9911796707
TMI Blog2008 (2) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... sthan VAT Act, 2003, Central Sales Tax Act, 1956 and the Rules framed thereunder. The company engaged in manufacture of lead, zinc and allied metals and it has is own mines. In the regular course of business, the petitioner company awarded various mining contracts to the contractors wherein cement and steel are required to be used. The petitioner company is required to use explosives for winning minerals from its mines. This operation includes explosions and is got done on job work basis in the field of the petitioner under strict control and supervision of explosive experts. For use of explosives the petitioner company is required to obtain licence from the competent authority under the Explosive Act, 1884 and as per the statutory condition of licence, the petitioner cannot re-sale the explosives purchased for its own use. The petitioner has placed on record the copy of the explosive licence. The petitioner company purchased the explosives against declaration form ST17 on payment of concessional rate of tax as stipulated under Section 10(1) and 10(3) of the Act of 1994. According to the petitioner explosives have been mentioned in the certificate of registration of the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apparent from the copy of the licence placed on record by the petitioner. The petitioner company cannot sale the explosives and has not sold it out to anybody. The petitioner company gave these explosives to its contractor only for using the explosives in petitioner's own mining operation. The explosives exhausts in the mining operation and after its use nothing remained in the hands of the contractor. As per the contract between the petitioner and its contractor, the contractor could have used the explosives within the mining field of the petitioner and that too, under the strict control and supervision of the explosives experts. Therefore, no legal title of the goods had passed on to the contractor. The petitioner company could have used its explosives through its own labour for its own consumption and as per Sub-section (3) of Section 10, the petitioner was entitled to purchase the goods for its mining operation on payment of lower rate of tax i.e., @ 4% on furnishing a declaration duly filled under form ST14. The petitioner consumed the explosives in its mining operation is not in dispute, therefore, the petitioner fulfilled all the conditions of Sub-section (3) of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 155. Facts of which case was slight different but Learned Counsel for the petitioner relied upon this judgment in support of his argument that since the explosives exhausts in the mining operation therefore, cannot be transferred to the petitioner company by the contractor, therefore the goods in the hands of the contractor is not a commodity acquired by sale. 7. Learned Counsel for the petitioner also relied upon the judgment of this Court delivered in the case of Bharat Sanchar Nigam and Anr. v. Union of India and Ors. reported in 2006(14) TU 185. 8. Learned Counsel for the revenue submitted that in the present case the petitioner not only delivered the explosives to its contractor but also recovered the cost of the explosives from the contractor and this fact is not in dispute. Therefore, the transaction of sale stands completed by delivery of goods to the contractor engaged by the petitioner for execution of their works contract and receipt of the sale consideration by the seller -petitioner company. Sale is not determined from the fact that how the purchaser (contractor) has used or consumed the goods or where the purchaser (contractor) has used the goods. The complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with the supply of explosives to the contractors by the petitioner-Company in these matters. The revenue treated the supply of those explosives to the contractors by the petitioner as transaction of sale, as defined under Sub-clause (ii) of Subsection (38) of Section 2 of the Rajasthan Sales Tax Act, 1994. The contention of the petitioner is that the said transaction is not sale for the reasons mentioned above. 12. Sub-clause (ii) of Sub-section (38) of Section 2 of the Act of 1994 is as under: (38) Sale with all its grammatical variations and cognate expressions means every transfer of property in goods by one person to another for cash, deferred payment or other valuable consideration and includes(i) ... (ii) a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (iii) ... (iv) ... (v) ... (vi) ... 13. When the word is defined in the Act itself then there is no need to take help of definition given in any other Act nor dictionary meaning is needed to see the meaning of the word. When any transaction is specifically included in any definition in the Act that transaction is required to be given its effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods to the assessee from PWD. By appropriation and by the agreement, there was a sale as envisaged in terms of clause of the contract. Here in present cases also, it is not in dispute that the explosives were handed over physically to the contractors and the petitioner-Company received the cost of explosives from the contractor by deducting the cost of explosives from bills of contractor, therefore, with the passing of the goods in the hands of the contractors from the petitioner for consideration, the transaction of sale stands concluded. Transaction is not dependent upon the ultimate use of the goods, transferred to the contractors, as the goods which may have been sold to the contractors for valuable consideration, may be returned to the Principal, if remained unused and the goods in different form may be returned to the Principal and the goods may be consumed or exhausted in the works contract. The transaction of sale completes with the passing of the goods for consideration in the hands of the contractors. Hon'ble the Supreme Court even in a case rejected the contention of the assessee that title in the property never got transferred to the contractor and the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty and that is subject matter relating to the title to the property and consequential rights of the purchaser, which is governed by general law governing the subject of sale of property. As stated above, the sale is defined in the Rajasthan Sales Tax Act, 1994. Tax Act is for specific purpose and and do not depend upon other law for the purpose of levy of tax or for finding out the nature of transaction, if the taxing law itself has defined the transaction and included the transaction in any of the category of transaction for the purpose of levy of tax. The taxing law may not be a substantive law determining the property rights of the parties involved in the transaction and, therefore, the separate definition of sale has been given in the Act of 1994. Certain transactions, which may fall short of sale in general law have been included in the transaction of sale statutorily in the Act of 1994 and that is why the transaction in question is deemed sale and may not be actual sale so as to pass on title in property to the vendee-the purchaser. The illegal transaction of sale may not pass on title of property to the vendee but still it is sale for the purpose of Act of 1994. An illegal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods which are consumed and exhausted in the execution of works contract and nothing remains with the contractor then the transfer of those consumable goods to the contractor, cannot be treated to be sale even under deeming clause of sale. The Learned Counsel for the petitioner for this purpose, relied upon the judgment of the Hon'ble Supreme Court delivered in the case of Gannon Dunkerley Co. and Ors. v. State of Rajasthan and Ors. 1993(88) STC 204. 25. It appears that in the case of Gannon Dunkerley(supra), a different question also cropped up which was with respect to the determination of the value of the goods which are involved in execution of the works contract. The value of the goods involved in works contract were of two types; one where value of goods involved in works contract was known and another where its actual cost is not known. In former case there is no difficulty in levying the tax. In later case a formula for determining the value of goods involved in works contract was worked out after taking into consideration the suggestions of contractors and suggestion came from the State that more convenient mode for such determination is to take the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he explosive is not falling in either labour charges nor it is service provided to the contractor. As per Clause (e) referred above, the consumable items are only the items used ancillary in works contract and those can be water, electricity and fuel etc., as these items are not the goods transferred to the contractor in execution of works contract and providing above or like items, the contractor is given some facilities by the Principal engaged in works contract. In mining operation, the main article with which operation can be given effect to, is the explosive and that explosive can be put to blast with the help of electricity, which may be generated or obtained from different source. The explosive is the item like cement, iron etc, for which tax is leviable. In mining operation, fuel is consumed to run the machinery like in other works contract and the machineries are run by electricity and fuel and in that process, there may be consumption of water. Therefore, the explosives are not those consumable items which can be equated with the water, electricity or fuel. When in the definition clause or a list prescribing certain items, is not exhaustive and uses the words-27 such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 then was entitled to benefit under Sub-section (3) of Section 10 of the Act of 1994. The declaration form ST17 is a composite declaration form covers all the transactions and if the purchase falls in any of the category given in the form ST17 or under Rule 23 then consequence is only one that tax will be levied at concessional rate of tax and in this case @ 4% only. Therefore, even if the declaration given in ST17 form may be found wrong merely on the ground that the declaration is not falling in particular category and it is found that it falls in another category then that cannot be said to be a violation of declaration and it is a technical mistake only cannot have penal consequence of charging full rate of tax. For this purpose we may examine relevant provisions of law. 31. Section 10 of the Act of 1994 allows sale and purchase of certain goods on payment of concessional rates of tax. The petitioner's -30 contention is that he was entitled to purchase the explosives on payment of concessional rate of tax under Section 10 of the Act of 1994 in view of the fact that the explosives have been shown in the certificate of registration of the petitioner company as raw-materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be sale then it is sale of tax paid goods, therefore, the same cannot be subject to tax second time even if it was sold to the contractor (in law) because sale was within State and as per Section 4 tax is one time tax. 33. It is also submitted that the Rule 23 prescribes form ST17, which is the declaration given before purchasing of the goods of concessional rate by the dealer and it very specifically provides that a purchase may be for re-sale within the State as per Sub-clause (i) in form ST17 in consonance with the of subclause (i) of sub-rule (1a) of Rule 23 of the Rajasthan Sales Tax Rules, 1995. In this form itself as per Clause (iv) the dealer can give declaration about the goods purchased that above -33 goods will be used as processing articles under Sub-section (3) of Section 3 of Section 10 of the Act of 1994 The petitioner's declaration in form ST17 was submitted under Sub-clause (iv) of sub-rule (1a) of Rule 23 of the Rules of 1995 and it is found that it has been falling in other clause of Rule 23 then it cannot be said that the petitioner-dealer has violated any of the conditions of form ST17 merely because of describing its purchased goods in different cate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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