2003 (6) TMI 460 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of turnover for works contract involving mosaic tiles.

Analysis:
The revision petitioner, an assessee, filed a return for the assessment year 1993-94, claiming exemption for the entire turnover as it represented works contract receipts with materials already taxed. The assessing officer disagreed, determining the taxable turnover at Rs. 3,24,920. The Deputy Commissioner set aside the assessment, stating the petitioner manufactured mosaic tiles and deemed sales were taxable. The Sales Tax Appellate Tribunal upheld this decision, considering the petitioner liable for tax on mosaic tiles used in contracts.

The petitioner argued that the contracts were for mosaic flooring, not tile supply, citing a previous court decision. The Government Pleader contended that as per section 5(1)(iv) of the Act, mosaic tile turnover for works contracts is taxable. The Court found previous authorities failed to analyze the contract nature properly. If the contract was for tile supply and laying, the turnover was taxable at the first sale. If it was for mosaic flooring only, the intermediate product (tiles) wasn't taxable. Referring to the previous judgment, the Court emphasized the importance of determining the contract's nature.

The Court emphasized the need to establish the contract's exact nature to apply the legal principles correctly. The authorities did not provide sufficient evidence on the contract specifics. A sample quotation produced by the assessee indicated potential contract details, but a definitive finding on the contract nature was crucial. Therefore, the Court set aside the Tribunal's order and directed a reassessment by the assessing officer in line with the legal principles discussed in the judgment.