2012 (8) TMI 940 - HC - VAT and Sales Tax

Summary

Issues involved:
The issues involved in this case are:
1. Whether the levy of sales tax on ducting works contract is justified under the TNGST Act.
2. Whether the ducting works contract can be considered as an outright sale of duct.
3. Whether the retrospective amendment to section 3B of the TNGST Act affects the assessment.
4. Whether the petitioner is eligible for deduction on the purchase of G.I. sheets under section 3B(2)(b) of the TNGST Act.

Issue 1:
The petitioner undertook works contract for installation of ventilation plants, humidification, and air-conditioning. The assessing officer found that the duct sold to customers was a different commercial commodity, leading to tax liability. The petitioner argued that as the work was indivisible and the turnover was indivisible, deeming sale did not apply. The assessing officer disagreed, stating that the goods were different commodities and thus taxable. The Appellate Assistant Commissioner and Sales Tax Appellate Tribunal upheld the assessment, confirming the levy of tax at 15% under entry 3 of the Fourth Schedule to the TNGST Act.

Issue 2:
The petitioner contended that the duct could be separated back into sheets through a simple hand process, supporting a claim of exemption as second sales. However, the court found that the duct-making process involved more than just bending sheets and was irreversible, leading to the rejection of the exemption claim. The assessment based on the consideration for both material value and labor was deemed valid.

Issue 3:
The court examined sample invoices and duct samples, determining that the materials were supplied separately and the duct-making process was irreversible. Despite the nature of the work being a works contract, the separate invoicing of material value supported the conclusion that what was sold was a duct, a different commercial commodity. As a result, the court upheld the Tribunal's order, dismissing the tax case revisions.

Outcome:
The court dismissed the tax case revisions, upholding the levy of sales tax on the ducting works contract. No costs were awarded in this matter.