1998 (9) TMI 641 - AT - VAT and Sales Tax

Issues Involved:
1. Revision and review of assessment orders by the Assistant Commissioner of Commercial Taxes.
2. Clubbing of assessment periods.
3. Taxability of inter-State purchases used in the execution of works contracts.
4. Privity of contract between the applicant and sub-contractors.
5. Application of judicial precedents to the facts of the case.

Detailed Analysis:

1. Revision and Review of Assessment Orders:
The applicants challenged the order dated April 20, 1995, by the Assistant Commissioner of Commercial Taxes and subsequent orders by the West Bengal Commercial Taxes Appellate and Revisional Board. The Assistant Commissioner revised the assessment order based on three grounds: clubbing of assessment, reliance on guesswork by the Commercial Tax Officer, and non-discussion of inter-State purchases used in the works contract. The applicants contended that the Assistant Commissioner did not properly consider judicial pronouncements and the contracts provided during the assessment.

2. Clubbing of Assessment Periods:
The Commercial Tax Officer clubbed the assessment for periods April 1, 1991, to June 2, 1991, and June 3, 1991, to March 31, 1992. The Assistant Commissioner directed a fresh assessment for these periods. The applicants did not object to the fresh assessment but challenged the irregular allowances reviewed without specific indications.

3. Taxability of Inter-State Purchases:
The applicants argued that the inter-State purchases used in the execution of the works contract were beyond the ambit of State taxation laws. They cited various judicial precedents to support their claim that the movement of goods in the course of inter-State trade or commerce should not be taxed by the State. The respondents countered that the tax was levied on the transfer of property in goods involved in the execution of the works contract within West Bengal, as per the expanded definition of "tax on the sale or purchase of goods" under Article 366 (29A) of the Constitution.

4. Privity of Contract Between the Applicant and Sub-Contractors:
The applicants contended that the contracts with sub-vendors were integral to the main contract with DSP, and hence, the movement of goods should be considered as inter-State trade. The respondents argued that there was no privity of contract between the sub-contractors and DSP. The applicant, as the main contractor, was solely responsible for the execution of the works contract, and the sub-contractors had no direct contractual relationship with DSP.

5. Application of Judicial Precedents:
The applicants cited several Supreme Court judgments to argue that the deemed sale of goods involved in the works contract related to inter-State trade and hence were not taxable under State laws. However, the Tribunal found that the facts of the cited cases were different from the present case. The Tribunal held that the inter-State movement ceased once the goods were delivered to the applicant, and the subsequent transfer of property in the goods to DSP was an intra-State sale subject to State taxation.

Conclusion:
The Tribunal dismissed the applications, holding that the applicant's purchase of plants and equipment from suppliers outside West Bengal caused inter-State movement, which was not taxable by the State. However, the deemed sale in the execution of the works contract with DSP was an intra-State sale and subject to State taxation. The Tribunal found no merit in the applicant's objections and upheld the orders of the Assistant Commissioner and the West Bengal Commercial Taxes Appellate and Revisional Board.

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