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TMI Blog2000 (1) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... ds Act, 1930 (Central Act 3 of 1930), for the purpose of this Act, the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract shall be deemed to have taken place in the State, if the goods are within the State at the time of such transfer, irrespective of the place where the agreement for works contract is made, whether the assent of the other party is prior or subsequent to such transfer:" 4.. The validity of this provision was challenged before the apex Court in Builders' Association of India v. State of Karnataka [1993] 88 STC 248. It was observed that: "A perusal of clause (t) shows that in the main part the expression 'sale' has been defined and in the inclusive part of the said definition, subclauses (i) to (iv) reproduce sub-clauses (a) to (d) of clause (29-A) of article 366. Explanation (3) contains three clauses, whereby the situs of the sale is fixed. Clause (a) of explanation (3) contains the words 'other than the sale in the course of inter-State trade or commerce or in the course of import or export' which means that a sale or purchase of goods in the course of inter-State trade or commerce or in the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this is the view expressed by the Full Bench in conclusions 3 and 4 in the East India Cotton Manufacturing Company's case [1993] 90 STC 221 (P H) [FB]. This is also the position that emerges from the decision of the Supreme Court in Gannon Dunkerley Co. v. State of Rajasthan [1993] 88 STC 204." This Court in India Equipment Leasing Ltd. v. Deputy Commissioner of Commercial Taxes, Assessments VIII, Gandhinagar, Bangalore [1998] 111 STC 403 has considered the effect of explanation 3(d) in the context of section 5(c) and came to the conclusion that the inter-State transaction would not be subjected to tax under the Karnataka Sales Tax Act. 5.. The main stress of the learned Government Advocate is that the property itself has been transferred in the State of Karnataka. The word "sale" which has included the works contract in its ambit refers to supply of goods for money consideration under a contract and delivery in pursuance thereon. If the contract itself contemplate movement from one State to another, passing of the property in either State is immaterial as held in Oil India Ltd. v. Superintendent of Taxes [1975] 35 STC 445 (SC): "No matter in which State the property in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and quantities shall be removed from the premises of the Corporation by the company within 10 (ten) days after the intimation in that behalf from the Deputy Manager (Materials), D T, Cuddapah region or their representatives and returned duly retreaded within 20 (twenty) working days from the date of removal of the tyres to the Deputy Manager (Materials), D T, Cuddapah. If the tyres are not removed by the company within 10 (ten) days of receipt of the intimation, the Corporation shall have the right to impose the penalty of Rs. 5 (five rupees only) per tyre per day after expiry of 15 (fifteen) days period till the date company remove the tyres from the premises of the Corporation. If the company fails to deliver the retreaded tyres within the period stipulated, viz., 20 (twenty) working days from the date of lifting the tyres, the Corporation shall have the right to impose a penalty of Rs. 5 (rupees five only) per tyre per day after the expiry of 20 (twenty) working days till the date the company delivers the retreaded tyres." 9.. Before the assessing authority it was submitted that: (a) That the execution of works contract to Andhra Pradesh State Road Transport Corporation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t India Cotton Manufacturing Company Limited v. State of Haryana [1993] 90 STC 221)." 11.. According to the revising authority the assessee has undertaken works contracts of retreading of tyres belonging to Andhra Pradesh State Road Transport Corporation. From this it is clear that the assessee has taken delivery of tyres to be retreaded and after completion of the work, deliver the same. Thus property in goods always remains with the employer and value of goods involved in execution of works contract passed immediately after the work. Therefore, it is a local works contract and not inter-State works contract as contemplated by the assessing authority. Hence, it is taxable at 8 per cent. In Builders' Association of India v. State of Karnataka [1993] 88 STC 248 (SC) the following principles were laid down: "(1) In exercise of its legislative power to impose tax on sale or purchase of goods under entry 54 of the State List read with article 366(29-A)(b), the State Legislature, while imposing a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract is not competent to impose a tax on such a transfer (deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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