2019 (6) TMI 1510 - HC - VAT / Sales Tax

Taxability - Works Contract - use of dyes and chemicals by the assessee - whether transfer of property to the customers or not - HELD THAT - Coordinate Bench of this Court has already decided similar revision petition in favour of the Revenue and placed before us, one such judgment in State of Tamil Nadu Vs Tex-in Printers 2013 (10) TMI 1279 - MADRAS HIGH COURT , in which a Coordinate Bench of this Court, in similar circumstances, held that after introduction of section 3B and after amendment made to the definition of sale under section 2(n)(ii), the contention raised by the learned counsel for the assessee cannot be accepted, since by the operation of law, the transfer of goods involved in works contract would amount to sale taxable under section 3B. The assessee therein had purchased the dyes and chemicals from outsaid the State. Consequently, this court held that the entire turnover was assessable to tax. None has appeared on behalf of the respondent assessee despite service, to controvert the aforesaid submissions made by the learned counsel for the Revenue - the present Tax Case Revision in favour of the Revenue in the same terms as was held in the case cited.

Summary

Issues:
1. Appeal against Sales Tax Appellate Tribunal's order.
2. Taxability of dyes and chemicals used in works contract.
3. Interpretation of the definition of "sale" under Section 2(n)(ii).
4. Application of Section 3B to works contracts.
5. Judicial precedent in similar cases.

Analysis:
The High Court of Madras heard an appeal filed by the Revenue against the order of the Sales Tax Appellate Tribunal, which favored the respondent assessee, Tamil Nadu Cooperative Textile Processing Mills Limited. The Tribunal ruled that the use of dyes and chemicals by the assessee in works contracts was not taxable due to the absence of property transfer to customers. The Revenue contended that a previous decision by a Coordinate Bench supported their stance, citing the case of State of Tamil Nadu Vs Tex-in Printers. In the Tex-in Printers case, the court held that the transfer of goods in works contracts amounts to a taxable "sale" under Section 3B, based on the amended definition of "sale" under Section 2(n)(ii). The court referred to judicial precedents like Rainbow Colour Lab Vs State of Madhya Pradesh and Associated Cement Companies Ltd Vs. Commissioner of Customs to support its decision. As the respondent did not appear to challenge the Revenue's submissions, the High Court allowed the Tax Case Revision in favor of the Revenue, setting aside the Tribunal's order. The court directed no costs to be awarded and ordered the communication of the decision to the respondent assessee.