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2022 (4) TMI 700 - HC - GSTInter-state sale - movement of the goods transported from the outside the State to the site of execution of work by the contractor - contract on turnkey basis - HELD THAT - The Court is unable to find any errors having been committed by the Tribunal in coming to the conclusion. Indeed, if the goods moved from outside Orissa to Orissa on the strength of declaration of Form C , then it cannot be said that there was one indivisible contract and that it would amount to a sale within the State of Orissa. It was correctly noted by the Tribunal that although the execution of the works contract took place inside Orissa, the total materials were brought from outside the State by the contractee from the contractor. Application dismissed.
Issues:
1. Interpretation of the Orissa Sales Tax Act, 1947 regarding the nature of transactions involving movement of goods from outside the State. 2. Determination of whether a contract is an inter-state sale or an intra-state sale. 3. Assessment of transactions as inter-state sale exigible to tax under the Central Sales Tax Act. Analysis: Issue 1: Interpretation of the Orissa Sales Tax Act, 1947 The State filed a petition under Section 24(2)(b) of the OST Act seeking a direction to the Tribunal to refer questions of law for the opinion of the High Court. The questions pertained to whether the movement of goods from outside the State to the site of execution of work constituted a sale or incident of a contract of sale. The Tribunal concluded that the transactions fell within the purview of inter-state sale under the CST Act and were outside the tax net under the OST Act. The Court upheld the Tribunal's decision, emphasizing that the movement of goods on the strength of a declaration of Form 'C' did not constitute an indivisible contract or a sale within the State. Issue 2: Determination of Sale Nature The Opposite Party entered into a contract for designing, engineering, and commissioning of equipment for a plant in Orissa. The STO initially assessed the transaction as falling under the definition of 'Sale' under the OST Act. However, the ACST determined that the contract was a 'turnkey' one, where the title to the goods supplied from outside the State did not pass immediately to the contractee. The Tribunal further analyzed the clauses of the agreement and concluded that the transactions were inter-state sales under the CST Act, not subject to tax under the OST Act. Issue 3: Assessment of Transactions The Tribunal's detailed analysis led to the conclusion that the transactions involving the movement of goods from outside the State were inter-state sales under Section 3(e) of the CST Act. The Court, after reviewing the orders of the STO, ACST, and the Tribunal, found no errors in the Tribunal's decision. It was established that the goods were brought from outside the State by the contractee, and the execution of the works contract took place inside Orissa. Consequently, the Court dismissed the petition and upheld the Tribunal's decision. In conclusion, the judgment clarified the interpretation of the Orissa Sales Tax Act, determined the nature of the contract as an inter-state sale, and assessed the transactions as falling under the CST Act. The decision highlighted the importance of analyzing the movement of goods and the contractual terms to ascertain the tax implications accurately.
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