2024 (1) TMI 929 - HC - VAT and Sales Tax

Sale in the course of interstate trade or commerce under Section 3(a) of the Central Sales Tax Act, 1956 or not - whether goods purchased outside Andhra Pradesh and used in works contracts within the state constituted an interstate sale under Section 3(a) of the Central Sales Tax Act, 1956. - HELD THAT - Relying upon the decision in the case of M/S. LARSEN AND TOUBRO LTD. VERSUS STATE OF ANDHRA PRADESH REP. BY ITS PRINCIPAL SECRETARY (REVENUE) , HYDERABAD AND OTHERS 2015 (12) TMI 470 - ANDHRA PRADESH HIGH COURT , there was yet another decision passed by this Court in M/S. PATEL ENGINEERING LTD., HYD VERSUS ASST. COMMR CT LTU, HYD 3 OTHERS 2021 (11) TMI 165 - TELANGANA HIGH COURT , whereby the writ petition filed by the assessee was allowed and the matter stood remanded back to the authorities concerned for a fresh consideration, setting aside the previous order passed by the Revisional Authority. Given the aforesaid judicial precedents from this High Court and also considering the issue raised in the present Tax Revision Case being similar if not identical, therefore the present Tax Revision Case would stand squarely decided in terms of the order passed by the Division Bench of this Court in the case of M/s. Larsen and Toubro Ltd. The present Tax Revision Case therefore being devoid of merits, deserves to be and is accordingly, rejected.

Summary

Issues involved:
The judgment involves the consideration of whether goods purchased from outside the State for use in a works contract within the State constitute a sale in the course of interstate trade or commerce under the Central Sales Tax Act, 1956.

Details of the judgment:

Issue 1: Interpretation of interstate sales in works contracts

The Tribunal allowed the appeal of the assessee and set aside the order of the Additional Commissioner. It was argued whether goods purchased from outside the State for a works contract within the State would constitute a sale in the course of interstate trade. The Tribunal held that even if Form-C was not signed by the contractee but by the contractor, it would not affect the interstate nature of the sale. The Tribunal referred to previous judgments, including one by the A.P. High Court, stating that materials purchased from outside the State for works contracts assumed the character of interstate sales.

Issue 2: Precedents and judicial decisions

The High Court referred to a case involving M/s. Larsen and Toubro Ltd., where it was concluded that transactions in the nature of interstate sales under works contracts in the State of Andhra Pradesh are not subject to tax. This decision was based on precedents from the Hon'ble Supreme Court. Another decision in the case of M/s. Patel Engineering Ltd. also supported the non-taxability of such transactions. Given these precedents, the present Tax Revision Case was decided in line with the earlier judgments.

Conclusion:
Based on the precedents and decisions from the High Court and the interpretation of interstate sales in works contracts, the present Tax Revision Case was rejected for lacking merits. The judgment reaffirmed the non-taxability of transactions involving goods purchased from outside the State for works contracts within the State, in accordance with established legal principles.