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TMI Blog2010 (9) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... of this court the following question of law under section 42 of the Haryana General Sales Tax Act, 1973 (in short, the Act ) arising out of its order dated April 12, 2006 passed in S.T.A. Nos. 482 and 483: Whether, on the facts and in the circumstances of the case, the receipts from the catering contract were taxable as sale of goods within the meaning of definition of 'sale' given in sub-clause (v) of clause (l) of section 2 of the Haryana General Sales Tax Act, 1973, as held by the Haryana Tax Tribunal as against the contention of the assessee that the same were taxable as 'works contract' within the meaning of definition given in clause (pa) of section 2 of the Act ibid.? The dealer-assessee is carrying on the business of catering. It entered into an agreement with the Management of Staff Training Colleges of State Bank of India and State Bank of Patiala for catering, house keeping and maintenance during the period from April 1, 2001 to August 5, 2001. The Assessing Authority created a demand of tax in respect of turnover under the contract in question. The plea of the assessee that the contract in question was works contract and did not involve any sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory obligations to provide meals-canteen facilities to the trainees but so far as the appellant is concerned, it had no such responsibility or liability and it was merely engaged in business activity in supplying the meals to the banks on payment. The purpose for which the meals were procured was irrelevant for the purpose of interpreting the taxing statute. The property in the goods, the meals, snacks, etc., was transferred to bank. Once they are supplied against payment the said transaction would amount to sale as it was for consideration. In these appeals the question is not of criminal or quasicriminal liability but is one of liability under a taxing statute. The authority in determining the liability of the appellant to pay sales tax cannot ignore the form and look at what is called the 'substance of the transaction'. Ex facie, the transaction is one in which the legal owner of the property transferred to another pursuant to a contract for a price, and that transaction must be regarded as a sale. The argument of the counsel for the appellant that supply of food is only incidental or ancillary transaction cannot be accepted in view of my above observations and discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The finding recorded by the third Member is as under: After going through the arguments of both side and considering the various citations and above-mentioned facts and circumstances combined together lead to clear conclusion that there is no merit in the plea of the learned counsel for the appellant especially because the definition of the 'works contract' contained in clause (pa) of section 2 of the HGST Act does not cover the agreement (contract) in question involved in the case in hand which is general in nature, whereas the definition of 'sale' envisaged in section 2(l)(v) of the Haryana General Sales Tax Act, 1973, is specific that the supply of food, snacks, drinks and tea, etc., involved in this case is sale which is liable to tax as sale and not as works contract and therefore no fault can be found in the impugned order of the first appellate authority who has confirmed the order of the Assessing Authority. To understand the matter clearly a glance over both the clauses will help in resolving the same. Section 2(pa) Works contracts ' Works contact means any agreement for executing for cash, deferred payment or other valuable considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2 of the HGST Act which is for executions of works like construction, repair of buildings, etc., and things concerning movable as well as immovable properties, etc., especially because it does not envisage the agreement concerning supply of food, etc., meant for human consumption. The learned counsel for dealer submits that total receipts from the catering contract could not be treated as taxable turnover and only that component of turnover which related to sale of goods could alone be covered by taxable turnover. Catering contract by nature is a contract having element of sales and service. Referring to the history of sales tax law, it was submitted that prior to the 46th Amendment to the Constitution, composite contracts of sale and service were not covered by the definition of sale as held in the judgment of the honourable Supreme Court in State of Madras v. Gannon Dunkerley Co. (Madras) Ltd. [1958] 9 STC 353. This interpretation was sought to be reversed by the Constitution (Fortysixth Amendment) Act, 1982 by incorporating, in the concept of sale, composite transactions or categories mentioned therein. In Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9A), unless the transaction in truth represents two distinct and separate contracts and is discernible as such, then the State would not have the power to separate the agreement to sell from the agreement to render service, and impose tax on the sale. The test therefore for composite contracts other than those mentioned in article 366(29A) continues to be Did the parties have in mind or intend separate rights arising out of the sale of goods? If there was no such intention there is no sale even if the contract could be disintegrated. The test for deciding whether a contract falls into one category or the other is as what is to the substance of the contract . We will, for the want of a better phrase, call this the dominant nature test. 50.. What are the goods in a sales transaction, therefore, remains primarily a matter of contract and intention. The seller and such purchaser would have to be ad idem as to the subject-matter of sale or purchase. The court would have to arrive at the conclusion as to what the parties had intended when they entered into a particular transaction of sale, as being the subject-matter of sale or purchase. In arriving at a conclusion the court would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of sales tax is correct. 28.. What, however, did not fall for consideration in any of the aforementioned decisions is the concept of works contract involving both service as also supply of goods constituting a sale. Both, in Tata Consultancy [2004] 137 STC 620 (SC); [2005] 1 SCC 308 as also in Associated Cement Companies Limited [2001] 124 STC 59 (SC); [2001] 4 SCC 593, what was in issue was the value of the goods and only for the said purpose, this court went by the definition thereof both under the Customs Act as also the Sales Tax Act to hold that the same must have the attributes of its utility, capability of being bought and sold and capability of being transmitted, transferred, delivered, stored and possessed. As a software was found to be having the said attributes, they were held to be goods. 29.. We have, however, a different problem at hand. The appellant admittedly is a service provider. When it provides for service, it is assessable to a tax known as service tax. Such tax is leviable by reason of a Parliamentary statute. In the matter of interpretation of a taxing statute, as also other statutes where the applicability of article 246 of the Consti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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