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TMI Blog1997 (3) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... competence and unconstitutional. They have also prayed for a direction to quash the assessment orders. 3.. One of the main questions that arises for consideration is whether the nature of the transaction carried out by the petitioner is a works contract or not. The issue relating to the works contract had been settled. But the case of the petitioner is that a similar question involved was referred to a Division Bench in O.P. No. 14939 of 1995 wherein a Division Bench passed an interim order directing the authorities to proceed with the assessment as proposed, but the final recovery would await orders for the Division Bench. In the right submission I called for the reference order in the said original petition. When the matter came up o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, to be declared as unconstitutional. The said argument cannot be accepted in the light of the charging section, section 5 which imposes tax on taxable turnover and the taxable turnover is excluding the purchase or sale in the course of inter-State trade or commerce which has been upheld by the learned Judge and confirmed by the Division Bench. A similar provision found in the Karnataka Sales Tax Act was upheld by the Supreme Court in Builders' Association of India v. State of Karnataka [1993] 88 STC 248; AIR 1993 SC 991. Before the Supreme Court it was contended that Explanation 3, which is similar to the explanation now we are concerned with, which fixes the situs of the sale, has the effect of converting a transfer which is an int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of the C.P. and Berar Sales Tax Act when the goods are actually at that points of time when the contract of sale was made. The Supreme Court considered the question that sale being the transfer of property in the goods agreed to be sold, they have to enquire if the property in the goods which fetched the sale proceeds on which the sales tax is sought to be levied was transferred in the Central Provinces as contemplated in the main definition or if those goods were actually in the Central Provinces at the time when the contract for sale as defined in the Sale of Goods Act in respect thereof was made as required by Explanation II set out above. The agreement was that the buyer should, with the assent of the seller, appropriate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer of the right to use goods is irrelevant and under the impugned Act, the State of Maharashtra has assumed power to levy tax on such transfer of the right to use goods which are located in the State of Maharashtra at the time of their use. In our view, the said provision contained in the explanation to section 2(10) does not result in bringing inter-State sales or sales taking place outside the State of Maharashtra within the scope of the impugned Act.................We have already pointed out that after clause (29A) was inserted in article 366, tax on sale or purchase of goods included, inter alia, tax on transfer of the right to use for any purpose goods for cash, deferred payment or other valuable consideration. Therefore, the validit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade or commerce under section 3 of the Central Sales Tax Act or an outside sale under section 4 or a sale in the course of import under section 5 has to be decided in the light of the particular terms of the works contract and it cannot be decided in the abstract. The Supreme Court also held that the taxable event is the transfer of property in goods involved in the execution of a works contract and the said transfer of property in such goods takes place when the goods are incorporated in the works, the value of the goods which can constitute the measure for the levy of the tax has to be the value of the goods at the time of incorporation of goods in the works and not the cost of acquisition of the goods by the contractor. Therefore it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the KGST Act. The assessment officers allowed 20 per cent of the direct receipt towards labour charges and the balance was treated as taxable turnover. When the matter was taken up before the Tribunal the matter was remanded to the assessing officer to examine whether the transaction of the petitioner is as a result of inter-State sale or a local sale. Thereafter after giving notice under section 17(3) the officer proposed to verify the conditions and agreements and revealed that the purchaser, after the completion of the works by the seller, would inspect and the price would be paid only after satisfying that the supply and installation was in conformity with the purchase order. The property in the goods did not pass to the buyer unti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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