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TMI Blog2002 (9) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,222.00 (ii) Penalty under section 16(1)(i) Rs. 42,444.00 (iii) Interest under section 11B Rs. 16,555.00 Total Rs. 80,221.00 For the year 1991-92: (i) Tax Rs. 20,740.00 (ii) Penalty under section 16(1)(i) (Rs. 41,480.00 (iii) Interest under section 11-B 3. These assessment orders were challenged before the Deputy Rs. 11,205.00 Commissioner (Appeals), Bikaner, who vide his order dated November 27, 1995 maintained the tax and interest amounts but set aside the penalty amount. Aggrieved by this order dated November 27, 1995 the applicant as well the non-applicant-firm filed two appeals each. The appeals of the department were against that part of the order whereby the penalty amount was set aside. As against this the appeals of the non-applicant-firm were against that part of the order whereby the tax and interest amounts were retained. Thus there was four appeals before the Tax Board which on May 22, 1997 dismissed the two appeals of the department and accepted the remaining two appeals of the non-applicant-firm. It is this impugned order dated May 22, 1997 which has been under challenge before us. 4.. We have heard the arguments and examined the material on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e chargeable to tax. The facts of that case are to be distinguished from those of the case in hand. The decision of the Rajasthan High Court was given in 1968 before Constitution (46th Amendment) Act, 1982 was put on the statute book. After 1982 the department is not required to prove that the sale of the material involved in the execution of the works contract has taken place. Once it is proved that the goods were supplied or delivered in the execution of a works contract it shall be presumed unless otherwise provided that the transfer of property in such goods has taken place. Once such goods are chargeable to tax, tax shall be levied as it is done in the case of sale of such goods. Such a view was taken by this Tribunal in the Revision Application No. 5 of 1997 (Chittlankia Cotton Ginning and Pressing Factory v. Commercial Taxes Officer) decided on October 13, 1997. 8.. We uphold that the iron strips and hooks used for fastening the cotton bales, which were supplied by the non-applicant-firm in the course of its job-works, are chargeable to tax for the reason that the property in these items passed from the non-applicant-firm to the awarder of the contract in the course of job- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal against the order of the Deputy Commissioner (Appeals) dated November 27, 1995. The Tax Board by its judgment dated May 22, 1997 dismissed the two appeals of the department so far as it relates to challenge penalty. The appeal filed by the assessee challenging the tax liability and the interest was allowed. In the opinion of the Deputy Commissioner (Appeals) it was not permissible for the assessing authority to reopen the case under section 12 of the Act. The department carried the matter in revision before the Rajasthan Taxation Tribunal. The Tribunal held that after the 46th Amendment in clause (29A) in article 366 of the Constitution, the department is not required to prove that the sale of the material involved in the execution of the works contract has taken place. The Tribunal found that the goods were supplied or delivered in the execution of the works contract and, therefore, there is a presumption that the transfer of the property of such goods has taken place. In view of the finding the Tribunal allowed the revision petition filed by the department and set aside the order of the Tax Board. 3.. It is contended by Shri S.L. Jain, learned counsel appearing for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over of such contract shall be subjected to tax, provided that such deductions, as may be prescribed, may be allowed to a contractor while determining his tax liability." 5.. By 46th Amendment Act, 1982 a new clause (29-A) was inserted in article 366 of the Constitution of India which provides that the transfer of property in goods involved in execution of works contract constitutes a sale or purchase of goods. Thus, there is a presumption of sale of items/goods used in the execution of works contract. Sub-clause (b) of clause (29A) is extracted as follows: "(29A) 'tax on the sale of purchase of goods' includes (a)............... (b) 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;". 6.. The sub-clause (b) makes it clear that transfer of property in goods (whether as goods or in some other form) was involved in execution of works contract which constitutes a sale or purchase of goods and as such tax can be levied thereon by the State Government by making the law under entry 54 of the State List. 7.. In support of the contention that in a use of packing material forming an integral part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (b) of clause (29A) of article 366 of the Constitution of India. In the opinion of the High Court the transaction did not involve transfer of any goods within the meaning of subclause (b) of clause (29A) of article 366 of the Constitution of India, it being purely a service contract. In our view, this case also does not advance the case of the petitioner. 10.. Learned counsel has also referred to a decision of apex Court in Rainbow Colour Lab v. State of Madhya Pradesh reported in [2000] 118 STC 9. In the said case the question involved was whether the job rendered by a photographer in taking photographs, developing and printing films would amount to a works contract "as contemplated under article 366(29A)(b) of the Constitution read with section 2(n) of the Madhya Pradesh General Sales Tax Act, 1958 for the purpose of levy of sales tax on business turnover of the photographers". The Court considering the law after the 46th Amendment held that now it was open for the State to divide the works contract into two separate contracts by a legal fiction, firstly contract for sale of goods involved in the works contract and consequently the supply of labour and service. The Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. In the said case the apex Court held that no straight-jacket formula can be made available by which one can distinguish a contract of sale from a contract for work and labour. It was further held that it is essential question of fact depending upon the intention of the parties by culling the same on an over all reading of other terms and conditions of a contract. 13.. The constitutional validity of sub-clause (b) of clause (29A) of article 366 of the Constitution of India came up for consideration before the apex Court in Gannon Dunkerley & Co. v. State of Rajasthan reported in [1993] 88 STC 204. The apex Court pointed out the consequence of the 46th Amendment to the effect that the contract which was single and indivisible has been altered by a legal fiction into a contract which is divisible into one for sale of goods and other for supply of labour and services and as a result such a contract which was single and indivisible has been brought at par with a contract containing two separate agreements. 14.. Thus, while it is true that it cannot be said that on passing of the 46th Amendment Constitution has conferred a larger power than what State had before in regard to pow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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