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TMI Blog2017 (11) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... es Tax Appellate Tribunal (Main Bench), Chennai, for the assessment years 2003-04 and 2004-05 respectively. 2. Both the Tax Case Revision Petitions have been filed, on the following substantial questions of law, 1. Whether manufacturing of new product out of inter-State purchase of Iron sheets into pipes in the State of Tamil Nadu by way of job work, would attract tax in the contract of supply and erection of pipes under section 38 of the TNGST Act, 1959? 2. Whether interstate purchase of Iron sheets would be eligible for exemption under sub-section (a) of section 38 of the TNGST Act 1959 even after conversion into new product of pipes to fulfill the obligation under contract? 3. When the respondent taken delivery of Iron sheets and handed over the same to job works for conversion of the same into spiral pipes, whether it would confer the transaction still under inter-State trade or commerce after taking delivery of the goods so purchased from interstate? 4. Is the inter-State purchase has been terminated when delivery is taken by the respondent, whether the State of Tamil Nadu is competent to levy tax or subsequent sale of pipes involved in the contract exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Tax Appellate Tribunal (Main Bench), Chennai, in T.A.Nos.180/2007 and 92 of 2011, dated 01.09.2015, held that assessments made on the turnovers represented as deemed sale value of Steel pipes used in Works Contract for the assessment years 2003-04 and 2004-05, under TNGST Act 1959, are not in order and accordingly, set aside the order of the first appellate authority, in respect of turnover relating to the above works contract. Being aggrieved by the same, the present Tax Case (Revision) petitions have been filed. 8. In support of the substantial questions of law raised, Mr.Kanmani Annamalai, learned Additional Government Pleader (Taxes) submitted that the order of the TNSTAT(MB), dated 01.09.2015, is not sustainable, as per the section 3(B) of the TNGST Act 1959. He further submitted that the Tribunal has failed to consider the fact of change of the identity and emergence of a new commodity, and thus, failed to accept the stand taken by the department and exempted under Section 3-B(2)(a) of TNGST Act. 1959. According to him, commodity Iron and Steel (HR Coil) would fall under Section 14 of CST Act, 1956, classified in Entry iv(vi), which states that, sheets, hoops, strips ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t erred in law in assessing the relative value with reference to inter-State purchase of goods. The tax levied on the value of goods involved with reference to unregistered purchases and used in the works contract also is proper. He therefore submitted that the order of TNSTAT(MB), Chennai, is contrary to the law and that the Tribunal also failed to take note of the transfer of goods in the form of spiral pipes, after losing the identity of HR Coil, purchased from outside the State. 13. Repelling the abovesaid submissions, Mr.V.Sundareswaran, learned counsel appearing for the respondent in both the cases, submitted that the issue is squarely covered by a decision of the Hon'ble Division Bench of this Court in The State of Tamil Nadu v. M/s.Sun Paper Mill Ltd., reported in 2009 (23) VST 191 (Mad.), wherein, this Court negatived the very same submissions, made by the State. 14. Heard the learned counsel appearing for the parties and perused the materials available on record. 15. Before adverting to the rival submissions of the parties, it is relevant to extract Section 3 of the Central Sales Tax Act, as follows: 3. When is a sale or purchase of goods said to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Project and Services Centre and another v. State of Tripura. Hence, tax could be levied on those inter-State sales by the State from which these goods were purchased and not by the State of Tamil Nadu and hence deduction has to be allowed on the impugned turnovers being the value of inter-State purchase by the appellants and moved to be work site in Tamil Nadu. In view of the foregoing discussions, it is clear that the liability to tax in respect of Works Contract under Section 3-B of Tamil Nadu General Sales Tax Act, 1959 is on the value of goods transport and the goods may be either in the form, in which it was purchased or in some other form. In the present case, HR sheets in coils were purchased from M/s.SAIL in pursuance of the contract entered with CMWSSB and the entire movement of goods were in connection with its contract only. The item of HR sheets in coils used as raw-materials by the appellants are incorporated into the Works Contract the same form except the same may be fashioned to shoot their requirement of CMWSSB before the same merge into the works which is thereafter identified as immovable property. At the time of incorporation, HR sheets in coils do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,324/ - taxable at 4% represented as deemed sale value of CI Pipes used in the execution of Works Contract, it is seen that the Assessing Officer had levied tax at 400 on the deemed sale value of CI pipes used in the execution of Works Contract by adding 7.70% gross profit on the purchase value of CI pipes. Admittedly, even at the time of hearing before this forum, the learned counsel for the appellants did not file and produce any supporting documentary evidence on record to the effect that they were exempted from tax. In the circumstances,. we find no valid reasons to interfere with the order of the lower authorities on the assessment made on the impugned turnover. Hence we hereby order to uphold the order of the first appellate authority in this regard. Accordingly, this point is answered. 20. With regard to the assessment made on the turnover of ₹ 2,51,347/- taxable at 16%, ₹ 44,500/- taxable at 10%, ₹ 3,99,636/- taxable at 12%, ₹ 1,84,500/- taxable at 4% and ₹ 9,92,428/- taxable at 4%, it is seen that the Assessing Officer had levied appropriate rate of tax on the deemed sale value of Metal, RCC pipes, MH cover, Bricks etc., used in the execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Press (P) Limited, Sivakasi and then the same were moved to Kerala. Therefore, the assessing Officer assessed the said turn over under the Tamil Nadu General Sales Tax Act, 1959. Aggrieved by that order, the assessee has filed an appeal before the Appellate Assistant Commissioner(CT), Tirunelveli in CST AP No.345/95. The Commissioner allowed the appeal on the ground that the movement of goods from the State of Tamil Nadu to Kerala would certainly form an inter-state transaction. Later, the Joint Commissioner (CT)(SMR) suo motu revised the order of the Appellate Assistant Commissioner and treated the transaction as local sales and held as follows: Looking at the above circumstances, it is found that the goods moved from the assesee to Sivakasi as a result of the sale. What happened later is that the concern of the assessee had no connection what so ever after the dispatch of paper to given basis. What moved out of the state were only news magazines and not news print with which the assessee is concerned. Therefore, the sales would fall under the local Act,s purview and the order of the Appellate Assistant Commissioner is not proper, therefore, liable to be set aside. Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 214 and A G Projects and Technologies Ltd., v. State of Karnataka reported in (2009) 19 VST 239 and on the facts and circumstances of the case, at Paragraph 10, a Hon'ble Division Bench of this Court in Sun Paper Mills' case (cited supra), held as follows: 10. After taking note of the principles enunciated in the above Supreme Court judgments, we have to find out whether there is movement of goods. The present case falls under Section 3(a) of the Act. There are two ingredients in the section. i.e. (i) it must be a sale of goods; (ii) the sale occasions the movement of goods from one State to another. In respect of sale, there is no dispute. We have to see here whether there is sale occasioning the movement of goods. In the case on hand, the seller and the buyer contemplated in movement of goods from Tamil Nadu to Kerala. At the instruction of the buyer, the goods were despatched to Sivakasi, wherein conversion took place and after conversion, the goods were moved to Kerala. Because of conversion, it cannot be held that there is no movement of goods. It is only for the purpose of Section 5(3) of the Act that any goods undergoing commercial change is relevant. It is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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