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TMI Blog2018 (4) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... rks contract and in such case, the appellants come under section 3B and is eligible for various deductions. When the appellants is eligible for various deduction, he is also eligible for deductions under section 3B 2(b) and also other deductions that are available under Section 3B. Revision petition dismissed. - T. C. Nos. 92 & 95 of 2018 - - - Dated:- 6-4-2018 - S. Manikumar And V. Bhavani Subbaroyan, JJ. For the Petitioner : Mr.V.Hari Babu Additional Government Pleader (Taxes) ORDER ( Order of the Court was made by S. Manikumar, J. ) Instant Tax Cases (Revision) are filed against the order of the Tamil Nadu Sales Tax Appellate Tribunal (AB), Madurai, dated 04.02.2002, made in Madurai Tribunal Appeal Nos.198, 199, 200, 201, 202, 203, 204, 205, 310/99 and 396/97 206, 207, 208, 209, 210, 211, 212, 213, 214, 215/99 and 422/00 respectively. 2. As instant Tax Case Revisions have been preferred on the same set of facts, they are taken up together and disposed of by means of a common order. 3. Short facts leading to filing of the revisions are that the Assessing Authority, in all the cases, determined the taxable turnover based on the return filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The finished product which has emerged had not suffered tax earlier. Therefore, the transfer of such goods during the course of execution of the works contract is a deemed sale as per Section 2(j), (n) of the TNGST Act. Thus, the dealers are not eligible for deduction of raw materials purchased according to Section 3(2)(b) of the TNGST Act. Since they have not used the raw materials purchased in the same form while executing the works contract, but utilised the same for manufacture of mosaic tiles which was ultimately used for executing the works contract. (ii) Appellate Tribunal has failed to note that the bills issued by the dealers, revealed that the dealers had charged only a gross amount of supply, laying and furnishing of mosaic tiles. The dealers have not charged separately for the value of goods supplied and labour charges, etc. Therefore, in the absence of the above details, the Assessing Officer had allowed a deduction of 30% on the total contract amount according to Section 3(2)(b) of the TNGST Act, which is quite reasonable and in conformity with law. (iii) Appellate Tribunal has failed to note that in the absence of value of mosaic tiles as per accounts, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them during the course of the execution of works contract and they have also claimed that the raw materials that had gone in for the execution of works contract had been purchased from local registered dealers and they have all suffered tax. They have also further stated that they got the records in support of their claim and it had also gone into the accounts. The main question that comes in for consideration is how the higher judicial forums had treated this kind of transactions has to be seen firs. Then various other factor can be discussed. The High Court of Madras in the case of Chandrasekaran Vs. State of Tamil Nadu reported in 78 STC 147 had held that, A contract of sale is a contract whose main object is the transfer of the property in and the delivery of the possession of chattel as a chattel to the buyer.... The contentions of the case for decision was for laying of mosaic tiles at a particular rate for particular area and not for more supply of tiles. The final bill made it clear that the contract was for only and indivisible and that it was indivisible works contract and not for a contract for sale of tiles and the fact that the customer had agreed to suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- Section 3-B levy of tax on the transfer of goods involved in the works contract. (1) Notwithstanding anything contained in sub-sections (2-A), (2-B), (3), (4) (7) and (8) of Section 3 or Section 7A but subject to the other provisions of this Act including the provisions of sub-section (1) of section 3, every dealer referred to in item (vi) of clause (g) of section (2) shall pay, for each year, a tax on his taxable turnover of transfer of property in goods involved in the execution of works contract at the rates mentioned in sub-section (2) of section 3 or as the case may, section 4. Explanation : Where any works contract, involves more than one items of work, the rate of tax shall be determined separately for each such item of work. (2) The taxable turnover of the dealer of transfer of property in the execution of works contract shall on and from 26th day of June 1986, be arrived at after deducting the following amounts from the total turnover of that dealer. (a) all amounts involved in respect of goods involved in the execution of works contract in the course of export of the goods out of the goods into the territory of India or in the course of Inter- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere as follows: Not withstanding anything contained in section 3, 4, 5, 7 or 7A, but subject to the other provisions of this Act, every dealer referred to in item (vi) of clause (g) of section 2 whose total turnover relating to the business of transfer of property in goods involved in the execution of works contract is not less than fifty thousand rupees and every casual trader or agent of a non-resident dealer in respect of such business whatever be his turnover for the year, shall pay for each year a tax on his turnover of transfer of property in goods involved in the execution of works contract mentioned in col.2 of Fourth each rule at the rates specified in the corresponding specific in column (3) of the said schedule . As per section 3B 2(B) of the TNGST Act'59, the amount for which any goods in the first schedule or second schedule are purchased from the registered dealers liable to pay tax under this Act and used in the works contract in the same form in which such goods were purchased are eligible for deductions. The appellants had claimed exemption under Section 3(B) 2(b) and he also relied on Commissioner of Commercial Taxes instructions for the goods that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant case also, the assessing authority had assessed 70% of the amount received towards contract as sale of tiles taxable at 16%. The case which had been referred is squarely applicable to the case on hand. The High Court had clearly held that it is a works contract and in such case, the appellants come under section 3B and is eligible for various deductions. When the appellants is eligible for various deduction, he is also eligible for deductions under section 3B 2(b) and also other deductions that are available under Section 3B. 14. After the Forty Sixth Amendment, a legal fiction was introduced. Whereby the works contract, which was entire and indivisible has to altered into a contract which is divisible into one for sale of goods and other supply of labour and services one position of a contractor in relation to a transfer of property in goods in the execution of works contract is not different from that of a dealer in goods who is liable to pay sale tax on the sale price charged form the customer for the goods sold. The sale price includes the cost of bringing the goods to the place of sale (97 STC 503 at 531). The amounts so deductible would have to be determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the TNGST Act'59. 16. The second issue related to the levy of penalty in respect of A.P.No.498/97, 497/97, 499/97 500/97, the appellants had stated that the assessment made is not a best judgement assessment and so penalty can not levied under Section 12(3)(b). As far as these assessment are concerned, the turnovers are available in the books of accounts. When the turnover is found in books of accounts and had been culled out for assessment, it can not be treated as suppression as per the decision of the Supreme Court reported in 28 STC 700 in the case of S.G.Jeyaraj Nadar and Sons. When it had been decided that the assessment is not a best judgement assessment and the turnover that had been taken for assessment and had not also been treated as suppression as it is found in the books, the penalty is not leviable. So, the penalty levied by the assessing authority is set aside. 17. In fine, the appeals in respect of A.P.No.490/97, A.P.502/97, A.P.501/97, A.P.503/97, A.P.504/97 and A.P.505/97 are REMANDED and in respect of A.P.No.498/97, A.P.497/97, A.P.499/97 and A.P.500/97 are PARTLY REMANDED AND PARTLY ALLOWED . 10. Against the above order of the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner has also gone through the entire records maintained by the appellants and had also given his categorical findings while disposing of all these cases. The learned counsel had further argued that the Appellate Assistant Commissioner while disposing all these appeals had stated that appellants had not maintained separate accounts for the various inputs they have utilized for the execution of works contract they have done. the learned counsel had further contended that the Appellate Assistant Commissioner having convinced that the appellants were maintaining separate stock accounts for the various inputs they have used for the execution of works contract instead of allowing these appeals had remanded the same back to the Assessing Officer for fresh consideration but in some cases confirmed the orders of the Assessing Officer. The contention of the learned counsel seems to be acceptable for the reason that the Appellate Assistant Commissioner had given his categorical findings in his orders that the appellants have maintained separate stock account for the various raw materials utilized for the purpose of execution of works contract. The learned counsel had further contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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