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TMI Blog2024 (10) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... recover the toll tax and except this, there is no difference in the work done under the BOT scheme and in the normal works contract. This issue has been considered in detail by the Full Bench of this Court in the matter of Viva Highways [ 2017 (5) TMI 1622 - MADHYA PRADESH HIGH COURT ] before the Apex Court in which it has been held that the works contract means an agreement must be in writing, it must be executed of any work related to the construction, repair or maintenance of any building, superstructure or other amenities mentioned in the definition. Any agreement by whatever name is called, if it falls within the meaning of a definition of works contract as per the definition of 1983 it must be treated as the works contract. The petitioner is misconstruing the terms of the agreement and the construction of Dewas by-pass road on a BOT basis that it does not amount to execution of works contract, the petitioner executed the works contract on the land belonging to the State Government and recovered the construction and maintenance cost by way of toll with the due permission from the State Government, it is nothing but a deferred payment by a mode of recovery of toll. Hence, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the definition of registered dealer as defined under Section 2 (gg) of the M.P. Entry Tax Act, 1976 and holding the certificate No. TIN 23030903601 which continues under the M.P. VAT Act, 2002. The details of the contract in question 06. The Executive Engineer of the Public Works Department, of the State of M.P., Division Dewas issued a tender notice dated 12.07.2000 inviting bids for construction of the Dewas By-pass road under the scheme of BOT. The total length of the road in the contract is 19.8 km including one medium bridge, 27 numbers of culverts, junctions and rotaries, protection works, toll tax barriers and booth, plantation, fencing truck parking lay-by and longitudinal drains, etc. It was made clear in the tender condition that the successful tenderer was required to maintain and operate the by-pass for the period of 10 years i.e. concessional period, for use of the general public. The tenderer was also authorised to collect the toll from the vehicles passing through the toll plaza constructed on a by-pass. This means the tenderer was permitted to recover the cost of construction and its maintenance during the concessional period by way of toll from the vehicles pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by-pass i.e. BOT road. According to the petitioner, since all the elements of the sale do not exist, therefore, the petitioner is not liable to get taxed under the Commercial Tax Act as well as the Entry Tax Act. The aforesaid contention was not accepted by the learned authority because firstly the petitioner is a dealer under Section 2 (h) of the Commercial Tax Act Secondly, the petitioner under the BOT system was given the right to recover the toll from the vehicles to recover the sale amount of the items purchased for construction of the road thirdly the petitioner was given 3922 days i.e. almost 10 years to recover the toll from those vehicle owners who utilize the by-pass, therefore, the work allotted to the petitioner under BOT system comes under the category of works contract. Accordingly, the learned authority determined the toll turnover at Rs. 9,93,52,465/- and liable to be levied the tax of Rs. 28,88,378/- besides the above Value Added Tax under Section 9-B of the Commercial Tax Act amounting to Rs. 2,33,775/- was also levied. The learned authority also directed the petitioner to pay interest of Rs. 15,97,913/- under Section 26 (4) (a) of the Commercial Tax Act apart f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enior counsel has placed reliance on a judgment passed by the Apex Court in the case of Hotel Balaji and others V/s State of Andhra Pradesh and others, (1993) 88 STC 98 (SC), where the question under consideration was whether the levy of tax was on the purchase of goods or the consignment of the manufactured goods. The Apex Court has held that the levy materializes only when the purchased goods (raw material) are consumed in the manufacture of different goods and those goods are disposed of within the State otherwise than by way of sale or are consigned to the depots or the manufacturing dealer or of his agent outside the State of Haryana. It refers to the connection with the event of purchase and sale and not the point of time at which such purchase or sale takes place. 13. Learned senior counsel for the petitioner has further placed reliance on another judgment passed by the Hon ble Apex Court in the case of Commissioner of Wealth Tax V/s Ellis Bridge Gymkhana and others, (1998) 229 ITR 1 (SC), in which it is held that if a person has not been brought within the ambit of the charging taxes, in clear words he cannot be taxed at all, a charging section has to be construed strictly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor of Dewas under the provisions of the Land Acquisition Act. The Commercial Tax Department has rightly levied the Commercial Tax and Entry Tax Act on the value of levied tax used/consumed/transferred in the execution of the construction of the Dewas By-pass road. The petitioner was given a right to collect the toll tax from the vehicle passing through the by-pass road in order to recover the cost incurred on construction and maintenance. Section 2(t) of the Commercial Tax Act, 1994 defines the sale and it means the transfer of property and goods for cash or deferred payment or other valuable consideration. Hence, valuable consideration doesn't need to be paid by handing over the cash immediately, it could be deferred, like in the present case, where the payment was deferred by way of the collection of toll tax by way of authorization to the petitioner, therefore, this petition has no merit and is liable to be dismissed. 17. Shri Sudeep Bhargava, learned Dy. Advocate General for the respondent / State relied on the Full Bench of this Court in the case of Viva Highways V/s M.P. Road Development Authority, (2017) 2 MPLJ 681 held that the work done under the concessional agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any society (including a co-operative society), club, firm or association which carries on such business; (ii) a society (including a co-operative society), club, firm or association which buys goods from, or sells, supplies or distributes goods to, its members; (iii) a commission agent, broker, a del-credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods on behalf of the principal; (iv) any person who transfers the right to use any goods for any purpose, (whether or not for a specified period) in the course of business to any other person; Explanation - (I) Every person who acts as an agent of a non-resident dealer, that is as an agent on behalf of a dealer residing outside the State and buys, sells, supplies or distributes goods in the State or acts on behalf of such dealer as - (i) a mercantile agent as defined in the Indian Sale of Goods Act, 1930 (III of 1930); or (ii) an agent for handling goods or documents of title relating to goods; or (iii) an agent for the collection or the payment of the sale price of goods or as a guarantor for such collection or payment, and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase 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 or purchase is made; and (ii) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale or purchase by the seller or by the purchaser, whether the assent of the other party is prior or subsequent to such appropriation; and (b) Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of clause (a) shall apply as if there were separate contracts in respect of the goods at each of such places. (c) Section 7 of M.P. Vanijyik Kar Adhiniyam, 1994 extracted as under: 7. Joint and several liability of a contractor or a sub-contractor - (1) Where a dealer who carries on the business of supplying goods in the course of execution of works contract entered into by him (hereinafter referred to as a contractor) through another such dealer (hereinafter referred to as a sub-contractor) directly or otherwise, and the sub-contractor executes such works contract and each or either of them is liable to pay tax under this Act, then notwithstanding anything co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area for consumption or use of such goods but not for sale therein; and such tax shall be paid by every dealer liable to tax under the Vanijyik Kar Adhiniyam who has effected entry of such goods: 23. In view of the aforesaid definitions, if the petitioner is a dealer then certainly liable to pay taxes by filing a return on the goods purchased and brought with the State in execution of the works contract. The words project and project cost are defined in clauses W3, and W4 of the agreement. According to the project, it shall mean survey, investigation, studies, design, construction, reconstruction, improvement, strengthening and repair. All the work related to the maintenance of the road, renewal of surface, bridge, tunnel, culvert, etc. and the cost offered to invest by the entrepreneur for completion of the aforesaid project shall be a project cost. As per clause 4.1, the land for construction of the by-pass road will be handed over on a license basis to the contractor for the concession period and this will not amount to transfer of the ownership or lease of the land. Clause 6 made it clear that the entrepreneur will have to make his own arrangement for procuring the material req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin the meaning of a definition of works contract as per the definition of 1983 it must be treated as the works contract. Para 42 to 55 of Viva Highways (supra) are reproduced below: 42. Since these questions are interrelated, it is apt to deal with these questions simultaneously. In the case of Kamini Malhotra (supra), the learned single Judge considered the definition of 'works contract. In addition, the meaning of word building was also considered. It was held that the definition of works contract is in wide spectrum. Its a definition of wide amplitude and application. The relevant portion of this judgment reads as under: 14. Learned counsel for appellant has submitted that the use of word 'means' in clause (i) of section 2 of Adhiniyam, clearly indicates that the definition is a hard and fast definition and therefore except for the works specified in the said clause, no other work could be treated as 'Works Contract'. In other words the sald definition excludes all other works, which are not specified in the said definition. 15. Learned counsel for appellant in the above context referred to P . Kasilingam v. P.S.G. College of Technology, 1995 Supp (2) SCC 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39; covers 'any' work relating to construction, repair or maintenance of 'any building or superstructure, which clearly indicates that all buildings, or superstructures or constructions are to be covered by the said definition of 'Works Contract', 't was therefore submitted that, since the Water Treatment Plant basically includes construction or building and water, storage plant, it was fully covered by the definition of 'Works Contract'. 19. In the above context learned counsel for respondents submitted that, the word any has been explained in Black's Law Dictionary and it has been stated therein that the word 'any' has a diversity of meaning and may be employed to indicate 'all' or 'every' as well as 'some' or 'one' and its meaning in a given statute depends upon the context and subject-matter of statute. It is often synonymous with 'either', 'every' or 'all. The Supreme Court in Lucknow Development Authority v. M.K. Gupta, (1994) 1 SCC 243: AIR 1994 SC 787 had considered the meaning and purport of word 'any' in the context of Consumer Protection Act, 1986 and has quoted the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilding as well as of storage tanks and reservoirs. Necessary ancillary, gadgets and implements for purification and cleansing of water would also have to be constructed. But such ancillaries would not change the basic nature of work to be executed by the appellant, which essentially was the construction of buildings and storage tanks. Therefore, the work undertaken to be executed by the appellant was covered within the meaning and definition of 'Works Contract . (Emphasis Supplied) As per the view taken in the case of Kamini Malhotra (supra), the nomenclature of agreement is immaterial. 43. In the case of D.D. Sharma (supra), another Single Judge considered the definition of 'works contract' and opined that it is elaborate exhaustive and inclusive. While deciding the case of D.D. Sharma (supra), the learned Single Judge considered earlier judgment delivered in M.C.C. No. 850/2005, Technogem Consultant Pvt. Ltd. v. G.M.M.P.R.R.D.A. In D.D. Sharma (supra), it was held that even if the State has formed a society for execution of a work, that would not make such society, a distinct legal entity from the State thereby loosing all the attributes of the State. It was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods or material and all other matters relating to the execution of any of the said works. Meaning thereby that all other matters relating to the execution of works contract are included in the definition of works contract. The aforesaid definition is exhaustive and inclusive in nature. The work assigned to the applicant as per the contract were supervision of construction and the applicant had to carry out checking and verification of all the works as per the working drawings and regular inspection of contractors equipment, plant and machinery. Applicant was also entitled to direct the contractor to carry out all such works or to do all things as may be necessary to avoid or reduce the risk affecting the safety of life of workers, or adjoining property etc. the applicant was under an obligation to inspect the works on completion before taking over by the respondents. The applicant was also to report in respect of quality of material and work. The applicant was to inform the progress as per the working plan and was to prepare all reports and documents. In nutshell the applicant was to supervise construction, to report in respect of quality and progress of work and was to measur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emphasis that an order passed by a previous bench of same strength is binding on the subsequent bench unless the earlier judgments are distinguishable or there exists any other judgment on the same point which is rendered by more number of Judges of the High Court or there exists a judgment of Supreme Court on that point. 45. True it is that in Kamini Malhotra (supra), this Court was considering a works contract in relation to construction of a water tank. Concession agreement was not subject -matter of adjudication in the case of Kamini Malhotra (supra). However, in Kamini Malhotra (supra), this Court opined that the definition of works contract is of wide spectrum/amplitude. Almost similar view was taken in the case of Technogem (supra) and D.D. Sharma (supra). Thus, in our view, to the extent interpretation of definition of 'works contract' is concerned, in Kamini Malhotra, Technogem and D.D. Sharma (supra), it was laid down that the definition is very wide. 46. In Jabalpur Corridor (supra), the learned Single Judge held that the expression works contract as defined in the 1983 Adhiniyam has a restrictive meaning and has special and limited connotation . It is further he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concession agreement , etc. are repeatedly used in various paragraphs of the concession agreement. Hence, it was held that the concession agreement is not 'a works contract'. 49. Reverting back to the unamended definition of 'works contract', it is noteworthy that works contract means an agreement which must be in writing for the execution of any work relating to construction, repair or maintenance of any building or super structure or other entities mentioned in the said definition. In the definition, it was made clear that other matters relating to execution of any of the said work are also included. In our considered view, whether a concession agreement or any agreement by whatever name called is a works contract or not will depend whether essential ingredients of works contract are available in the said agreement. The essential ingredients in the definition of works contract are that the agreement must be in writing, it must be for execution of any work relating to construction, repair or maintenance of any building, super structure or other entities mentioned in the definition. The words any work relating to construction, repair or maintenance are very wide. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract' or not. If agreement satisfies the requirement of a 'works contract', on the basis of parameters laid down in the definition of 'works contract' it can be safely concluded that said agreement is a 'works contract'. As per the definition of 'works contract', the 'salient features' aforesaid are not decisive. In this regard reference may be made to the judgment of Supreme Court reported in 2014 (1) SCC 708, Larsen and Toubro Ltd. vs. State of Karnataka. The Apex Court considered the term works contract used in Art. 366 (29A) b of the Constitution. It is laid down that even if in a contract besides the obligations of supply of goods and material and performance of labour and services, some additional obligations are imposed, such contract does not cease to be a 'works contract'. The additional obligations in the contract would not alter the nature of contract so long as the contract provides for a contract of work and satisfied the primary description of works contract. It is apt to mention that this view is subsequently affirmed by the Constitution Bench in 2014 (7) SCC 1 [Kone Elevator India Pvt. Ltd. vs. State of Tamil Nad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o found it on mere guess work. In view of this judgment, it cannot be held that the order of this Court in Jabalpur Corridor (supra) has got a seal of approval from the Supreme Court. The order of Supreme Court shows that leave was granted and SLP was dismissed before its conversion into a civil appeal. 54. On the basis of foregoing analysis, it is clear that any agreement by whatever name called, if it falls within the meaning and definition of works contract as per Adhiniyam of 1983, it must be treated as a works contract. In that case, the appropriate forum is the Tribunal constituted under section 3 of Adhiniyam of 1983 if differences between the parties are covered under section 2 (1) (d) of the Adhiniyam of 1983. 55. The aforesaid discussion further shows that nomenclature of agreement is immaterial for determining whether it falls within the ambit of 'works contract'. By applying an artistic linguistic engineering, an agreement can be worded in a unique or a different manner. It may have a different nomenclature but these factors will not determine its real nature. In Ashoka Infraways (supra), the Division Bench paid much concession . The Division Bench further relie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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