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TMI Blog2007 (8) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggarwal, Adarsh Upadhyay, Vishwajit Singh, Ujjwal Banerjee, H.K. Puri, Arun Kumar Sinha, Rakesh Singh, Mukesh Kumar Sinha, Abhishek Chaudhary, A.P. Dhamija, Ram Niwas and Mrs. Pratibha Jain, Advocates with them) for the respondents. Sunil Gupta, Senior Advocate (T.N. Singh, G. Venkateswara Rao and Kamlendra Mishra, Advocates with him) for the appellants. -------------------------------------------------- The judgment of the court was delivered by S.H. KAPADIA J. Leave granted in special leave petitions. This batch of civil appeals is directed against the judgment and order dated March 14, 2002 passed by the Allahabad High Court in Writ Petition No. 741 of 2001 Reported as P.N.C. Construction Company Limited v. State of U.P. [2002] 128 STC 476. Civil Appeal No. 7256 of 2005 is the lead case in which the facts are as follow: M/s. P.N.C. Construction Co. Ltd. (assessee) is a public limited company incorporated under the Companies Act, 1956. It is registered under the U.P. Trade Tax Act, 1948. It entered into a contract with National Highway Authority of India, New Delhi, for construction of 4/6 lane of National highways of north, south, east and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see should not be revoked. The impugned notice dated May 9, 2001 as well as the aforestated two impugned circulars dated January 17, 2001 and February 23, 2001 were challenged by the assessee before the High Court vide Writ Petition No. 741 of 2001 See P.N.C. Construction Company Limited v. State of U.P. [2002] 128 STC 476 (All). The main contention of the assessee before the High Court was that the raw materials used by the assessee in execution of works contract constituted "deemed sale" under article 366(29A) of the Constitution of India and, therefore, the assessee was entitled to the benefit of concessional rate of duty on the purchase of aforestated raw materials. Before the High Court, assessee further contended that it was open to the State to challenge the order of the Tribunal directing the A.O. to grant recognition certificate to the assessee; that the State did not challenge the decision of the Tribunal and, therefore, the impugned circulars dated January 17, 2001 and February 23, 2001 constituted colourable exercise of power by the Commissioner in order to get over the judgment of the Tribunal which was against the department. That, it was not open to the issuing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this court by way of civil appeals. The said Act is enacted to provide for levy of tax on sale or purchase of goods in U. P. Under section 2(bb) of the Act "trade tax" means a tax payable on sale or purchase of goods. Under section 2(d) of the Act the word "goods" is defined to mean every kind or class of movable property including all materials, commodities and articles involved in the execution of works contract. Under section 2(e1) of the Act the word "manufacture" is defined to mean producing, mining, extracting, altering, finishing or otherwise processing, treating or adapting any goods. Under section 2(gg) of the Act "purchase price" is defined to mean valuable consideration paid or payable by a person for purchase of goods less cash discount given by the seller. Under section 2(h) of the Act "sale" is defined to mean any transfer of property in goods for cash or deferred payment or for other valuable consideration including transfer of property in goods (whether as goods or in some other forms) involved in the execution of a works contract. Under section 2(i) of the Act "turnover" is defined to mean the total amount for which goods are supplied or distributed by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforestated raw materials, namely, cement, sand, bitumen, furnace oil, HSD, lubricant, etc., are the raw materials required by the assessee for the manufacture of hot mix in the hot mix plant of the assessee. In the present case, recognition certificate was granted in respect of the said raw materials which has been subsequently withdrawn in view of the circulars dated January 17, 2001 and February 23, 2001 issued by the Commissioner. Assessee has purchased the aforestated raw materials at the concessional rate of duty. This was pursuant to the recognition certificate given by the A.O. (issuing authority) which is subsequently cancelled on account of the aforestated two circulars dated January 17, 2001 and February 23, 2001. Hot mix is a notified item. On May 21, 1994 State of U.P. have issued Notification No. TT-2-1623/XI-7(159)/91 U.P.Act-15/48-Order-94 which stated that with effect from June 1, 1994 tax shall be payable at the rate of two per cent on the sale or purchase as the case may be, by a dealer holding a valid recognition certificate under section 4B(2) of any raw material covered by such certificate which raw material shall be used in the manufacture of notified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as there was no transfer of property in the goods. Learned counsel urged that under the Act the word "sale" is defined to mean transfer of property in goods and it includes a transfer of property in goods involved in the execution of works contract. Learned counsel urged that by no stretch of imagination "roads" can constitute a notified item. It cannot also come in the definition of the word "goods" and, therefore, the assessee was not entitled to the recognition certificate under the Act. Learned counsel submitted that goods used in the works contract for construction of roads cannot come within the concept of "deemed sale" under article 366(29A) of the Constitution of India. Learned counsel further submitted that in the present case the department is not invoking the provisions of the Constitution. Learned counsel submitted that limited question involved in these civil appeals is: whether the case of the assessees came within section 4B(2) of the said Act. Learned counsel submitted that the very purpose of granting of recognition certificate is to give the benefit of concessional rate of duty to the assessee who buys raw materials for the manufacture of goods like doors, windows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h type of goods and not roads. According to the Commissioner, if the contractor utilises the said raw materials for construction of the roads then the contractor-assessee would not be entitled to the benefit of section 4B of the Act. Further, according to the Commissioner, the contracted road is an immoveable property whereas under section 4B of the Act the facility of buying raw materials was permissible only to the manufacturing dealer who sold the manufactured commodity and since roads were not saleable the manufacturer-assessee was not entitled to the benefit of section 4B. In the present case, raw materials are bought by the assessee which are used in the manufacture of hot mix which is utilised for road construction. These facts are not in dispute. The question before us is: whether on the said facts the department was right in denying the benefit of section 4B of the Act to the assessee? Therefore, there was no need for adjudication. "Value addition" is an important concept which has arisen after the Forty-sixth Amendment to the Constitution. Prior to the said Amendment this court had taken the view in State of Madras v. Gannon Dunkerley Co. (Madras) Ltd. AIR 1958 SC 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a single and indivisible contract there could be a "deemed sale" of the goods in the execution of a works contract. Such a deemed sale has all the incidents of a "sale" in cases where the contract is divisible into two parts one for sale of goods and the other for supply of labour and services. Similarly, in the case of State of Kerala v. Builders Association of India [1997] 2 SCC 183 See [1997] 104 STC 134 (SC)., it has been held that after the Forty-sixth Amendment goods transferred in the course of execution of the works contract are chargeable to tax under the Kerala General Sales Tax Act, 1963. In the present case, as stated above, the notifications issued by the State Government from time to time show that different rates were prescribed for declared goods and other raw materials. "Cement" fell in the category of declared goods whereas sand, bitumen, furnace oil, HSD, lubricant, etc., fell in the category of other raw materials. The said notifications also indicate notified goods. "Hot mix" fell in the category of notified goods. Under section 4B(2) of the Act the recognition certificate enabled the assessee to buy the above raw materials at concessional rate of duty provid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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