TATA ROBINS FRASER LIMITED Vs. STATE OF A. P.
LAWS(ST)-1993-10-1
SALES TAX TRIBUNAL
Decided on October 05,1993

TATA ROBINS FRASER LIMITED Appellant
VERSUS
State Of A. P. Respondents

JUDGEMENT

R. Bayapu Reddy, Chairman - (1.) THESE two appeals are filed by the same appellant questioning the orders of the Appellate Deputy Commissioner (CT), Kakinada, who confirmed the orders of the assessing authority subjecting the respective disputed turnovers to tax relating to the assessment years 1985 -86 and 1986 -87 respectively. The particulars of the present two appeals are as follows:
(2.) THE appellant who is the same in both the appeals is M/s. Tata Robins Fraser Limited and is a registered dealer under the A.P.G.S.T. Act on the rolls of the Commercial Tax Officer, Gajuwaka, Visakhapatnam and he is having his head office at Jamshedpur in Bihar State. The appellant had entered into three separate agreements with Visakhapatnam Steel Project (VSP) for supply of machinery and erection of certain plants and the particulars of the said three contracts are as follows: (i) Design, manufacture, assembly, testing, packing, supply, transportation to site, site storage, site handling, erection, start -up, testing and commissioning of Conveyor System for Ore ANF Flux Stock Yard Area in Letter of Acceptance of Tender PUR, 2.50,035/1606 dated 29 -8 -1984 of M/s. Visakhapatnam Steel Project, Visakhapatnam. (ii) Design, Engineering, Manufacture, Supply, transportation to site storage, handling, erection, testing and commissioning of Primary Crushing and Screening System of Non -Coking Coal in letter of acceptance of tender Pur. 3,50 (G.S.) 001/11606, dated 8 -4 -1985 of M/s. Visakhapatnam Steel Project, Visakhapatnam. (iii) Design, manufacture, assembly, testing, packing, supply storage, erection start -up, testing and commissioning of Complete Bulk Materials Charging System of Converters of SMS I as per Specification No. VSP/P -07 -030 in letter of acceptance of tender PUR. 4.50.014/0129 dated 11 -4 -1985 of M/s. Visakhapatnam Steal Project, Visakhapatnam. Contract Nos. 1 and 2 alone pertain to the assessment year 1985 -86 while all the three contracts pertain to the assessment year 1986 -87. In pursuance of the above said contracts, the appellant supplied material purchased from outside the State to Visakhapatnam Steel Project and also erected the required plants mentioned in the contracts out of such material. The assessing authority subjected a turnover of Rs. 7,98,40,560/ - during the assessment year 1985 -86 and a turnover of Rs. 5,80,89,950/ - during the assessment year 1986 -87 to tax treating the same as relating to the value of the goods manufactured and used in the execution of the concerned works contracts. While doing so, the assessing authority took into consideration the total amount received by the appellant during the respective assessment years pertaining to contracts 1 and 2 during the assessment year 1985 -86 and all the three contracts during the assessment year 1986 -87 and after deducting the amounts relating to fabrication charges from such total amount received and arriving at the balance turnovers, which are the disputed turnovers, as relating to the value of goods manufactured and used in the execution of the works contracts. The appellant had however contended before the assessing authority that the contracts entered into by him with the Visakhapatnam Steel Project are divisible contracts consisting of a contract to supply material and a contract to erect the plant out of such material, that the material supplied by him to the Visakhapatnam Steel Project related to the goods purchased from outside the State and such transactions amount to inter -State sales which are not exigible to tax under the A.P.G.S.T. Act and that therefore the disputed turnovers which relate to such inter -State sales cannot be subjected to tax under the A.P.G.S.T. Act. The assessing authority, however, refused to accept such contention observing that the contracts entered into with the Visakhapatnam Steel Project by the appellant are indivisibles works contracts, that there were no separate contracts for mere supply of goods, that the goods supplied by the appellant were used in the execution of works contract in our State and they became the property of the Visakhapatnam Steel Project only when such works were carried out and as such there are no inter -State sales of any commodities and the disputed turnovers are therefore exigible to tax under the A.P.G.S.T. Act. The appellant therefore preferred separate appeals before the Appellate Deputy Commissioner questioning the orders of the assessing authority and the said appeals were dismissed by the Appellate Deputy Commissioner who agreed with the view of the assessing authority regarding the nature of the transactions and the exigibility of the disputed turnovers to tax under the A.P.G.S.T. Act. As such, the present appeals are filed by the appellant questioning the orders of the Appellate Deputy Commissioner raising the same contentions as before the lower authorities. During the pendency of the present appeals the appellant has also urged additional grounds contending that the disputed turnovers relate to inter -State sales which cannot be subjected to tax by the State Legislature, that such view was clearly expressed by the Supreme Court in the decision reported in Builders Association of India & Others v. Union of India ( : 1989 -73 STC 370) and in M/s. Gannon Dunkerley & Co. v. State of Rajasthan (1993 -88 STC 204) and that therefore the orders of the lower authorities may be set aside holding that the disputed turnovers are not exigible to tax under the A.P.G.S.T. Act. As both the appeals are filed by the same appellant and common points are involved for consideration in both the matters, they are heard together and are being disposed of by a common order. The point for consideration in the present appeals is whether the disputed turnovers relate to inter -State sales and not exigible to tax under the A.P.G.S.T. Act?
(3.) AS already stated above, the appellant had entered into there separate contracts with M/s. Visakhapatnam Steel Project for supply of material, and for erection of certain plants which are described in detail in the concerned agreements and which are referred to above as Contracts 1 to 3. The disputed turnovers were subjected to tax under the A.P.G.S.T. Act by the assessing authority on the ground that they relate to the value of the goods which were used in the execution of the concerned works contract at Visakhapatnam and that the value of such goods which were used in the works contract can be subjected to tax under the A.P.G.S.T. Act in view of the 46th Amendment effected to the Constitution. It is seen from a perusal of the relevant contracts that the said contracts were executed for the supply of goods as well as for erection of the required plants. It is not in dispute that the goods which were supplied by the appellant to Visakhapatnam Steel Project were all purchased from outside the State of Andhra Pradesh and the said goods were used by the appellant in the execution of the works contracts at the site of the Visakhapatnam steel Project. The assessing authority arrived at the value of the goods used in the execution of the works contract by taking into consideration the total amount received by the appellant during each year pertaining to the relevant contract and by deducting the fabrication charges and thereby arriving at the value of the goods used in the execution of the works contract which are the present disputed turnovers The contention of the appellant in this connection is, that even though supply of goods as well as erection of the plant were contemplated under a single agreement, such contracts are divisible contracts - one pertaining to the supply of the material and the other pertaining to the erection of the plant that the goods supplied to the Visakhapatnam Steel Project were all purchased from outside the State of Andhra Pradesh and such transactions amount to Inter -State sates which are not exigible to tax under A.P.G.S.T. Act and that therefore the disputed turnovers are not exigible to tax under the A.P.G.S.T. Act. But the assessing authority subjected the disputed turnovers to tax by coming to the conclusion that the contract is indivisible contract, that there was no contract for supply of goods to the Visakhapatnam Steel Project took place only when the said goods were used in the execution of the works at Visakhapatnam and when the goods became part of immovable property on the theory of accretion, accession or blending and that therefore was no inter -State sale of any goods involved in the present cases. It is clear from the said opinion expressed by the assessing authority, which was accepted by the Appellate Deputy Commissioner, that the supply of goods was treated as local sale only on account of the conclusion arrived at by the lower authorities that the contract was not for supply of any goods as such, and that the contract was only for supply of goods used in the execution of works contract when they become part of immovable property. But such view expressed by the lower authorities for subjecting the disputed turnovers to tax by negativing the contention of the appellant is not in accordance with law and is contra to the view expressed by the Supreme Court in the recent decisions mentioned above.;


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