(2011) 38 VST 336 (All) CTT v. Advance Spectra Tec (P) Ltd.

Facts :
The dealer was a contractor registered in UP having its office outside the State of UP. For the purpose of execution of works contract in UP the dealer procured material within the State of UP as well as received material from its office outside the State of UP. The Department levied tax under UP Trade Tax Act on value of material received from its office outside the State of UP, which was successfully challenged before the Tribunal. The Tribunal held that the value of goods used in the execution of works contract received from a place outside the State of UP as stock transfer is exempt from payment of tax u/s.3F(2)(b)(i) of the UP Trade Tax Act, 1948. The Department filed revision appeal before the Allahabad High Court against the judgment of the Tribunal.

Held :
Under section 3F of the UP Act, every dealer is liable to pay tax on the net turnover of the transfer of goods involved in execution of works contract, but the amounts representing the sales value of the goods which are covered by sections 3, 4 and 5 of the CST Act, 1956 are deductible from the said turnover in determining the tax liability.

In Santosh and Company v. Commissioner of Trade Tax, (1999) UPTC 823, it was held that the value of the goods brought from outside UP and consumed in UP in works contract is deductible u/s.3F(2)(b) (i) of the UP Act. Following this judgment, the Court held that goods received by the dealer as stock transfer from his office situated outside UP and consumed for execution of pre-existing works contract amounts to sale or purchase of goods in the course of inter-State trade or commerce which is covered u/s.3 of the CST Act. The value of such goods is therefore liable to be deducted u/s.3(F)(2)(b)(i) of the UP Act from net turnover of the assessee. Accordingly the judgment of the Tribunal was confirmed.