2018 (9) TMI 627 - HC - VAT and Sales Tax

Works Contract - rate of tax - Civil Works Contract or not? - Reopening of assessment - whether the assessment could have been reopened on the allegation made against the dealer and as to whether there was any transfer of property in goods by way of transferring the insulation material while in the process of executing a civil works contract? - transfer of right in insulation material. Held that - It is evidently clear that the revision of assessment made by issuing the revision notice dated 11.6.2008 is a clear case of change of opinion. The Revenue preferred an appeal before the Tribunal. The Tribunal once again considered the entire factual position and held that there was absolutely no evidence on the file of the Assessing Officer to come to a conclusion that there was a transfer of right in insulation material. The Assessing Officer does not dispute the fact that the Indian Oil Corporation had awarded a contract in favour of the dealer for construction of a petrol bunk. Thus, whatever material was utilized should be treated as a composite contract and the artificial splitting by the Assessing Officer is uncalled for. The Tribunal rightly dismissed the appeal filed by the Revenue - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Reopening of assessment based on allegation against the dealer.
2. Transfer of property in goods during the execution of a civil works contract.

Analysis:
1. The case involved a dispute regarding the assessment of a registered dealer under the Tamil Nadu General Sales Tax Act, 1959. The dealer was assessed for a total turnover, including a sum assessed at a compounded rate under Section 7C of the Act towards civil works contract receipts. Subsequently, the Assessing Officer issued a revision notice alleging a transfer of property in insulation material in a works contract executed for Indian Oil Corporation, which the dealer contested, stating it was a pure civil contract without insulation material involvement.

2. The Assessing Officer, without providing detailed reasoning, rejected the dealer's objections and revised the assessment, leading to an appeal by the dealer. The Appellate Deputy Commissioner allowed the appeal, emphasizing the lack of evidence supporting the property transfer allegation. The Tribunal also dismissed the Revenue's appeal, noting the absence of evidence and the artificial splitting of the contract by the Assessing Officer. The Tribunal concluded that the revision of assessment was a change of opinion without factual basis, upholding the dealer's position.

3. The High Court concurred with the Tribunal's findings, highlighting the lack of material supporting the property transfer claim and the absence of grounds to interfere with the Tribunal's decision. Consequently, the Court dismissed the tax case, ruling in favor of the dealer and against the Revenue, emphasizing the importance of factual evidence and proper assessment procedures in tax matters.