1967 (8) TMI 105 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of works contracts involving supply of goods under the Mysore Sales Tax Act.

Analysis:
The judgment pertains to revision petitions originating from the Deputy Commissioner of Commercial Taxes' exercise of revisional power under section 21(2) of the Mysore Sales Tax Act regarding an assessment by the Commercial Tax Officer for the years 1960-61 and 1961-62. The petitioner, a dealer named Eastern Engineering Works, was involved in contracts for installing electrical fittings. The Deputy Commissioner found that these contracts included both supplying and fixing of electrical goods, with the dealer charging customers consolidated rates for materials and labor. While the Commercial Tax Officer considered the contracts as works contracts, the Deputy Commissioner viewed them as consisting of distinct parts - one for goods supply and the other for works. Consequently, the assessment was altered, leading to demand notices being issued by the Commercial Tax Officer.

The Sales Tax Appellate Tribunal upheld the Deputy Commissioner's decision, stating that the supplies of materials were sales made to the other parties. The petitioner's appeals were dismissed. However, the petitioner argued that the Deputy Commissioner lacked the authority to separate the contract into distinct parts not agreed upon by the parties. The judgment referenced Supreme Court decisions emphasizing that for a contract involving work and material supply to be considered a sale, there must be a specific contract for goods sale with property transfer upon delivery. The Deputy Commissioner and the Tribunal failed to establish such a contract, instead reconstructing it based on assumptions, which was deemed impermissible.

The judgment also addressed the argument that a consolidated payment stipulation in a contract does not preclude identifying a separate contract for goods sale if it exists. However, without evidence of a distinct goods sale contract, the orders of the Deputy Commissioner and the Tribunal were set aside. The petitioner was awarded costs, and the deposited amounts were to be refunded, ultimately allowing the petitions.