2008 (12) TMI 690 - HC - VAT and Sales Tax

Whether, in the facts and in the circumstances of the case, the Sales Tax Tribunal is justified to hold that the respondent is engaged in the distribution of electricity so as to be entitled to purchase goods at concessional rate of tax on the strength of C forms? Whether the respondentdealer (works contractor) was entitled to the use of form IV for concessional purchase of goods? Whether a series of sales can be postulated to apply to the provisions under section 8 of the OST Act, even after the tax is paid while purchasing the goods? Held that - The issue as to whether the respondent-Sidhartha Engineering (P) Ltd. (works contractor) was entitled to purchase goods at concessional rate of tax on the strength of C forms, is no longer res integra in view of the judgment rendered by the Full Bench of this court in the case of Kalinga Builders (P) Ltd. v. Commissioner of Commercial Taxes, Orissa 1999 (1) TMI 501 - ORISSA HIGH COURT been answered in favour of the dealer and against the State. In so far as isuue to whether the respondentdealer (works contractor) was entitled to the use of form IV for concessional purchase of goods also no longer subsists in view of the judgment of Kalinga Builders (P) Ltd. supra . Apart from this, the respondent while using form IV has deposited tax at four per cent and at the relevant point of time, a works contract dealer was liable to pay works contract tax at the same rate, i.e., four per cent. Therefore, since the respondent has admittedly deposited tax at four per cent, no difference in his tax liability would arise and, therefore, this question remains purely academic and is, therefore, also answered in favour of the dealer and against the Revenue. So far as to whether a series of sales can be postulated to apply to the provisions under section 8 of the OST Act, even after the tax is paid while purchasing the goods, this issue is also no longer res integra and has already been answered by this court in the case of Bharat Heavy Electricals Ltd. v. Union of India 1988 (5) TMI 355 - ORISSA HIGH COURT wherein it has been held that section 5(2)(AA)(i) of the OST Act was also subject to section 8 of the OST Act and if the goods involved in a works contract, had already been subjected to tax in a series of sales, this would have to be excluded from the taxable turnover, thus answered in favour of the dealer and against the Revenue

Summary

Issues:
1. Entitlement to purchase goods at concessional rate of tax on the strength of "C" forms.
2. Determination of engagement in the distribution of electricity in executing a works contract.
3. Entitlement to use Form IV for concessional purchase of goods in specific circumstances.
4. Applicability of series of sales to the provisions of section 8 of the Central Sales Tax Act, 1956.
5. Justifiability of allowing deductions towards value of goods purchased on the strength of "C" forms.

Analysis:

1. The High Court addressed the entitlement of the respondent to purchase goods at a concessional tax rate using "C" forms. Referring to a previous judgment, the Court established that the issue had already been settled in favor of the dealer in a Full Bench decision. Therefore, no further answer was required on this issue.

2. The Court considered whether the respondent, engaged in executing a works contract with NTPC, was involved in the distribution of electricity. It was noted that the issue had already been addressed in a previous judgment, and since the respondent had deposited tax at the required rate, no difference in tax liability would arise. Consequently, the Court answered this question in favor of the dealer.

3. The issue of the respondent's entitlement to use Form IV for concessional purchase of goods was examined. The Court referred to a previous judgment and highlighted that the respondent had deposited tax at the appropriate rate, rendering the question academic. Therefore, this question was also answered in favor of the dealer.

4. Regarding the applicability of a series of sales to the provisions of the Central Sales Tax Act, the Court cited previous judgments to establish that if goods involved in a works contract had already been taxed in a series of sales, such transactions should be excluded from the taxable turnover. The Court concluded that this issue had already been settled in favor of the dealer.

5. The Court deliberated on the justifiability of allowing deductions towards the value of goods purchased on the strength of "C" forms. Despite certain conditions not being satisfied, the Sales Tax Tribunal had allowed deductions. The Court, based on previous authoritative pronouncements, concluded that the issue had already been answered in favor of the dealer.

In light of the conclusions reached on all the issues and the questions being resolved in favor of the dealer, the revision was disposed of accordingly.