2006 (7) TMI 627 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the petitioner is engaged in the sale of goods or executing works contracts.
2. Verification of purchase orders and nature of work executed by the petitioner.
3. Determination of sales tax assessments for KGST and CST for specific years.
4. Assessment of inter-State sales and works contract outside the State.

Analysis:
1. The primary issue in the case revolved around determining whether the petitioner was involved in the sale of goods or executing works contracts. The Tribunal found that the petitioner was fabricating and supplying aluminium products like doors, windows, frames, etc., based on specific orders from customers. The Tribunal concluded that as the price was charged per piece, the items supplied constituted finished goods, following the principles laid down by the Supreme Court in Hindustan Shipyard Limited v. State of Andhra Pradesh.

2. During the hearing, the petitioner contended that the work involved the execution of projects at the customer's site and not the sale of various articles. The petitioner argued that the Tribunal had not correctly verified all purchase orders and had not considered all the works executed, such as metal walls for partitions and shutters for rooms. The petitioner cited legal precedents, including the Madras High Court and the Supreme Court decisions, to support the claim that fabrication and supply of certain items amount to works contracts and not sale of goods.

3. The Court agreed with the Tribunal that the fabrication and supply of doors, windows, etc., on a piece-rate basis constituted the sale of goods, even if custom-made. However, the Court directed the Tribunal to allow the petitioner to produce all purchase orders for re-verification, specifically regarding works claimed to be cabin making or partition. The Tribunal was instructed to re-hear and modify its orders accordingly within a specified timeframe.

4. Regarding the CST assessments, the petitioner argued that contracts were received in Bangalore, and materials were sourced from Karnataka for execution. The assessing officer treated the receipts from Karnataka as inter-State sales and assessed them accordingly. The Court noted that even if works contracts were involved outside the State, the petitioner should have been assessed in Karnataka as per its laws. As there was no assessment in Karnataka and goods were consigned from Kerala, the Court upheld the Tribunal's decision on CST assessments.

In conclusion, the Court disposed of the KGST assessments as per the directions given and dismissed the sales tax revision cases against the CST assessments.