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TMI Blog2019 (7) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... n be levied on transfer of property in the goods whether as goods or in some other form whereas Rule 6(4)(m)(i) provides for a deduction in respect of the goods which have already suffered tax and which are used in the same form. Thus, it appears to be in clear consonance with the charging provision and does not militate against Section 5B of KST Act, 1957. This Court in State of Tamil Nadu Vs. Pyare Lal Malhotra and Others [ 1976 (1) TMI 151 - SUPREME COURT ] has held that if the separate commercial commodities emerge out of the goods already taxed earlier, the new commercial commodity is liable to sales tax provided there is a law to this effect - It can be inferred from this case that Sales tax can be levied on the same goods only once so long as they retain their identity of goods of a particular type, and If separate commercial commodities emerge out of the (goods already taxed earlier), then the said new commercial commodity is liable to sales tax. What emerges from the scheme of the Act and Rules framed thereunder is that Rule 6(4)(m)(i) purports to grant benefit to the assessee by allowing deductions for the value of goods which have already suffered taxation and which good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed deduction from the total turnover of such purchases in terms of Rule 6(4)(m)(i) of the KST Rules, 1957 as per which all amounts received or receivable in respect of goods purchased from registered dealers and used in the execution of works contracts in the same form in which goods are purchased, can be claimed as deduction from the total turnover. 4. The assessing Officer issued notices for provisional assessment for the years 1998-99, 1999-2000, 2000-2001, 2001-2002 and 2002-2003 to deny the deduction of the value of timber, purchased from the local registered dealers claimed under Rule 6(4)(m)(i) on the ground that the timber was not used in the same form in which such goods were purchased, while executing the works contract. It was further observed that for carrying out the interior decoration, the appellant purchased timber in log forms, plaster of paris, plywood, glass sheets and the said purchases have been manufactured to produce the goods which are necessary for interior decoration. The Assessing Officer further observed that as per Rule 6(4)(m)(i), the registered dealer purchases deductible from the works contract receipts is limited to transfer of the purchased goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantive provision being unconstitutional is liable to be struck down. 8. Learned counsel further submits that the High Court of Andhra Pradesh in the case of Media Communications Vs. Government of Andhra Pradesh 1997(105) STC 227(AP) struck down a pari materia provision (Section 5F of the A.P. General Sales Tax Act, 1957) on the premises that the said levy is contrary to the single point system of tax and cannot be accepted. Appeal filed by the Government of Andhra Pradesh against the said Order in SLP(C ) Nos. 6804-6849 of 1998 has been dismissed by this Court on 29th October, 1998 and in the light of the judgment of the High Court of Andhra Pradesh, Rule 6(4)(m)(i) read with Explanation III is not sustainable and deserves to be quashed. 9. Learned counsel further submits that provisional assessment under Section 28 of the KST Act cannot be invoked unless there is an assessment pending either for finalisation or assessment for escaped turnover under Section 12A for the assessment years 1998-1999 and 1999-2000. The assessment stood finalised on 25th February, 2002. The notice for provisional assessment was issued on 8th November, 2002. In the given circumstances, there was no o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submits that the judgment of Media Communications Vs. Government of Andhra Pradesh(supra) is wholly misplaced. In Media Communications(supra), the High Court relied on Telangana Steel Industries and Others Vs. State of A.P. and Others 1994 Supp(2) SCC 259 and recorded a finding that the first and second proviso to Section 5F of the A.P. General Sales Tax Act are ultra vires of the main provision. The fact is the High Court in Media Communications(supra) failed to notice that this Court in Telangana Steel Industries and Others(supra) has held that if two goods at hand be different commodities , the single point taxing principle would not debar realisation of tax once again. This what has been observed would not be construed as finding in affirmance in Media Communications case(supra) merely on dismissal of the special leave petition(s) preferred by the State of Andhra Pradesh. 14. Learned counsel further submits that whether the assessee/appellant was eligible under Rule 6(4)(m)(i) is a question of fact which will have to be determined in pending proceedings initiated pursuant to the impugned notices served upon the appellant. Since the provisional assessment has not been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arging provision which empowers the State to levy tax on the transfer of property in goods involved in works contract. At the same time Rule 6(4)(m)(i) read with Explanation III to Rule 6(4) of the KST Rules clarifies that the same goods can be taxed only once and cannot be made subject matter of multiple incidence of tax and the goods which have suffered taxation undergoes transformation into a different commodity altogether and is then used in the execution of a works contract, the same being a different commercial commodity is liable to be taxed. The justification which has been tendered by the appellant in reference to five notices impugned in the instant proceedings for the assessment years 1998-1999 to 2002-2003 is a question of fact to be examined by the assessing authority who has served him the notices. 19. We are clear, in our view, that Section 5B of the KST Act and Rule 6(4)(m)(i) of the KST Rules operate in different spheres. Section 5B is a charging provision for levy of sales tax whereas Rule 6(4)(m)(i) is a provision for deduction from tax. Under Section 5B, tax can be levied on transfer of property in the goods whether as goods or in some other form whereas Rule 6( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Such products cannot be regarded as cast iron and cannot be treated as declared goods under Section 14(iv) of the Central Sales Tax Act. This view is not in conflict with the view taken in the case of Bengal Iron Corpn. [1994 Supp (1) SCC 310: (1993) 90 STC 47], but it is in consonance with the decision in that case. 23. The same principle has been recently reiterated in B. Narasamma Vs. Deputy Commissioner of Commercial Taxes, Karnataka and Another 2016(15) SCC 167. In para 18 thereof, the principle of Pyare Lal Malhotra and Others(supra) quoted hereinabove is considered. Rule 6(4)(m)(i) came up for consideration in B. Narasamma(supra) where this Court after noting the said Rule came to the conclusion in para 23 as under: 23. On facts in this case, it has been found that the appellant is engaged in works contracts of fabrication and creation of doors, window frames, grills, etc. in which they claimed exemption for iron and steel goods that went into the creation of these items, after which the said doors, window frames, grills, etc. were fitted into buildings and other structures. On facts, therefore, we find that the High Court s judgment [State of Karnataka v. Anant Engg. Wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of this that we do not propose to decide the controversy at hand, which is whether iron wires are separate commercial goods from wire rods from which they are produced, by trying to answer whether they are one commercial commodity or separate. The point has however arisen for consideration because we are concerned with a single point sales tax, which would not allow taxing of the same commodity again. It is also not in dispute that if the two goods at hand be different commodities, the single point taxing principle would not debar realisation of tax once again from the sale of wires. Shri Tarkunde s whole emphasis is that goods in question cannot be regarded as two different commercial commodities. Let it be seen why this stand has been take by the learned counsel on behalf of the appellants and whether the same is sound? (emphasis supplied) 29. So far as the submissions made by the learned counsel for the appellant on merits in reference to the five impugned notices of provisional assessment served under Section 28(6) is concerned, whether the assessee was eligible under Rule 6(4)(m) (i) is a question of fact which has to be determined in the assessment proceedings and since t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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