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TMI Blog2023 (5) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... , Goods and Dealer given in the GST Act, the transfer of goods or property in goods utilized in the execution of works contract is a sale exigible to tax under the GST Act. This finding of fact and the conclusion drawn on the basis of the definitions of Sale, Goods and Dealer given in the GST Act has been upheld by the Appellate Authority as well as the Tribunal - Once the questions of law framed by the Tribunal are appreciated in the aforesaid backdrop, it would clearly transpire that, having regard to the definitions of Goods, Dealer and Sale given in the GST Act, the services provides in the shape of works contract, whether divisible or indivisible involving transfer of property or not, fall in the definition of the term goods and any such transaction shall be deemed to be a sale by the person making the same. Handing over of the goods and material to the contractors for construction and laying of power grids, sub-stations and transmission lines of the assessee did not involve the transfer of right to use goods. Not only the ownership and dominion over the goods handed over to the contractors remained vested with the assessee, but the transfer or handing over of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. As a matter of fact, the goods and materials purchased by the assessee from outside the State were utilized by the contractors as per the directions of the assessee in raising the construction of various transmission lines, power grids and sub-stations etc. Principle of consistency - Tribunal was bound by its earlier orders in the cases of applicant itself as they have attained finality or not? - whether the Tribunal should not hold otherwise than what has been settled by its earlier Benches? - HELD THAT:- Not only the Tribunal but all the Authorities subordinate to it are bound to follow and comply with the law laid down by the Tribunal. This is necessary to maintain judicial discipline and avoid uncertainty in law. The Tribunal may, in appropriate cases, take a view different from the one taken by it earlier if there is change in law or the fact situation in the context whereof the law was declared by it earlier. The Assessing Authorities or the Statutory Appellate Authorities under the GST Act cannot and should not take a view on question of law contrary to the view taken by the Tribunal. Such conduct of the Authorities shall be gross impropriety and indis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with it and the contractors are only engaged to execute the work on payment of labour charges. It is the specific case of the assessee that since no property in goods is transferred to the contractors, as such, no payment against such material handed over to the contractors, to be used in the execution of works of the assessee, is charged. It is, thus, claimed that since the assessee was not making any local sales under the GST Act, as such, was not initially registered under the Act. However, in compliance to the notice, the assessee appeared before the Assessing Authority and on the advice of the later, it filed the returns with nil turnover. The Assessing Authority, however, did not accept the contentions of the assessee and held that as the assessee had taken registration under the CST Act to import goods from outside the State against C-Forms, was therefore, a dealer . It was the plea taken by the Assessing Authority that only a dealer, who is registered as such under CST Act can use C-Forms to purchase goods for personal use. It was, thus, concluded by the Assessing Authority that the transactions made by the assessee were liable to tax. Consequently, the Assessing Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors for using the same in the works contract for the projects of the assessee was taxable under GST Act ?. Referring to the definitions of Dealer , Goods and Sale , contained in Section 2 of the GST Act till 15.05.1997, it was concluded by the Tribunal that the Assessee was a dealer supplying goods defined under Section 2(h)(ii) and 2(h)(iv) of the GST Act upto 15.05.1997 and after 15.05.1997, the works contract, whether divisible or indivisible, involving transfer of property or not, would be deemed to be a sale by the assessee in terms of Section 2(g)(i-b). It was further opined by the Tribunal that before 15.05.1997, the term sale under Section 2(L) included goods involved in the execution of the contract. Post 15.05.1997, the position is much clear i.e transfer of right to use goods etc. was also held to be a sale as defined in Section 2(L) (v). The Tribunal, however, set aside the orders of the Assessing Authority to the extent and insofar as these pertain to imposition of penalty and levy of interest. The appeals were, thus, partly allowed. 3 The assessee was still not satisfied and, therefore, moved an application before the Tribunal under Section 12-D of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lves following steps: (i) purchase of material; (ii) handing over the material to the contractors for construction purposes; (iii) contractors hand over the possession of the works to the assessee after its due execution; and, (iv) the entire work including equipments and assets after completion get transferred to the State or other utilities/organizations. 6 It is, thus, held by the Assessing Authority that the transaction i.e transfer of equipments/assets erected and established by the assessee either itself or through sub-contractors is tantamount to execution of works contract by the assessee and, therefore, by the definitions of Sale , Goods and Dealer given in the GST Act, the transfer of goods or property in goods utilized in the execution of works contract is a sale exigible to tax under the GST Act. This finding of fact and the conclusion drawn on the basis of the definitions of Sale, Goods and Dealer given in the GST Act has been upheld by the Appellate Authority as well as the Tribunal. 7 Once the questions of law framed by the Tribunal are appreciated in the aforesaid backdrop, it would clearly transpire that, having regard to the definitions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not intoxicating) way of or as part of any service or in any other manner whatsoever with or without any other amenity; (iii) on hire purchase or any system of payment by installments notwithstanding that the seller retains the title to any goods as security for payment of price; (iv) in the course of supplies or distribution by a society or a club or any association or any other body of persons, whether or not incorporated; and, (v) transfer of the right to use any goods, for any purpose (whether or not for a specified period), and the word purchase shall be construed accordingly. Explanation 1. A transfer of property in goods for cash or deferred payment or other valuable consideration, whether on licence, permit or otherwise shall notwithstanding that such goods are controlled goods be deemed to be a sale. Explanation 2. (a) The sale of goods shall be deemed, for the purpose of this Act to have taken place in the State, wherever the contract of sale might have been made, if the goods are within the State: (i) In the case of specific or ascertained goods, at the time the contract of sale is made; and (ii) in the case of unascertained or futu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration is, whether goods purchased by the assesseee from outside the State against C-forms and in its capacity as a registered dealer under CST Act have been used in the execution of works contract. Indisputably, the goods and the material purchased by the assessee against C-forms from outside the State by way of inter-State sale has been used in the construction and laying of power grids, sub-stations and transmission lines of the assessee. It is, however, not clear from the record as to whether the works contract executed by the assessee through its sub-contractors is actually handed over to the State or other utilities/undertakings. From deep scrutiny, we could only find that the assessee, after erecting grid stations, sub-stations and transmission lines, provides facility of transmission of electric energy to the State and other utilities/undertakings by levying transmission charges. Whether the works executed by the assessee through its sub-contractors involving the use of goods and material are executed for and handed over to the States, other utilities or undertakings, is not clear from the record. As a matter of fact, this aspect has not been considered either by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovement or repair of movable or immovable property; (iii) growing crops, grass, trees, plants including the produce thereof and other things attached to or forming part of the land which are agreed to be served before sale or under contract of sale; and (iv) right to use any goods for any purpose, whether or not, for a specific period. 14 Similarly the definition of Sale during the period w.e.f 15.05.1997 to 08.11.2004 was as under: Sale with all its grammatical variations and cognate expressions means any transfer of property in goods (otherwise than by mortgage, hypothecation, charge or pledge) by any person for cash with or deferred payment or for any other valuable consideration and includes a transfer of property in goods or in some other form: (i) xxxxxxx (ii) being eatables including food or any drink (whether or not intoxicating) way of or as part of any service or in any other manner whatsoever with or without any other amenity. (iii) on hire purchase or any system of payment by installments notwithstanding that the seller retains the title to any goods as security for payment of price. (iv) in the course of supplies or distribution by a soci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure, whether the works executed by the assessee through subcontractors were meant for some third person like the State, utilities/organizations. Anyway, this transaction between the assessee and the Government or organization for which the works are constructed/erected by the assessee, is not subject matter of adjudication before us. The transaction between the contractors and the assessee is, of course, in the nature of services provided by the contractors to the assessee in the shape of works contract which transaction shall be deemed to be a sale by the contractor. 19 Viewed thus, it shall be the contractor, who shall be accountable for paying the sales tax on the services provided to the assessee in the shape of works contact. Such is also not the case set up by the revenue before the Forums below or even before us. This will leave us with only the transfer of right to use goods by the assessee to the contractors. We have already rendered our opinion hereinabove and reiterate that, in the given facts and circumstances, we find no transfer of right to use the goods provided by the assessee to the contractors for constructing, erecting or laying out the power grids, sub-statio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tractors, nor was there any consideration, either in cash or in form of some other valuable consideration. It can also be not said that by handing over the goods to the contractors for erection of aforesaid utilities for the assesssee, there was, in essence, any transfer of right to use any goods for any purpose supported by some consideration. Needless to point out that transfer of the right to use any goods for any purpose whether or not for a specific period must also be for a consideration paid or deferred to qualify it to be a sale within the meaning of Section 2(L). Mere transfer of right to use any goods or even transfer of goods to be used in works or not shall not be a sale unless it is supported by consideration. 23 In the instant case, the ownership and dominion over the goods purchased by the assessee from outside the State always remained with the assessee and the goods were never transferred to the contractors against any valuable consideration. As a matter of fact, the goods and materials purchased by the assessee from outside the State were utilized by the contractors as per the directions of the assessee in raising the construction of various transmission li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is not a dealer under the CST Act is, thus, not available in view of the fact that the assessee is not only a registered dealer in terms of Section 7 of the GST Act, but has also availed the benefit of concessional rate of tax in the inter-State purchases made by him of the goods and material used in construction and laying of power grids, sub-stations and transmission lines etc. 28 As already noted, had it been a case of the revenue that the assessee had utilized the goods imported from outside the State against C-forms in the works contract, entirely different consideration would have prevailed. What is sought to be taxed by the revenue is the transaction of transferring/conveying/handing over of the goods and material purchased by it to the contractors engaged for constructing and laying of utilities like power grids, sub-stations and transmission lines. We, however, find the mechanism adopted by the assessee to defeat the provisions of the GST Act and to cause loss to the public exchequer, a figment of ingenuity of the assessee. The contractor, who is entrusted the job of constructing and laying power grid stations and transmission lines is a supplier also. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reading of definition of sale and goods as it existed at the relevant point of time that the transaction of handing over the material/goods by the assessee to the contractors is not a transaction of sale in any manner calling for imposition of liability of sales tax interest or penalty. We also find force in the argument of Mr Subash Dutt that, for the sake of maintaining consistency and discipline, the Assessing Authorities as well as the statutory appellate authorities must follow the law laid down by the Tribunal which stood at the apex of hierarchy of the quasi judicial forums created under the GST Act. As is brought to our notice that on the earlier occasions also, the similar question had arisen before the Tribunal and the Tribunal after analyzing the entire legal position had held the transaction between the assessee and its contractors not a sale exigible to tax under the GST Act. This order of the Tribunal should have been followed faithfully by all the Forums subordinate to it. We, however, find that the Assessing Authorities had been passing the same orders time and again ignoring the mandate of law laid down by the Tribunal. We can understand that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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