Decided on February 26,1998



Girija Jagannath, Member (A) - (1.) THIS is an appeal filed against the orders of the Appellate Deputy Commissioner (CT), Guntur, in proceedings Appeal No. 236/92 -93, dt. 3.4.93 upholding in -toto the orders of the Commercial Tax Officer, Nandigama, in Asst. No. - -/87 -88 dated 30.3.1992. The appellant was engaged in execution of works contract at the project site of the contractee viz., A.P.S.E.B., at Vijayawada Thermal Power Station (V.T.P.S.). The appellant was not registered as a local dealer. The assessment has arisen out of information gathered from the records of V.T.P.S., from their purchase order dated 5.2.1988 placed on the appellant for Rs. 2,44,52,299.00 Ps. The name of equipment and work was indicated as fire protection system'. According to the C.T.O., subsequent to the 46th Amendment of the Constitution and the consequent amendment to the A.P.G.S.T. Act, the turnover involved in the execution of works contract ought to be treated as general goods. Therefore he brought the entire turnover of Rs. 2,44,52,299.00 Ps. to tax without any exemption for the latest component involved, for reasons of want of details. The A.D.C., upheld the assessment order in toto. Hence appellant has preferred the present appeal before us.
(2.) THE point to be considered is, whether the disputed turnover of Rs. 2,44,52,299.00 Ps., is liable to tax in the hands of the appellant under the A.P.G.S.T. Act. Counsel for the appellant raised several contentions viz., that this was not the correct year of assessment, but it was a divisible contract and the disputed turnover related only to supply of material and equipment which constituted a sale in the course of inter -state trade and commerce not liable to tax under the local Act. He also urged that the A.D.C. (CT) heard him on the petition for stay, but dismissed the case on merits without hearing him on merits of the issue.
(3.) WE shall first deal with the ground whether 1987 -88 is the correct year of assessment. Coming to the C.T.O.'s order, it is seen that he relied on the information gathered from V.T.P.S., regarding the work order dated 5.2.1988 placed on the appellant. According to him, the appellant ought to have applied for registration and filed monthly returns which it failed to do. As the appellant failed to produce their books of account for security, he presumed that labour charges were incidental and negligible and taxed the entire value of the order being Rs. 2,44,52,299.00 Ps. The appellant has submitted copies of correspondence with the A.P.S.E.B., including the purchase order No. 1401/CPR/631/VTSTI/F.P.S./96/88, dated 7.4.88. The date is apparently 7.4.88, but the month is over -written. The purchase order is in respect of design, manufacture, shop testing, transportation to site, unloading, storage, handling the site, complete erection, testing and commissioning of fire protection system complete with all accessories of their Thermal Power Station at Vijayawada. The purchase order gives references of the entire correspondence between the appellant and the A.P.S.E.B. First, there was appellants offer dated 22.5.1987, appellant's revised offer dated 21.9.1987 then appellant's letters dated 7.1.88 and 11.1.1988. These letters were followed by A.P.S.E.B.'s letter of intent dated 1.2.88 followed by another letter from the appellant to A.P.S.E.B. dated 5.2.1988. So the purchase order is subsequent to 5.2.1988 and the date of the purchase order can be taken as 7.4.1988, even though the month "4" is over -written on the figure "9". The significance is that till February, 1988, correspondence was going on between the appellant and the A.P.S.E.B. The C.T.O. on A.P.S.E.B.'s letter of intent dated. 1.2.1988, the disputed turnover in the year 1987 -88. His action cannot be sustained as no taxable event had yet taken place as of 1.2.1988. The Department cannot tax works -contract going by the dates of letters of intent issued by the customers. As of March 1988, A.P.S.E.B. had not even issued its purchase order. In fact the supplies were made to the customers from 30.7.1988 to 26.3.1990 as seen from the details filed in the assessment record. In any case, date of the purchase order is not the date of the taxation event, which occurs only when the transfer of goods involved in the execution of works contract takes place in the case of indivisible works contract. In the case of a supplying contract, the transfer shall take place either on delivery or on the date of sale bill depending upon the terms of contract. We therefore cannot sustain the order of the C.T.O., on this ground. Though the A.D.C. referred to the dispute regarding year of assessment he dismissed the appeal with an observation that it was a matter for the assessing authority to look into. Practically, there is no finding from A.D.C. on this ground. We hold that the disputed turnover, if at all, liable to tax was liable in the year 1988 -89 when the contract was executed and not in 1987 -88 merely because the letter of intent was dated 1.2.1988.;

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