2015-VIL-88-RAJ
THE INDIAN HUME PIPE CO. LTD. Vs STATE OF RAJASTHAN
Rajasthan Sales Tax Act, 1954 – Works Contract – Contracts for execution of civil construction works including laying of pipelines for water supply – Laying of pipelines – Assessing Authority, on the findings that the contract work executed by the appellant is a contract, which is divisible work orders imposed tax and penalties under Section 7AA of the Act – Denial of application for exemption by the assessee under Rule 10A on the ground that the contract is a divisible contract, supply of pipes and the works for contract of civil work – The work performed was not an undivided work contract – Appellant submission is the contract is an indivisible contract for the supply of pipes and for the supply of labour and services, and that the Company is not liable to pay tax at the rate of 12%, as charged on the cost of the pipes. It was only liable to pay tax @ 2% on the turnover of the works contract, which has already been deducted at source by the PHED – Single judge order in appeal – HELD – The legal proposition with regard to definition of ‘works contract’ in Article 366(29A)(b) of the Constitution of India, has been explained in the recent judgment in Larsen and Toubro Ltd Vs. State of Karnataka 2013-VIL-03-SC-LB. For sustaining levy of tax on goods, deemed to have been sold in execution of a works contract, three conditions namely (i) there must be a works contract; (ii) goods should have been involved in execution of a works contract; and (iii) property in those goods must be transferred to a third party, either as goods or in some other form, have been amply clarified. A contract may involve both, a contract of work and labour, and a contract for sale. A transfer of property in goods under clause 29A(b) of Article 366, is deemed to be sale of goods involved in execution of a works contract by a person making transfer and purchase of those goods to a person, to whim such transfer is made. A single and indivisible contract has been brought on par with a contract containing two separate agreements, empowering the State to levy sales tax on value of material in execution of works contract – In view of the clarification of law with regard to imposition of tax on the sale of goods in the works contract, the question of law, does not require any further discussion for its determination. The findings with regard to sale of pipes involved in the works contract, are findings of fact, which do not required any interference by us in these matters – So far as the exemption is concerned, we do not find any error in the finding recorded by learned Single Judge, that the exemption Notification having been issued on 29.03.2001, will only apply prospectively from the year 2001-2002, and that the benefit of exemption can be availed by a firm only after issuance of the Notification dated 29.03.2001. The petitioner has challenged the Assessment Year 1999-2000, and therefore, the Notification was not applicable to the dispute involved in the matter – No error of law in the judgment of learned Single Judge – Writ petition are dismissed