28. Whether the property in goods used in execution of Works Contract of erecting rolling shutters at the site of the customers passed to the customer or the property in the form of rolling shutters passed to the customer?

Held : Property in the form of goods used in the execution of works contract passed to the customer and not the property in the form of rolling shutters.

The appellant undertakes contract of assembling and erecting of rolling shutters at the site of the customer. He a was assessed for the periods 1995-96, 1996-97 and 1997-98 under the Works Contract Act. The Assessing Officer levied tax @ 24% on the supply of rolling shutters. The appellant contended before the appellate authority that the rolling shutters comes into existence only after various components and parts are brought to the site and fixed to the wall. At that stage it is a part of immovable property and therefore the levy as per schedule is not correct. The appellate authority did not accept the submission and the matter reached the Tribunal.

The Tribunal referred to the decision of the Supreme Court in Sentinal Rolling Shutters and Engg. Co. and the decision of the Tribunal in Fine Rolling Shutters (S.A. 69 of 1992 dated 30-7-1994. After referring to the observations of the Supreme Court that "there is no transfer of property in rolling shutter by the manufacturer to the customer as a chattel. It is essentially transaction for fabricating component parts and fixing them on the premises so as to constitute a rolling shutter" the Tribunal observed that the manufacturer would undoubtedly be the owner of the components parts when he fabricates them, but at no stage does he become owner of the rolling shutter as a unit. As the appellant in the present matters at no stage was the owner of a rolling shutter as a unit, it cannot be said that the appellant has passed property in rolling shutters to the customers. The Tribunal has also referred to the decision of the Supreme Court in Gannon Dunkerley and Co. (88 STC 204) and held that orders of the appellate authority confirming the levy of tax @ 24% holding that the property in rolling shutters has passed to the customers requires to be set aside. The Tribunal has also allowed deduction under section 6(1)(A)(d) of the iron and steel material used in the same form without doing anything which amounts to manufacture.

Second Appeal Nos. 665 to 668 of 2005 – Fine Engineering Co. vs. The State of Maharashtra dated 4th June 2007. The judgment is delivered at the Third Bench of the Tribunal by the Hon'ble Member Shri D. H. Sali. The appellant was represented by Mr. B. C. Joshi, Advocate along with Mrs. N. R. Badheka, Advocate.

29. Whether the Steel (declared goods) supplied by the Government department (an unregistered dealer) for executing the Works Contract is exempt under section 6(3) of the Works Contract (Re-enacted) Act 1989?

Held : Yes

Brief facts emanating from the judgment delivered by the Hon'ble Tribunal in Second Appeal are as under:

The appellant is dealer undertaking construction contracts of the Government of Maharashtra and Govt. of Karnataka. He got himself registered under the Works Contract from 22-8-1990. The Assessing Officer took up the assessment for the unregistered periods 1-4-1990 to 21-8-1990 and 22-8-1990 to 31-3-1991. The plea of the appellant before the assessing authority as well as at appellate stage was that materials like steel and cement required for execution of the works contract were supplied by the contractees themselves; i.e., the Government departments and the ownership of the material never passes on to the appellant and therefore there was no transfer of property in the goods involved in the execution of the particular works contract. The Tribunal upheld the view of the appellate authority by following Supreme Court decision in the case of N. M. Goel & Co. (72 STC 368) that supplies of materials by the Government department constituted sales and purchases by the appellant. An alternative plea was made that steel being a declared goods under section 14 of the Central Act the tax in respect thereof is leviable only at the specified stage. This levy cannot be shifted to any subsequent stage. The Tribunal discussed this issue in terms of sections 14 and 15 of the Central Sales Tax Act and section 7 of the Bombay Sales Tax Act. The Tribunal came to the conclusion that in view of various decisions especially Govind Saran Ganga Saran (60 STC 1) (SC) and the Tribunal decision in Nirmala C. Shah & Others (S.A. 275-276 of 1968 dated 28-2-2002 and Trafalgar House Construction India Ltd. (S.A. 984 and 985 of 1996 dated 31-7-2002) if the steel in question is held to have been purchased by the appellant locally from the Government department, then it is at the said stage that tax is leviable under the Bombay Sales Tax Act. Therefore by operations of the aforesaid provisions in section 6(3) of the Works Contract Act, no tax would be legally leviable in the hands of the appellant when such steel is used in the execution of the Contract. The Tribunal further observed that this position would hold good even if the contractee (Government department) is not registered under the Works Contract/Bombay Sales Tax Act and this position would of course be applicable where the purchases in question are effected locally in Maharashtra.

The Tribunal deleted the penalty under Explanation II to Section 36(2)(c) by 90% and re-worked the interest under section 36(3)(b).

Second Appeal Nos. 1716 and 1717 of 1999 –B. T. Patil & Sons Belgaum (Construction) Ltd. vs. The State of Maharashtra dated 7th June, 2007. The judgment is delivered at the Fifth Bench of the Tribunal by the Hon'ble Member Shri G. G. Kochrekar. The appellant was represented by Mr. V. P. Patkar, Advocate.