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TMI Blog2013 (12) TMI 1586X X X X Extracts X X X X X X X X Extracts X X X X ..... authority to impose tax. It cannot impose tax more than the tax prescribed in Section 15 of the Act - the Assessing Authority was justifies in levying on these iron and steel rods at 4%. Point of taxation - Held that: - the sale of goods takes place either by transfer of title or by delivery of possession or at the tome of incorporation of the goods in the course of execution of any works contract. It is a deeming provision. Therefore for any amount to be included in the turnover, the condition precedent in there should be a sale or delivery of possession or incorporation of the goods in the course of execution of any works contract. If none of these events have happened, there is no turnover, If consideration of entering into the works contract, if amounts are paid in advance as mobilization advance, that amount is paid to the contractor to take steps to execute the work. On the date of amount is paid, the contractor neither transfers title in the property nor delivers possession nor incorporates any goods in the work. Therefore the question of treating the advance amount paid as part of consideration for transfer of property in goods would not become turnover and therefore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .P. NO. 6/2012, S.T.R.P. NOS. 18/2012 217-227/2012, W.A. NO.3306/2011 W.A. NOS.5405-5415/2011, W.A. NO.4828/2010 W.A. NOS.5430-5494/2011 (T-KST), W.A. NO.740/2011 W.A. NOS.4273-4295/2011 (T-RES), W.A. NO.3441/2011 W.A. NOS.5394-5404/2011 (T-RES), W.A. NOS.16364/2011 16910-16923/2011 (T-RES). W.A. NO.3489/2011 W.A. NOS.5389-5393/2011 (T-RES). W.A. NOS.1214-1229/2012 (T-RES). S.T.R.P. NOS. 90/2012 300-304/2013,. S.T.R.P. NOS. 108/2011 246-268/2011, S.T.R.P. NOS. 314/2012 97-119/2013 G.Sarangran and K.S. Ramababran JJ. Judgement As common question of law in all these batch of cases, they are clubbed together and decided by this common order. However, for the purpose of clarity, the facts in W.P Nos. 29932-33/2009 and W.P. Nos. 29046-48 of 2009 are set out hereunder. FACTS IN W.P. Nos. 29932-33/2009 2. The petitioner- M/s. Nagarjuna Construction Company limited is a Public Limited Company. It is engaged in undertaking of trunkey projects and other works contracts for governmental authorities or other private bodies/parties. It is regularly assessed to tax, previously under the Karnataka Sales Tax Act ( hereinafter for short referred to as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reassessment and therefore, the proceedings initiated for the period March 2006 under section 39(1) of the KVAT act, 2003 was dropped. 4. The Joint Commissioner of Commercial Taxes by virtue of the power conferred on him under section 63(A) of the KVAT ACT, was of the view that the orders passed by the assessing authority were prima facie erroneous and prejudicial to the interest of the revenue of the State warranting interference. Therefore, he issued a show cause notice it is stated that in the schedule entry, works contract of civil works finds entry in serial No. 23 under the head All other works contracts specified in VI schedule and attracts taxes at 12.5%. However, the petitioner had offered the turnover of civil works at the rate of 4% and 12.5%, which is impermissible and not in accordance with the provisions of VI schedule to the KVAT Act.Then he has referred to the amounts involved in each subcontracts and was of the view that the taxable turnover in the works contract after allowing admissible deductions and exemptions is proposed to be subjected to tax at 12.5% only. Therefore, he also proposed to levy interest under section 36 of the KVAT act and also penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olated the provisions of the act and therefore, such orders are detrimental to the interest of the revenue and the revisional authority was justified in initiating proceedings under section 63A of the Act. The petitioner has challenged the show cause notice. A statutory remedy of preferring an appeal is provided under the Act, without exhausting the statutory remedy he has filed the writ petition. It is not maintainable. FACTS IN W.P. Nos.29046-48/2009 7. The assessee, M/s GR Engineering Private Limited is a dealer registered under the provisions of KVAT Act, 2003. During the month of October, 2008, they were awarded by Mangalore Refinery and Petrochemicals Limited, Mangalore (hereinafter referred to as MRPL for brevity), with the execution of composite works contract of residual designing, detailed engineering, procurement of materials and bought out components and fabrication, construction, errectyion, inspection, testing, supp;y and commissioning of four mrmbers of mounded LPG Storage system for refuinery project at MRPL on trunkey project. The work included like civil structural work such as earth exacavation, foundation work, cinstruction, erection of RCC retaining w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st respondent on 09.07.2009, and he verified the work orders issued by the contractee MRPL as also the Form A1 being the application made by the assessee before the Assisteant Commissioner of Central Excise, Mangalore and the license granted to it. After looking into the entire materials, the authorities came to the conclusion that the assessee was engaged in the activities of manufacturing of bullet tanks which are later to be installed in the MRPL project site. Thus the nature of work fell under the VI Schedule to the Act namely supply and installation of manufactured bullet tanks at the MRPL project site. Therfore, the authority came to the conclusion that even M.S.Plates/ sheets used as raw materials are declared goods, the goods manufacture namely bullet LPG tanks were altogether different commercial goods and liable to be taxed at the rate of 12.5%. The notice under section 39(1) of the Act, dated 18.08.2009 proposing to levy tax at the rate of 12.5% on th e amounts declared by the assessee was issued. He also proposed to levy penalty under section 72(2) of the Act for having understated the tax liability as well as interest under section 36 of the Act . The assessee filed de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such tax is leviable on the taxable turnover relating to transfer of property in goods whether as goods or in some other form, involved in the execution of the works contracts that are specified in the Sixth Schedule to the Act and at the specified therein. The levy is subject to the provisions of Sections 14 and 15 of the CST Act realting to declared goods. Though tax at 12.5% is applicable under Sl.No. 23 of the Sixth Schedule to the Act in respect of complete works contract involving transfer of property in goods, an exception is provided in section 4(1) (C) of the KVAT Act itself, that in respect of declared goods involved in the execution of the works contract, the rate of tax shall be as provided in Section 14 of the CST Act at 4%. Then relying of Section 7 of the Act It was held that, steel and steel products used as raw material bythe petitioners are incorporated into their civil works or other works contract in the same form except that the same may be fashioned to suit the requirement, before the same merge into the works which is thereafter identified as immovable property. At the time of incorporation, steel and steel products do not lose their nature or form and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of property, the iron and steel rods of various dimendions are not directly transferred to the building as such, but as skeleton structures in roof, columns, beams, structures. Such skeleton structures is not a declared goods under Section 14 of the Act and therefore, the levy of tax under item No. 23 of the Sixth ?Schedule of the Act is valid and cannot be found fault with at 12.5% she also contended in a wprks contract when advance amount is paid, it is towards the sale of property which is involved in the execution of the works contract and, therefore, the said amount has to be included in the total turnover as provided in the explanation and liable to pay tax and the learned single Judge was not justified in holding otherwise and declaring the said provisions as unconstitutional to this effect. 15. Per contra, the learned senior counsel appearing for the petitioner Sri Sarangan submitted that, in interpreting this provision one has to keep in mind the object with Sections 14 and 15 are enacted. The legislature wanted the goods mentioned in the aforesaid section which are in the nature of essential commodities to be available to all the persons throughout the country. Thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides that any advance paid to a contractor as part of the consideration of the goods involved in the execution of the works contract could be included in the total turnover in the month in which the execution of the works commences even before the goods are incorporated in the works? When the petitioner purchased M.S. plates/ sheets which are declared goods for use as a raw material when it was transformed into M.S.Section, at works site and before it was incorporated in the construction as bullet tanks, the levy of tax at the rate of 12.5%,treating as not a delared goods is valid? (W.P. Nos. 29046-48/2009? STATUTORY PROVISIONS 17. In order to answer these questions we have to look at the statutory provisions incorporated by the state Legislature under the Act. Section 3 of the KVAT Act reads as under:- 3. Levy of tax The tax shall be levied on every sale of goods in the State by a registered dealer or a dealer liable to be registered, in accordance with the provisions of this Act. The tax shall also be levied, and paid by every registered dealer or a dealer liable to be registered, on the sale of taxable goods to him, for use in the course of his b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ything contained in Sub-section (1), a registered dealer shall be liable to pay tax on the sale of Cigrattes, cigars, gutkha and other manufactured tobacco, on the maximum retail price indicated on the label of the container or pack thereof, after reducing from such maximum retail price an amount equal to the tax payable to the dealer as the consideration for sale of such goods exceeds five hundered rupees or any other higher amount as may be notified by the Commissioner. Where tax in respect of his purchase of goods is collected in accordance is collected with sub-section(5),- A registered dealer whose sale of such goods is not liable to tax under sub-section (5) shall be eligible for refund or adjustment of any amount of tax collected on his purchase, which is in excess of the tax payable on his turnover relating to sale of such goods, and the burden of proving that the tax has been collected and paid in accordance with the said sub-section shall be on the dealer; A person who is not a dealer liable to get registered under the act, may claim refund of any amount paid by the selling dealer in excess of the tax payable on the consideration paid by him to such dealer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of declared foods within a state.- Every sales- tax laws of a state shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely :-- (a) the tax payable under that law in respect of any sale or purchase of such goods inside the state shall not exceed four percent of the sale or purchase price thereof. 21. These provisions in the CST Act, 1956, has been enacted in pursuance of Article 286 of the constitution and in particular clause (3) which was introduced by way of substitution by the 46 th amendment which came into effect on 12.02.1983. 22. The Apex Court in the case of MODI SPINNING AND WEARING MILLS CO. LTD. VS. COMMISSIONER OF SALES TAX, PUNJAB AND ANOTHER REPORTED IN (1965) STC V.60 PAGE 310, interpreting Clause (3) of Article 286 of the constitution of India and Section 14 of the Central sales tax Act, has held as under:- Section 14 of the Central Sales Tax Act Declares certain goods to be of special importance in inter-state trade or commerce and mentions cotton of all kinds in unmanufactured state, whether ginned or unginned. Section 15 then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been vested with the power to impose tax on such declared goods, tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed 5% of the sale or purchase price thereof. 24. Section 4(1) (c) of the value added Tax Act, specifically provides for levy of tax on declared goods. It provides that in respect of transfer of property in goods whether as goods or in some other form involved in the execution of works contract specified in column (2) of Sixth Schedule, the tax leviable is at the rate specified in the corresponding entries in column 3 of Sixth Schedule. However, this is subject to Sections 14 and 15 of the central Sales Tax Act, 1956. Therefore, though the State Legislature is empowered to levy tax in respect of transfer of property in goods whether as goods or in some other form, if such goods are covered under Section 14 and 15 of the CST Act their power to levy tax is curtailed and they cannot impose tax more than what is prescribed under Sections 14 and 15. POINT NO. 1-POWER OF THE STATE TO LEVY TAX ON DECLARED GOODS 25. The Apex Court in the case of STATE OF MADRAS VS. GANNON DUNKERELY CO. REPORTED IN (195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y consideration, and the other for payment of remuneration for services and for work done. In such a case, there are really two agreements, though there is a single instrument embodying them, and the power of the State to separate the agreement to sell from the agreement to do work and render service and to impose a tax thereon cannot be questioned, and will stand untouched by the present judgement. 26. Therefore, if the contract is indivisible and from the contract it is not possible to make out what is the value of the material and what is the value of the service rendered and then the State legislature had no competence to levy tax in respect of the materials involved in the execution of the works contract. 27. After this judgement, the parliament brought in 46 Amendment to the constitution inserting clause 29A as under:- 366.(29A) tax on the sale or purchase of goods includes- xxx xxx xxx 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. 28. The Apec court in BUILDERS ASSOCIATION OF INDIA AND OTHERS VS. UNION OF INDIA AND OTHERS REPORTED IN (1989) STC VOL.73 PAGE 370, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s wherever it occurs in the constitution so that it may include within its scope the transfer, deliver or supply of goods that may take place under any of the transactions referred to in sub-clause (a) to (f) thereof wherever such transfer, delivery or supply becomes subject to levy of sales tax. So construed the expression tax on the sale or purchase of goods in entry 54 of the State List, therefore, includes a tax on transfer of property in goods(whether as goods or in some other form) involved in the execution of a works contract also The tax leviable by virtue of sub-clause (29-A) of article 366 of the Constitution thus becomes subject to the same discipline to which any levy under entry 54 of the State list is made subject to under the Constitution. The position is the same when we look at article 286 of the constitution. Clause (1) of article 286 says that no law of a state shall impose, or authorize the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place-(a) outside the state; or (b) in the course of the import of the goods into, or export of the goods out of , the territory of India. Here again we have to read the expression a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose some other restrictions or conditions which are not generally applicable to all kinds of sales. That however cannot take the other parts of Article 286 in applicable to the transactions which are deemed to be sales under Article 366 (29A) of the Constitution. We are of the view that all transfers, deliveries and supplies of goods referred to in clause (a) to (f) of clause (29-A) of Article 366 of the constitution are subject to the restrictions and conditions mentioned in clause (1) , clause (2) and sub-clause (a) of clause (3) of Article 286 of the Constitution and the transfers and deliveries that take place under sub-clause (3) of Article 286 of the Constitution and the transfers and deliveries that take place under sub-clause (b),(c) and (d) of clause (29-A) of Article 366 of the constitution are subject to an additional restriction mentioned in sub-clause (b) of Article 286 (3) of the Constitution. xxxx xxxxx We, therefore, declare that sales tax laws passed by the legislatures of States levying taxes on the transfer of property in goods (whether as goods or in some other form ) involved in the execution of a works contract are subject to the restrictions and conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, the expressions defined in that article have the meanings respectively assigned to them in that article, The expressions goods is defined in clause (12) of Article 366 of the constitution as including all materials, commodities and articles. It is true that in the State of Madras v. Gannon Dunkerley co. (Madras) Ltd., (Supra) this court held that a works contract was an indivisible contract and the turnover of the goods used in the execution of the works contract could not, therefore, become exigible to sales- tax. It was in order to overcome the effect of the said decision Parliament amended Article 366 by introducing Sub-Clause (b) of Clause (29-A). Sub Clause (b) of clause (29-A) state that tax on the sale or purchase of goods include among other things a tax on the transfer of property in the goods (whether as goods or in some other form ) involved in the execution of a works contract. It does not say that a tax on the amount pais for the execution of a works contract. It refers to a tax on the transfer of property in goods (whether as goods or in some other form ) involved in the execution of a works property in goods whether as goods or in some other form). The latt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-clause (b) of clause (29-A) of Article 366 which is deemed to be a sale of goods and the tax leviable thereon would be subject to the terms of clause (1) of Article 286. Similarly the restrictions mentioned in clause (2) of Article 286 of the constitution which says that Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1) of Article 28+ would also be attracted to a transfer of goods contemplated under Article 366 (29A) (b). Similarly clause (3) of Article 286 is also applicable to a tax on a transfer of property referred to in sub clause (b) of clause (29-A) of Article 366. Clause (3) of Article 286 consists of two parts. Sub clause (a) of clause (3) of article 286 deals with a tax on the sale or purchase of goods declared by parliament by law to be of special importance in inter state trade or commerce, which is generally applicable to all sales including the transfer, supply or delivery of goods which are deemed to be sales under clause (29-A) of Article 366 of the constitution. If any declared goods which are referred to in section 14 of the central Sales Tax Act, 1956 are involve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the goods which are involved in the execution of a works contract and the measure for levying such a tax can only be the value of the goods so involved and the value of the works contract cannot be made the measure for levying the tax. The submission is further that the value of such goods would be the cost of acquisition of the goods by the contractor and ,therefore, the measure for levy of tax can only be the cost at which the goods involved in the execution of a works contract were obtained by the contractor. On behalf of the states, it has been submitted that since the property in goods which are involved in the execution of a works contract passes only when the goods are incorporated in the works, the measure for the levy of the tax would be the value of the goods at the time of their incorporation in the works as well as the cost of incorporation of the goods in the works. We are in agreement with the submission that measure for the levy of the tax contemplated by article 366 (29-A) (b) is the value of the goods involved in the execution of a works contract. In Builders Association case [1989] 73 STC 370 (SC); [1989] 2 SCR 320 it has been pointed out that in Article 366 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly of labour and services; other similar expenses relatable to supply of labour and services profit earned by the contractor to the extent it is relatable to supply of labour ans services; The amounts deductible under these heads will have to be determined in the light of the facts of a particular case on the basis of the material produced by the contractor. We may, however, make it clear that apart from the deductions referred to above, it will be necessary to exclude from the value of the works contract the value of the goods which are not taxable in view of section 3,4,and 5 of the Central Sales Tax Act and goods covered by Sections 14 and 15 of the Central Sales Tax Act as well as goods involved in the execution of a works contract will have to be exclusions from the value of the works contract. RATE OF TAX: A question has been raised whether it is permissible for the state legislature to levy tax on deemed sales falling within the ambit of Article 366(29-A)(b) by prescribing a uniform rate of tax for all goods involved in the execution of a works contract even though different rates of tax are prescribed for sale of such goods. The learned counsel for the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 and 5 and sections 14 and 15 of the Central Sales Tax Act, 1956 are applicable to a transfer of property in goods involved in the execution of a works contract covered by article 366(29-A) (b) While defining the expression sale in the sales tax legislation it is open to the state Legislature to fix the situs of a deemed sale resulting from a transfer falling within the ambit of article 366(29-A) (b) but it is not permissible for the state legislature to define the expression sale in a way as to bring within the ambit of the taxing power a sale in the course of interstate trase or commerce, or a sale outside the state or a sale in the course of import and export. The tax on transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract falling within the ambit of Article 366(29-A) (b) is leviable on the goods involved in the execution of a works contract and the value of goods which are involved in the execution of works contract and would constitute the measure for imposition of the tax. In order to determine the value of the goods which are involved in the execution of a work contract for the purpose of levying t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he very title of the Article 366 shows, it is the definition clause. It starts by saying that the Constitution unless the context otherwise requires the expressions defined in that article shall have the, meaning respectively assigned to them in article. The definition of expression tax on sale or purchase of the goods is contained in Clause (29-A). If the first part of vlause 29-A is read with the sub-clause (b) along with latter part of this clause, it reads like this : tax on the sale or purchase of a goods includes a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a work contract and such transfer, delivery or supply of any goods shall be deemed to be a sale ot those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer delivery, or supply is made. The definition of goods in clause 12 is inclusive. It includes all materials, commodities and articles. The expression, goods has a broader meaning from merchandise. Chattels or movables are goods within in the meaning of Clause 12 Sub-Clause (b) refers to transfer of property in goods (whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eemed as goods. The definition of tax on sale or purchase of goods includes a tax on the transfer or property in the goods as goods or which have lost its form as goods and have acquired some other form involved in the execution of a works contract. Therefore a legal fiction is created by this deeming provision providing for sale of goods at the time of incorporation of the goods in the course of execution of any works contract. The liability to tax even inrespect of declared goods is to be determined at the time of acquisition or purchase of such goods which is involved in the execution of contract but at the time of incorporation of any woks contract. As held by the Apex Court, a contractor cannot insist that the value of the goods for the purpose of levy of tax cannot be taken as the value of acquisition of goods. It has to be the vale of the goods at the time of incorporation of the goods in to the works contract, there is no change of form, then the value of the goods at the time of incorporation would be the same as the value of the goods at the time of acquisition. If after acquisition of the goods, before incorporation, the goods is transformed into a different form, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into between the parties which came up for consideration in that case was one to do certain work and to supply certain materials and not an agreement for the sale or delivery of the goods. Accordingly, no sales tax was payable thereon. In 1932 the legislature intervened and amended the statue of 1930 by introducing a new provisions, section 3(4) in the following terms: For the purpose of this Act, a person shall be deemed to have sold goods, if in the performance of any contract (not being a contract for the sale of goods) under which he has received, or is entitled to receive, valuable consideration, he supplies goods the property in which (whether as goods or in some other form ) passes, under the terms of the contract, to some other person. After the Above amendment there arose a case in Australia regarding the liability of a goods involved in a works contract, namely M.R. Hornibrook (pty.) Ltd. V. Federal Commissioner of Taxation.,[1939] 62 CLR 272. The relevant facts involved in that case were these. M.R. Mornibrook (pty.) Ltd. Was a builder and a contractor and in addition to manufacturing ironwork and goods for use in contracts undertaken, manufactured items of plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to receive valuable consideration he supplies goods, the property in which (whether as goods or in some other form) passes under the term of the contract to some other person. In my opinion the commissioner is right in his contention that this provision applies to the present case. The appellant- company, in the performance of a contract for buildings a bridge under which contract it was entitled to receive and doubtless has received valuable consideration, has supplied goods, namely, reinforced concrete piles. Such piles are Plainly manufactured articles. They are chattels. They were intended to be incorporated in a structure and were so incorporated. They lost their identity as goods in that structure. But this fact does not prevent the piles from being goods any more than it prevents bricks or stones or nuts and bolts from being goods. The fact that the goods were specially manufactured and designed for a particular purpose cannot be held to deprive them of the character of goods. Sub-clause (b) of Clause (29-A) od Article 366 of the constitution of India more or less has adopted the ;language used in section 3(4) of the Australian Act. 35.From the aforesaid facts, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld squarely come under entry No. 6 of the sixth schedule to the Act. Keeping this aspect of the matter in view, the Tribunal has accepted the reasoning of the revisional authority while confirming the order passed by the revisional authority. 37. Therefore, what follows from the aforesaid judgements is that, the iron and steel is purchased from the contractor are not used in the same form as iron and steel at the time of incorporation of the same in the construction of the bridge, the liability of the tax at serial No.23 is attracted. If the iron and steel purchased by him is used in the same form, it continues to be a declared goods of serial No. 23 is not attracted. The State has no power to levy tax more than what is prescribed under Section 15 of the Act. Therefore, the said judgment has no application to the facts of this case. 38. Then reliance is placed on the judgement in the case of ALGURAM HARINARAYAN RAM VS. ASSISTANT COMMISSIONER OF SALES TAX, CUTTACK RANGE REPORTED IN 1971 V. 27 STC PAGE 385, wherein at paras 3 and 4 it has been held as under :- 3.xxxxxxxxxxxxxxxxx Even though the longer iron rods are cut into pieces, they continue to remain as iron rods. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, if the iron and steel continues to be in the same from the time it was purchased and after it was incorporated in the buildings or any work undertaken, it continues to be a declared goods at the time of incorporation the power of the state to levy tax over and above what is prescribed under the CST is not permissible. 41. In the instant case, it is not in dispute that the petitioner purchased iron and steel for the purpose of execution of works contract. The nature of work involved is civil work. The iron and steel which is purchased by the petitioner is used in casting beams, pillars, slabs and roofs. For the purpose of casting the said roofs, beams, iron and steel is cut to a particular size and then are arranged in the shape of beams , pillars, roofs with the help of binding wire. Thereafter, concrete mixture is poured into it. Merely because iron and steel are cut into a particular length depending on the requirement and they are bound by wire and converted into a particular shape, the iron and steel do not lose their original characteristics. It continues to be the same product. Even after these beams, pillars, roofs are cast, the rod and steel continues to be in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of property in goods (whether as goods or in some other form) involved in the execution of works contract including any amount paid as advance to the dealer as a part of such consideration The total amount paid or payable to the dealer as the consideration for transfer of the right to use any goods for any purpose(whether or not for specified period); The total amount payable to the dealer as the consideration in respect of goods delivered on hire purchase or any system of payment by installments; The aggregate of the sale prices received by the dealer in respect and receivable by the dealer in respect of sale of any goods in the course of inter-state trade or commerce and export out of the territory of India and sale in the course of import into the territory of India; and The value of all goods transferred or despatched outside the state otherwise than by way of sale 46. By notification dated 27.05.2006, a explanation was inserted with effect from 01.04.2006. The said Explanation reads as under: Explanation.- Any amount paid as advance to a dealer as a part of consideration for transfer of property in goods(whether as goods or in some other form) involved i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, which defines the tax on the sale or purchase of goods includes a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works cpontract. 51. Section 7 of the KVAT Act, reads as under:- 7. Time of sale of goods Notwtihstanding anything contained in the sale of Goods Act, 1930 (central Act 3 of (1930, for the purpose of this Act, and subject to sub-section(2), the sale of goods shall be deemed to have taken place at the time of transfer of title or possession of incorporation of the goods in the course of execution of any works contract whether or not there is receipt of payment Provided that where a dealer issues a tax invoice in respect of such saled within fourteen days from the date ot the sale, the sale shall be deemed to have taken place at the time the invoice is issued. Where, before the time applicable in sub-section (1), the dealer selling the goods issues a tax in respect of such sale of receives payment in respect of such sale, the sale shall, to the extent that it is covered by the invoice is issued or the payment is received. The commissioner may on an application of any dealer e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed LPG, storage system package for phase III- refinery project of MRPL, Mangalore- This includes residual process engineering, design detailed engineering preparation of drawing, schemes, procurement of material, supply fabrication, construction, erection, assembly, inspection testing cathodic protection, civil works, structural work and RCC retaining wall, concrete tunnels around mound vessels piping work and steels electrical and instrumental works, fire protection system, Pumps and instrumentation, insulation, fire proofing, site insulation of pumps, gauges providing temporary works and equipments for completion pre-commissioning, commissioning, required tools and tackles complete all work in respect of trunkey basis and system performance gurantee of LPG storage and transfer system to the entire satisfaction of inspection authority and engineering in charge. Dimendion of Mounded Vessels 1.Number of Vessels- 4 Nos. 2. Diameter- 7000 mm each 3. Length- 97,058 mm each 4. Weight- 956 MT each 5. Thickness of plate 48MM, 45 MM, 42 MM As per the drawings are procured from steel Authority of India Ltd. For quantity of 3800 mt. The plates so procured are used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the name of the petitioner. The total costs towards supply of bullet section inside the Refiners Bullet Section is ₹ 20.47.80.859. The basic excise duty paid is ₹ 2,04,78,086/- From the aforesaid description it is clear that the plates so procured are used in the execution of works contract, i.e. for making sections. The plates are rolled as per required diameter by using rolling machine. The two ends are joined by welfing. These sections are painted and are transported to the mound site to place on the foundation where piece by piece it is erected, installed and welded and fixed to the earth. After all sections are installed it becomes a vessel called bullet vessel. Therefore, at the time of incorporation, the goods whixh is transported is not in the form of plates but in the form of sections. Therefore, the contention that at the time of incorporation, the goods do not lose the character of a plate cannot be accepted. In fact these plates are purchased for the purpose of manufacturing of bullet tanks. Having regard to the size and weight of the bullet tank each mounded vessel consists of 11 sections and these sections are fabricated and processed at the yard and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be declared goods at the time of incorporation. Before incorporation. Before incorporation there is value addition to the steels plates by the process of manufacture. Therefore, the prohibition contained under section 15 of the CST is not attracted and the state legislature has the power to levy tax in terms of Item No.23 of Sixth Schedule on these goods as it does not fall within any of the categories mentioned from Item Nos. 1 to 22 and also for the reason that it is not a declared goods as stipulated under section 14 of the CST Act. 61. In that view of the matter, the authorities were justified in levying tax at 12.5% in terms of Item No.23 of Sixth Schedule on the bullet tanks. 62. All the connected revision petitions were allowed by the Karnataka Appellate Tribunal relying on the Judgement of the learned single judge and accordingly, the appeal were allowed. It is against that order, the state has preferred these revision petitions before this court. In view of the fact that we have upheld the order of the learned single judge, insofar as levying of tax on iron and steel well as the provision relating to liability of tax on advance is quashed, the said revision petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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