GHATGE KARKERA POWER INDUSTRIES Vs. ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES AND ANOTHER

JUDGEMENT

(1.) The assessee is a manufacturer of captive diesel generating sets. It is having its manufacturing/assembling unit at Padubidri and registered as a dealer under the Karnataka Sales Tax Act, 1957 (hereinafter referred to as "the KST Act", for brevity) and the Central Sales Tax Act, 1956 (hereinafter referred to as "the CST Act", for brevity). The appellant-firm is also having one more manufacturing/assembling unit at Canacona, Goa, manufacturing captive diesel generating sets of more than 10 KVA capacity and the said unit was registered under the Goa Sales Tax Act and the CST Act. The assessee entered into a contract of sale with Telecom Electrical Division, Laddy Hill, Mangalore, in respect of electrical works contract of the value of Rs. 3,13,650. In order to execute the said works contract they procured the DG sets from their branch office at Goa unit. The Goa unit raised an invoice in the name of Telecom Electrical Division, Laddy Hill, Mangalore and sent the goods to Mangalore. The assessee has paid sales tax under the Goa Sales Tax Act. Therefore, the assessee did not include the said transaction in the returns filed by them in Karnataka. After noticing the same, a notice was issued calling upon the assessee to show cause as to why the said addition should not be made. The assessee contested the said show-cause notice by contending that the Goa unit supplied DG sets to the Telecom Department and has raised invoice accordingly. The DG sets are moved from Goa to Karnataka and therefore, they said as they have already paid sales tax under the Goa Sales Tax Act, they are not liable to pay any sales tax under the KST Act. Overruling the said objection, the assessing authority made the addition. Aggrieved by the same the assessee preferred an appeal to the Appellate Commissioner. He was of the view as the invoice raised by the Goa unit directly in the name of Telecom Department at Mangalore and that the goods were moved from Goa to Mangalore, the assessee's office at Mangalore was only a liaison agent and therefore, he held that the addition made was unwarranted. Accordingly, allowed the appeal and the addition was set aide. The Additional Commissioner of Commercial Taxes by virtue of the provisions of section 22A(1) of the KST Act invoked his revisional jurisdiction and issued a notice to the assessee calling upon to show cause as to why additional should not be restored. The assessee entered appearance in the statement of objections and argued the matter. After hearing, the revisional authority set aside the order of the appellate authority and restored the addition. Aggrieved by the same, the assessee preferred appeal in STA No. 60 of 2003 before this court. This court by order dated October 13, 2008 set aside the order of the revisional authority and remanded the matter back for fresh consideration on the ground that the revisional authority has not taken into consideration all relevant materials. After such remand, after giving sufficient opportunity to the assessee and after considering all relevant materials, the revisional authority held that the deletion of addition was improper as the contract was entered into at Mangalore, payment is made at Mangalore and the movement of the goods from Goa to Karnataka was not because of the contract and it is an independent transaction. He held that section 5B of the KST Act is attracted and addition is proper and therefore, he again set aside the order passed by the appellate authority. Against the said order present appeal is filed.

(2.) The learned counsel for the appellant assailing the impugned order contends that admittedly DG sets were moved from Goa to Mangalore. Invoice was raised by them in the name of Telecom Department at Mangalore. It is they who sold the DG sets at Mangalore. It is by utilising the said DG sets works contract has been executed by the assessee. They have paid sales tax under the Goa Sales Tax Act and therefore, section 5B of the KST Act is not attracted and no tax is payable under the KST Act. In support of his contention, he has relied on the judgment of this court in the case of State of Karnataka v. ECE Industries Limited, 2006 144 STC 605 (Karn). In the aforesaid judgment the head office of the assessee was in Ghaziabad at U.P. The manufacturing unit was also in Ghaziabad. It is the Bangalore office, i.e., branch office received the orders, forwarded the same to the head office and in pursuance of the said contract goods were moved from Ghaziabad to Kamataka. Therefore, it was held that as the contract of sale occasioned movement of goods from Uttar Pradesh to Kamataka, it is because of inter-State sale and therefore, it is not liable to pay tax under the Kamataka Sales Tax Act. The said judgment has no application to this case because, the head office is at Mangalore, the contract was entered into between head office and the Telecom Department at Mangalore. The contract was to be executed at Mangalore. The consideration for the contract was paid at Mangalore. In order to execute the contract work the appellant got the material from the unit at Goa, while sending the DG sets, the Goa unit raised an invoice in the name of Telecom Department at Mangalore and they were constrained to pay the tax at Goa. Merely because they have paid tax at Goa, is no reason to hold that no sales tax is payable under section 5B of the KST Act. It is not a case of inter-State sale. It is a case of sale within Kamataka. Merely because the assessee obtained DG sets from its unit at Goa while executing contract at Mangalore, the character of the transaction does not change. In fact, it was submitted that the assessee has not even paid any tax in Goa as it is completely exempted. Besides this, when the contract was entered into at Kamataka, contract was executed in Kamataka, payment is made in Kamataka and the contract did not occasion movement of the goods from outside the State of Kamataka, tax is attracted. Merely because the assessee got the goods from Goa that is altogether an independent contract and to that contract the Telecom Department is not a party. In that view of the matter, the revisional authority was justified in setting aside the order of the appellate authority and restoring the revision. Therefore, we do not see any merit in this appeal. Accordingly, appeal is dismissed.