of the assessing authority in respect of the year 2010-11 is that the iron and steel used in execution of the works contract were charged at the rate of 4%. Thus, a question would arise as to whether this would operate as res judicata and the revenue cannot be allowed to take a plea that the steel structure in this case would not be covered under the specified goods (iron and....
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....parties were directed to complete their instructions and since then the writ applications are pending for argument and now, it would not be appropriate to dismiss these applications on the ground of alternative remedy. It is well settled that principle of alternative remedy is based on Rule of Prudence but it is not a Rule of law. Legislative history of Taxation in Works Contract 62. Before coming to the merit of the case, we would briefly take note of the legislative history leading to the 46th Constitution Amendment. We are required to take note of the relevant provisions of the Constitution, the Central Sales Tax Act and the BVAT Act. Article 286(3) of the Constitution reads as under:- "(3) Any law of a State shall, in so far as it imposes, or authorises the imposition of,- (a) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or (b) a tax on the sale or purchase of goods, being a tax of the nature referred to in sub- clause (b), sub-clause (c) or sub-clause (d) of clause (29A) of article 366, be subject to such restrictions and conditions in regard to the system of ....
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.... a single commodity for the purposes of levy of tax under that law.]" 64. The 46th Amendment of the Constitution added Article 366(29-A) making it possible by deeming fiction to tax sale of goods involved in a works contract. BVAT Act was enacted to consolidate and amend the law relating to levy of tax on sales or purchases of goods in the State of Bihar. It was published in the Gazette of India (Extraordinary) dated 23.06.2005 and made effective from the first day of April 2005. Section 2(j) defines the word "declared goods" which means goods declared under Section 14 of the Central Sales Tax Act, 1956 to be of special importance in inter-state trade or commerce. The word "sale" has been defined under Section 2(zc) which reads as under:- "(zc) "sale" with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or for other valuable consideration and includes - (i) a transfer, otherwise than in pursuance of a contract, 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) involv....
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....of such sale or purchase or input tax credit, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice under this sub-section was a notice under section 27: Provided that the amount of tax shall be assessed or re-assessed after allowing such deductions as were allowable during the said period and at rates at which it would have been assessed had the turnover not escaped assessment. (2) (a) The prescribed authority shall, in a case where the dealer has concealed, omitted or failed to disclose full and correct particulars of such sale or purchase or input tax credit, direct that the dealer shall, besides the amount of interest payable under sub-section (10) of section 24, pay by way of penalty a sum equal to three times the amount of tax which is or may be assessed on the turnover of sale or purchase which escaped assessment. (b) The penalty imposed under clause (a) shall be in addition to the amount of tax, which is or may be assessed on the turnover of sale or purchase which escaped assessment. ^8[(c) No order shall be passed under this sub-section without giving the dealer a reasonable opportunity of being heard....
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....that all transfers, deliveries and supplies of goods referred to in sub-clauses (a) to (f) of clause (29-A) of Article 366 of the Constitution are subject to the restrictions and conditions mentioned in clause (1), clause (2) and sub-clause (a) of clause (3) of Article 286 of the Constitution and the transfers and deliveries that take place under sub-clauses (b), (c) and (d) of clause (29-A) of Article 366 of the Constitution are subject to an additional restriction mentioned in sub-clause (b) of Article 286(3) of the Constitution. *** 38. In Benjamin's Sale of Goods (3rd Edn.) in para 43 at p. 36 it is stated thus: 'Chattel to be affixed to land or another chattel.-Where work is to be done on the land of the employer or on a chattel belonging to him, which involves the use or affixing of materials belonging to the person employed, the contract will ordinarily be one for work and materials, the property in the latter passing to the employer by accession and not under any contract of sale. Sometimes, however, there may instead be a sale of an article with an additional and subsidiary agreement to affix it. The property then passes before the article is....
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....tes levying taxes on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract are subject to the restrictions and conditions mentioned in each clause or sub-clause of Article 286 of the Constitution. We, however, make it clear that the cases argued before and considered by us relate to one specie of the generic concept of "works contracts". The case-book is full of the illustrations of the infinite variety of the manifestation of "works contracts". Whatever might be the situational differences of individual cases, the constitutional limitations on the taxing power of the State as are applicable to "works contracts" represented by "building contracts" in the context of the expanded concept of "tax on the sale or purchase of goods" as constitutionally defined under Article 366(29-A), would equally apply to other species of "works contracts" with the requisite situational modifications." 16. In Gannon Dunkerley and Co. v. State of Rajasthan, (1993) 1 SCC 364, this Court held: (SCC pp. 386, 389, 392 & 394, paras 31, 37, 41 & 45) "31. ... Apart from the limitations referred to above which curtail the ambit....
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....f the goods involved in the execution of the works contract the cost of incorporation of the goods in the works can be included in the measure for levy of tax. Incorporation of the goods in the works forms part of the contract relating to work and labour which is distinct from the contract for transfer of property in goods and, therefore, the cost of incorporation of the goods in the works cannot be made a part of the measure for levy of tax contemplated by Article 366(29- A)(b)." 67. In B. Narasamma (supra), the Hon'ble Supreme Court has also quoted paragraph '9' and '10' of the judgment in case of Pyare Lal Malhotra (supra) which are as under:- "9. If the object was to make iron and steel taxable as a substance, the entry could have been: "Goods of Iron and Steel". Perhaps even this would not have been clear enough. The entry, to clearly have that meaning, would have to be: "Iron and Steel irrespective of change of form or shape or character of goods made out of them". This is the very unusual meaning which the respondents would like us to adopt. If that was the meaning, sales tax law itself would undergo a change from being a law which normally taxes sales of "goods"....
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.... II, III and IV, at the rate of twelve and a half percent.] (2) The State Government may, by notification, alter any Schedule to this Act." 69. It is evident from a reading of this provision that clause (bb) were inserted by Finance Act 3 of 2011. It provides for the goods specified in Schedule IIIA to be taxed at the rate of 4%. It is evident from the aforementioned provisions and the judicial pronouncements on the subject that the taxable event in the case of execution of a works contract is the transfer of property in goods involved in the execution of the contract and that transfer occurs when goods are incorporated in the works. Consequently, it would be the value of the goods at the time of incorporation which would constitute the measure for the levy of the tax. It is in this background, the revenue has contended before this Court that the goods i.e. the steel superstructure/triangulated steel girder is different and distinct from steel structurals (angles, joists, channels, tees, seat pilings sections, Z-sections, or any other rolled sections). It is stated that the steel structurals includes (angles, joists, channels, tees, seat pilings sections, Z-sections or ....
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....ich was already in existence will serve no purpose but for the said process. In other words, whether the commodity already in existence will be of no commercial use but for the said process. In the present case, the plain bottles are themselves commercial commodities and can be sold and used as such. By the process of printing names or logos on the bottles, the basic character of the commodity does not change. They continue to be bottles. It cannot be said that but for the process of printing, the bottles will serve no purpose or are of no commercial use." (emphasis supplied)" 27. This court in Union of India v. J.G. Glass Industries Ltd (1999) 114 STC 387 (SC); (1998) 2 SCC 32; 1997 SCC OnLine SC 22 established a two-fold test to ascertain if an activity constitutes "manufacture": (a) Fundamental change test : The first criterion is to determine if the process results in a new commercial item being created, or if the original item's identity is fundamentally altered or ceases to exist. This means assessing whether a transformation occurs such that a distinct product with a new name, identity, character, or use emerges; (b) But for the proces....
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.... the Constitution came into effect, the works contract was made subject to tax by virtue of Entry 54 of the State List read with Article 366(29-A)(b) of the Constitution of India. Article 366(29-A)(b) contemplated levy and the taxes on the value of the goods involved in the execution of works contract. In Builders' Association of India vs. Union of India reported in (1989) 2 SCC 645, the Hon'ble Supreme Court has pointed out that in Article 366(29-A)(b) emphasis is on the transfer of property in goods whether as goods or in some other form. In Gannon Dunkerley (supra), the Hon'ble Supreme court held that though the tax is imposed on the transfer of property in goods involved in the execution of a works contract, the measure for levy of such imposition is the value of the goods involved in the execution of a works contract. The Apex Court rejected the contention urged on behalf of the contractors that the value of such goods for levying tax can be assessed only on the basis of cost of acquisition of the goods by the contractor. It has been held that "...Since the taxable event is the transfer of property in goods involved in the execution of a works contract and the said....
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....act; (v) cost of consumables such as water, electricity, fuel, etc. (vi) transportation charges for transport of goods to the place of works; (vii) overhead expenses of the head office and branch office including rents, salary, electricity, telephone charges, etc. and interest charges to banks and financial institutions; (viii) profits expected on such contract. 47. Keeping in view the legal fiction introduced by the Forty-sixth Amendment whereby the works contract which was entire and indivisible has been altered into a contract which is divisible into one for sale of goods and other for supply of labour and services, the value of the goods involved in the execution of a works contract on which tax is leviable must exclude the charges which appertain to the contract for supply of labour and services. This would mean that labour charges for execution of works, [item No. (i)], amounts paid to a sub-contractor for labour and services [item No. (ii)], charges for planning, designing and architect's fees [item No. (iii)], charges for obtaining on hire or otherwise machinery and tools used in the execution of a works contract [item No. (i....
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....uded. The amount so deductible would have to be determined in the light of the facts of a particular case on the basis of the material produced by the contractor. The value of the goods involved in the execution of a works contract will, therefore, have to be determined by taking into account the value of the entire works contract and deducting therefrom the charges towards labour and services which would cover- (a) Labour charges for execution of the works; (b) amount paid to a sub-contractor for labour and services; (c) charges for planning, designing and architect's fees; (d) charges for obtaining on hire or otherwise machinery and tools used for the execution of the works contract; (e) cost of consumables such as water, electricity, fuel, etc. used in the execution of the works contract the property in which is not transferred in the course of execution of a works contract; and (f) cost of establishment of the contractor to the extent it is relatable to supply of labour and services; (g) other similar expenses relatable to supply of labour and services; (h) profit earned by the contractor to the extent ....
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.... Andhra Pradesh Value Added Tax, 2005, there was no provision for inclusion of sub-contractors' turnover in the turnover filed by the company; and the scheme of the said Act at the relevant time did not contemplate for the declaration of sub- contractors' turnover and that the sub-contractor was a dealer under the scheme of the Act of 2005. 75. The objections raised by the company in its reply to the show cause notice was rejected by the Assessing Officer and the company was consequently served with an assessment order dated 31.05.2006 raising an additional tax payment of Rs. 9,75,89,261/- 76. In the aforementioned facts, the Hon'ble Supreme Court found that the question which was required to be decided as to whether the turnover of Rs.1,11,53,05, 835/- of the sub- contractors is liable to be added with the turnover of L&T. Thus, the dispute in the case of Larsen & Toubro Ltd. (supra) was the addition of the sub-contractors' turnover to the turnover of the L&T. The Hon'ble Supreme Court considered the first case of State of Madras vs. Gannon Dunkerley & Co. (Madras) Ltd. reported in AIR 1958 SC 560 which necessitated an Amendment of Article 366 of the Cons....
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....ment of the Department is to be accepted, it would result in plurality of deemed sales which would be contrary to Article 366(29-A)(b) of the Constitution as held by the impugned judgment of the High Court. Moreover, it may result in double taxation which may make the said 2005 Act vulnerable to challenge as violative of Articles 14, 19(1)(g) and 265 of the Constitution of India as held by the High Court in its impugned judgment." 77. A further reading of the Larsen & Toubro Ltd. (supra) would show that after the impugned judgment in the said case, the Department has amended Rule 17 of the Andhra Pradesh VAT Rules, 2005 vide Government Order dated 20.08.2007. The position had been clarified vide Rule 17(1)(c) (as amended) saying that where a VAT dealer awards any part of the contract to a registered sub-contractor, no tax shall be payable on the consideration paid for the sub-contract. Therefore, their Lordships were of the view that the principle to be adopted in all such cases is that the property in the goods would pass to the owner/contractee on its incorporation of the works executed. It is evident that the Larsen & Toubro Ltd. (supra) was decided on the facts of the said c....
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....oration of fabricated components of (17x123m + 1x64m) span from fabrication workshop at Dighaghat end and (1x123m) span from fabrication workshop at Pahlejaghat end of river Ganga to launching site including casting of RCC pedestals and final coat of painting. The Schedule of items shows the quantity of 36630 MT and the rate quoted is Rs.29,000/- per MT, thus, the total amount of Sub-contract comes to Rs.106,22,70,000/- the rate for (i) 123m C/C span girders and (ii) 64m C/C span girders and casting of RCC Pedestals have been provided separately giving total cost of works Rs.107,08,70,000/-. 80. The scope of work under clause 1.5 contains the principal items of work covered by the contract. It is stated that the list is only indicative and the work is to be done in accordance with detailed tender/contract conditions, approved drawings and direction of Engineer etc. as stipulated in these documents. It includes (i) preparation of shop/fabrication drawings for fabrication of steel work based on approved drawings and (ii) supply of cement, reinforcement steel and structural steel to the extent covered under Schedule C-I, C-II and C-III respectively. The transportation of structural....
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....any National Test House or Govt, recognized institution competent to do so. (vi) Rolled materials before being laid off on worked, must be made straight. If straightening or flattening is necessary it shall be done by method that will not damage the material. Material having sharp kinks and bends will be rejected. (vii) Tolerance- The tolerance in fabrication shall be in accordance with as mentioned in Appendix -II of RDSO's booklet B-1-2001 (viii) Fabrication records - The records of fabrication shall be maintained in the register as per format given in Appendix-I of RDSO's Booklet B-1-2001 or as specified by the Engineer. (ix) Flattening and straightening - All steel materials, plates, bars and structures shall have straight edges, flat surfaces and be free from twist. If necessary, they shall be cold straightened or flattened by pressure before being worked or assembled unless they are required to be of curvilinear form. Pressure applied for straightening or flattening shall be such as it would not injure the material and adjacent surfaces or edges shall be in close contact or at uniform distance throughout. (x) Flattening or ....
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....is only one of the items which is used in the fabrication work. Fabrication of girders and its accessories are to be carried out by the contractor in his factory premises or in a well established fabrication workshop to be set up by the contractor at the bridge site. Opinion of the Court 87. On perusal of the documents available on the record, we are of the considered opinion that the Assessing Officer- Respondent No. 2 has rightly held that the petitioner had got the assembly erection, launching, fabrication work through the sub- contractor for which the petitioner paid sum of Rs. 172,15,39,774.61/-. It is recorded in the impugned order that the representative of the petitioner admitted that these expenses were incurred in course of conversion of structural steel into steel structure by fabrication work. Keeping in view the judgment of the Hon'ble Supreme Court in the case of Gannon Dunkerley and Co. (1993) 1 SCC 364 (supra), paragraph '47' quoted hereinabove, we take a view that the cost of transportation launching and installation at the site are the part of the cost of steel structure which have been transferred in course of execution of works contract, theref....