2011 (9) TMI 907 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of section 3F(2)(b)(i) of the U.P. Trade Tax Act regarding deduction of goods transported under works contract.
2. Examination of whether the movement of goods from outside the State was due to a pre-existing contract for use in works contract.
3. Claim for deduction towards payment made to a sub-contractor under section 3F(2)(b)(vii).

Interpretation of Section 3F(2)(b)(i):
The judgment addressed the interpretation of section 3F(2)(b)(i) of the U.P. Trade Tax Act concerning the deduction of the value of goods transported under works contracts covered by the Central Sales Tax Act. It referred to precedents like Garg Photo Films and Commissioner, Trade Tax v. Indian Railway Construction Company Limited to emphasize that the movement of goods must be in pursuance of a prior contract of sale, and both the movement of goods and sale must be inseparably connected. The court highlighted the importance of examining whether the movement of goods from outside the State was due to a pre-existing contract for use in works contracts.

Examination of Movement of Goods:
The judgment scrutinized whether the movement of goods from outside the State was due to a pre-existing contract for use in works contracts. It noted that the Tribunal failed to address this crucial aspect in the case, leading to the order being set aside. The court directed the Tribunal to reexamine the appeal in light of the legal principles established in previous judgments, emphasizing the inseparable connection between the movement of goods and the sale under section 3F(2)(b).

Claim for Deduction to Sub-Contractor:
Regarding the deduction claimed towards payment made to a sub-contractor under section 3F(2)(b)(vii), the judgment upheld the Tribunal's decision. The Tribunal found that the sub-contractor's turnover disclosure was not established by the assessee during the proceedings. The court rejected the belated submission of the assessment order of the sub-contractor, stating that such evidence should have been presented earlier. Consequently, the Tribunal's order on this issue was affirmed, and the trade tax revision was disposed of with the given observations and directions.