2008 (2) TMI 836 - HC - VAT and Sales Tax

Central sales tax registration certificate - petitioner is engaged in works contracts - Held that - A person engaged in works contract of building construction is a manufacturer and is liable to be granted registration as a dealer under the CST Act and entitled to issue C forms for effecting inter-State purchases. If that be so, the stand taken by the respondent in their statement justifying the denial of the benefit to the petitioner cannot be upheld. In the result, this writ petition is disposed of directing that the petitioner will be issued CST registration certificate in form B prescribed under the Central Sales Tax (Registration and Turnover) Rules, 1957 containing the list of goods covered in exhibits P2A list accepting exhibit P2 CST registration application. The petitioner will also be allowed to make inter-State purchases against C forms for execution of works contract undertaken by them.

Summary

Issues:
- Relief sought for in the writ petition to direct the issuance of Central sales tax registration certificate in form B.
- Allow the petitioner to make inter-State purchases against C forms for works contract execution.
- Dispute over eligibility of the petitioner as a works contractor to get C form declarations for machinery purchases.

Analysis:
The petitioner sought a directive to the third respondent for the issuance of a Central sales tax registration certificate in form B, along with permission to make inter-State purchases against C forms for works contract execution. The petitioner, engaged in works contracts, submitted various applications for registration under the Kerala Value Added Tax Act and the CST registration application in form A. The third respondent issued a registration certificate based on these submissions. However, issues arose when the petitioner purchased machinery from outside Kerala for works contract execution, leading to detention at a check-post due to concerns over authorization for purchase. The respondent demanded a self-bond from the petitioner, restricting the issuance of C forms. The petitioner complied and obtained the certificate of ownership for the release of the consignment. The respondents contested the petitioner's eligibility for C form declarations for machinery purchases, arguing that as a works contractor, the petitioner cannot avail of concessional rates under the CST Act.

The respondents contended that the petitioner, not being a manufacturer, is ineligible for C form purchases and can only obtain Form 16 countersigned by the jurisdictional assessing authority. They relied on a previous decision to support this stance. However, subsequent judgments, including one by a Constitution Bench of the Supreme Court, established that contractors engaged in building contracts could be liable to pay purchase tax, indicating that their activities could be considered as manufacturing. Another Division Bench judgment confirmed that a dealer engaged in works contract was entitled to CST Act registration and issuance of C forms. These precedents clarified that a person involved in building construction works contracts is considered a manufacturer and is entitled to CST Act registration and C form issuance for inter-State purchases.

In conclusion, the court ruled in favor of the petitioner, directing the issuance of the CST registration certificate in form B and allowing inter-State purchases against C forms for works contract execution, provided the petitioner fulfills any statutory requirements. The judgment emphasized that a person engaged in works contract activities related to building construction is considered a manufacturer and is entitled to the benefits under the CST Act, contrary to the respondent's arguments.