By C. B. Thakar Advocate G. G. Goyal Jana K Vaghani Chartered Accountants
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Central Sales Tax- Works Contract- -Supply and Laying of Pipe Line- Prior to 11-05-2002-Whether Divisible or Indivisible- Issue of Invoice Showing Value of Material- For Payment of Excise Duty- Not Relevant- On Facts- Held As Indivisible Works Contract- Not Liable to Tax- Section 2(g) of The Central Sales Tax Act, 1956.
Facts The applicant company entered in to contract for supply and laying of pipe lines for transportation of natural gas with Assam Gas. The company claimed exemption from payment of tax as no tax under the CST Act was applicable prior to amendment to section 2(g) of the CST Acti.e.11-5-2002, defining the term sale, to include transfer of property in goods involved in execution of works contract. The company claimed the transaction as indivisible works contract effected in the course of inter- State trade and in absence of definition of sale to include deemed sale no tax was paid under the CST Act. The assessing authority considering excise invoice issued by the company, in the name of Assam Gas, showing value of material for payment of excise duty and other terms of the contract held the contract as divisible works contract one for supply of pipes and other for installation and levied tax under the CST Act. The appellate authority as well as Tribunal up held the levy of tax under the CST Act by the assessing authority. The Tribunal at the instance of Company referred question of law before the Bombay High Court.
Held
The authorities below erred in placing reliance on the invoices which were raised by the applicant company to only comply with the excise duty provisions.The High Court considering various clauses of agreement held that the transaction between the company and Assam Gas was indivisible inter-State works contract. The liability to pay tax under the CST Act would arise only after 11-05-2002 from which the section 2(g) was amended. Since the transaction pertains to period prior to 11-05- 202 no tax under the CST Act is payable. The High Court accordingly answered the question of law in favour of the applicant company.
