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TMI Blog2015 (11) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... the SEZ area. Such goods were used in the execution of the works contract, which is not even disputed by the appellant. Appellate authority has failed to appreciate the fact that it is not possible to abide by sub-rule (2A) of rule 42 of the rules having regard to the nature of the contract which is a works contract wherein the goods which are sold to the buyer, are used in the execution of the works contract and it is only after execution that the invoices are raised. This court is, therefore, in agreement with the view adopted by the Tribunal that rule 42(2A) of the rules cannot be held to be mandatory in nature and that the endorsement on the purchase bills obtained by the respondent assessee is sufficient compliance with the provisions of sub-rule (2A) of rule 42 of the rules. - it cannot be said that the impugned order passed by the Tribunal suffers from any legal infirmity so as to give rise to any question of law, much less, a substantial question of law as proposed or otherwise - Decided against Revenue. - Tax Appeal No. 614 of 2015 - - - Dated:- 11-9-2015 - Harsha Devani And A. G. Uraizee, JJ. For the Appellant : Mr Maithili Mehta, Asstt Govt Pleader For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and demanded tax with interest and penalty under the Act. The assessee went in appeal to the Deputy Commissioner of Commercial Tax (hereinafter referred to as the first appellate authority , before whom it was submitted that the goods were sold to Adani Power Limited which is a co-developer and, therefore, the assessee was entitled to exemption as zero rated sale under section 5A of the Act. It was brought to the notice of the first appellate authority that the purchase bills were endorsed by the customs/SEZ authorities before their entry into the SEZ for use in execution of the works contract. The first appellate authority, however, dismissed the appeal on the ground that the running bills which were issued by the assessee to Adani Power Limited did not bear the endorsement of the customs/SEZ authority. For this purpose, the first appellate authority placed reliance upon rule 42 (2A) of Gujarat Value Added Tax Rules, 2006 (hereinafter referred to as the rules) and accordingly, confirmed the levy of tax on the sales made to Adani Power Limited as well as the interest and penalty imposed by the assessment order. The assessee carried the matter in further appeal before the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee is engaged in the execution of works contracts and that having regard to the nature of the contract in question, it was not possible to obtain endorsement of the customs authority on the running bills submitted to Adani Power Limited. It was submitted that the Tribunal, in the facts and circumstances of the case, has rightly construed the provisions of sub-rule (2A) of rule 42 of the rules to be directory in nature. According to the learned advocate, even if it were to be accepted that there was non-compliance of sub-rule (2A) of rule 42 of the rules, in the light of the provisions of section 21 of the Gujarat SEZ Act, 2004, which exempts all sales and transactions within the processing area of the zone or in the demarcated area or between the units in the processing area and the demarcated area, from all taxes, cess, duties, fees or any other levies under any State law to the extent specified therein, even otherwise, such transactions were not amenable to tax. The attention of the court was invited to the decision of this court in the case of Torrent Energy Limited v. State of Gujarat, (2014) 71 VST 582 (Guj.), wherein the court has held that by virtue of the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciple of accretion. Therefore, at the time of entry of goods into the SEZ area, there is no sale to the SEZ unit or to the developer, but the sale takes place at a later point of time. In view thereof, the assessee with a view to ensure compliance with the provisions of the SEZ law as well as requirement of endorsement of bills with a view to claim exemption from tax as zero rated sale, obtained the endorsement of the concerned authority on the purchase bills for goods which entered the SEZ area. Such goods were used in the execution of the works contract, which is not even disputed by the appellant. The assessee raised running bill to Adani Power Limited on achievement of milestone as stipulated in the works contract. Since the bills were raised after the goods had entered the SEZ area and after they had been used in the execution of the works contract, endorsement of the customs authority/ SEZ authority on such running bills was not possible. However, the State authorities have adopted an adamant and hypertechnical approach in insisting upon endorsement of the customs authority on the invoices itself. The appellate authority has failed to appreciate the fact that it is not possi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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