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TMI Blog2022 (4) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices Ltd. (TCS) to be a works contract and liable for tax under the provisions of the Act. The petitioner also challenges the order of the learned Tribunal dated 20.02.2020 to the extent it is held that the works contract is zero rated under Section 21 A of the Act. The learned Tribunal had interpreted the nature of contract entered by the petitioner with TCS to be two separate contracts and should be considered according to the nature and purpose for which they have been entered into. This finding of the learned Tribunal has not been challenged by the petitioner. The petitioner also challenges the order passed by the learned Tribunal in a review application in R.W. 02 of 2020 to the extent that it holds if any agreement satisfies any condition of Section 2(57) of the Act, it should be termed as "works contract" even if there is payment towards labour charges as also the finding of the learned Tribunal that no grounds are made out to review the order passed by it. The facts which are necessary and relevant for disposal of the writ petition are as hereunder: 2. The case of the petitioner was selected by the Commissioner of Commercial Taxes under Section 46 read with Section 66 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Tribunal challenging the final assessment order dated 26.06.2019 and also to declare the works contract to be zero rated under Section 21 of the Act. The learned Tribunal framed the following points for consideration which are as follows: 1) Whether the works contract, as defined in Section 2(57) and levied tax by section 14 of the West Bengal VAT Act comes under the sale simpliciter on the analogy that works contract is a deemed sale. 2) Whether the consideration money of works order or simply works contract is exempted from tax in view of section 21 A of West Bengal VAT Act and schedule AA. 3) Whether those respective purchase orders and works order be taken as a sale or as a work order or the both orders should be dealt separately subject-wise, as mentioned in the subject column of those respective orders. 4) Whether the findings of respondent No. 1 of both the applications and the orders under challenge are tenable and substantial in law or whether it requires intervention from this Tribunal. 4. The point Nos. 1 and 2 were answered against the petitioner and point Nos. 3 and 4 were considered and directions were issued by partly allowing the appeals filed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be a sale of those goods by the person making the transfer and a purchase of those goods by the person to whom such transfer is made. The provision makes it abundantly clear that there must be transfer of property in goods in the execution of works contract to levy tax even if it satisfies any of the conditions in Section 2(57) of the Act. Reliance was placed on the decision of the Hon'ble Supreme Court in Larsen and Toubro Ltd. And Another Versus State of Karnataka and Another (2014) 1 SCC 708, wherein it was held that for sustaining the levy of tax on goods deem to have been sold in execution of a works contract, three conditions must be fulfilled, namely, i) There must be a contract; ii) The goods should have been involved in the execution of a works contract and iii) The property in those goods must be transferred to a third party either as goods or in some other form. 5.2 It is submitted that if the interpretation of the authority is to be accepted and the contract is to be treated as works contract then the petitioner is entitled to treat the transaction as zero rated transaction under Section 21 A of the Act. The learned Advocate referred to Section 2(39) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieu of valuable consideration and (iii) the categories referred to in Clauses (a) to (e) in Section 2(39). 6.1 It is submitted that the definition section proceeds to state that such transfer, delivery or supply of any goods shall be deemed to be sale of those goods. By use of the word "deemed" of a legal fiction is created in Section 2(39) of the Act and is relatable to the five categories mentioned in Clauses (a) to (e) in Section 2(39). It is submitted that if the definition of "sale" as defined under Section 2(39) is compared with the definition of "works contract" under Section 2(57), it is seen that there is no such deeming provision. 6.2 It is submitted that Section 14 of the Act commences with a non-obstante clause and states that transfer of property in goods involved in the execution of works contract shall be deemed to be a sale. Therefore, the deeming provision creates a legal fiction and in construing the scope of such fiction, it is proper and necessary to assume all those facts on which alone fiction can operate and for this purpose, the limits within which and the purpose for which the legislature has created a legal fiction is to be determined. Further it is subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t arise as to be entitled to the benefit it must be a simple "sale" or a "deemed sale" as defined under Section 2(39) of the Act. Reliance was placed on the decision of the Hon'ble Supreme Court in Commissioner of Customs (Import), Mumbai Versus Dilip Kumar & Company & Ors. (2018) 9 SCC, for the proposition that any exemption or incentive or concession extended in a taxation statute should be strictly construed and if there is any ambiguity, the interpretation should be in favour of the revenue. Reliance was placed on the decision in Larsen and Toubro Limited to explain the scope of the 46th Amendment to the Constitution. 7. We have elaborately heard the Learned Advocate for the parties and carefully perused the materials placed on record. 7.1 The entire case of the petitioner rests upon the interpretation of the various provisions of the Act. To put the case of the petitioner in simple terms is that the nature of transaction done by the petitioner was held to be a works contract and deemed to be a sale. If the works contract is deemed to be a sale, then it should fall within the definition of sale as defined under Section 2(39) of the Act and if it is held to be a sale, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale is admissible. Section 14 deals with liability to pay tax on transfer of property in goods involved in the execution of works contract. Sub-Section (1) of Section 14 commences with a non-obstante clause and states that notwithstanding anything contained elsewhere in the Act, any transfer of property in goods, involved in the execution of works contract in West Bengal shall be deemed to be a sale of those goods by the person making the transfer and a purchase of those goods by the person to whom such transfer is made. Section 15 deals with liability of a casual dealer to pay tax. Section 16 deals with levy of tax on sales and Section 16 A deals with levy of tax on sales by casual dealer and Section 17 deals with levy of tax on turnover of purchases and Section 17 A deals with levy of tax on purchases by casual dealers. Section 18 deals with levy of tax on taxable contractual transfer price and these are all the charging sections in respect of the sales referred therein. 7.5 Section 21A deals with zero rated transaction. Sub-Section (1) states that notwithstanding anything contained in Section 16 or 16 A (charging sections), sale of goods between person whether dealer or not or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e definition should not be restricted. This argument is by relying on the decision in the case of Larsen and Toubro which explains object of insertion of Clause 39A in Article 366 of the Constitution. 7.7 Thus, we have to consider as to whether by including Clauses (a) to (e) in Section 2(39) the provision becomes inclusive and wide interpretation has to be given and a "deemed sale" also should be treated as a "sale" under Section 2(39) and by doing so if the deemed sale is effected in SEZs should it be treated as "zero rated". 7.8 It may be true that Section 2(39) uses the expression "includes". But what has been brought within the inclusive definition of sales or the types of transactions enumerated in Clauses (a) to (e) above. This becomes clear on reading the provision further i.e. after Clause (e) which uses the words "and such". By use of the words "and such" would mean that such of the transfers, delivery of goods, transfer of right to use goods, supply or service or supply of goods, as mentioned in Clauses (a) to (e) alone can be treated to be the inclusive part of the definition of "sale" as defined under Section 2(39) of the Act. It is those 5 categories of transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the illustrative list it cannot be taken out of the purview of the definition of "sale" is an argument which is unacceptable.
7.11 We have assigned reasons as to how Clauses (a) to (e) in Section 2(39) has to be read and merely because the word "includes" has been used in Section 2(39) it does not become an inclusive definition to be given widest meaning but the inclusive definition has to be given a restricted meaning by restricting it to the categories of transactions in Clauses (a) to (e) as such. Thus, the argument that the beneficial provision has not been extended to the petitioner is unacceptable and the decision in the case of ITC Classic Finance is clearly distinguishable on facts and there is no hyper-technical interpretation adopted by the respondent and the respondent department and the findings of the tribunal on Point Nos. 1 and 2 which are framed for consideration is sustainable.
8. For all the above reasons, the petitioner has not been made out any grounds to interfere with the order of the tribunal.
9. In the result the writ petition fails and is dismissed. No costs.
(T.S. SIVAGNANAM, J.)
I agree
(HIRANMAY BHATTACHARYYA, J.) X X X X Extracts X X X X X X X X Extracts X X X X
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