1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR : O R D E R : S.B. Sales Tax Revision Petition No.66/2009. (C.T.O., Jaisalmer Vs. M/s Karyapalak Engineer, C.P.W.D.) DATE OF ORDER : April 15th, 2009. P R E S E N T HON’BLE MR. JUSTICE GOPAL KRISHAN VYAS ____________________________________ Mr. Sandeep Bhandawat, Government Counsel. Mr. Dinesh Kumar Sharma for the respondent. BY THE COURT : Instant Sales Tax Revision Petition has been filed under Section 86 (2) of the Rajasthan Sales Tax Act, 1994 against the judgment dated 18.06.2008 passed by the learned Tax Board, Ajmer by which the Tax Board dismissed the appeal filed by the petitioner department and confirmed the order dated 20.07.2007 passed by the Deputy Commissioner (Appeals), Jodhpur, in which, interest and penalty order dated 01.03.2007 passed by the assessing authority has been quashed. Brief facts of the revision are that certain construction work was assigned by the Union of India through its agency, Central Public Works Department to the contractors and for the purpose of construction various contractors were supplied certain materials as per terms and conditions of the contract 2 such as cement etc. The controversy with regard to question of supply of the material for the purpose of construction to the contractors by the CPWD can be treated to be sale or not was finally adjudicated by the Supreme Court in bunch of civil appeals filed by the Karyapalak Engineer, C.P.W.D., Bikaner, decided on 12.08.2004, reported in Tax Up-Date Vol.IX Pt.8. In the said judgment, Hon'ble Supreme Court has held that the Union through its agency Central Public Works Department undertook the work of erection of barbed-wire fencing along the Indo-Pak border from 1991 onwards in the State of Rajasthan. In order to get the construction work done the appellant awarded contracts to various contractors and under the terms and conditions of the said contract it had agreed to supply the contractors materials such as cement, barbed wire, M.S. angles, etc. The apex Court held that the use or consumption of material supplied in the work of construction, there was passing of property and by virtue of receipt of value of such transferred property by way of adjustment in bills the consideration has also passed which satisfies the definition of 'sale' in the local Sales Tax Act. Therefore, in view of the above judgment, the assessing authority passed order of assessment from the year 1996 onward and the assessing authority imposed tax, penalty, interest and penalty under Section 59, penalty under Section 61 of the Sales Tax Act vide assessment order dated 01.03.2007. 3 Against the said order passed by the assessing authority, appeal was preferred by the respondent before the Deputy Commissioner (Appeals), Jodhpur, who, vide order dated 20.07.2007 partly allowed the appeal of the respondent and while following the judgment of the apex Court in the case of Karyapalak Engineer (supra) confirmed the order of the assessing authority so far it relates to tax but quashed the order of interest and penalty and remitted the matter to the assessing authority for deciding the question of interest from the date of judgment of the apex Court which is 12.08.2004; and, for the purpose of penalty imposed under Section 61 of the Act of 1994 it has been held that the said penalty has not been imposed in accordance with law, therefore, set aside the order of penalty imposed under Section 61 and further upheld the penalty imposed under Section 59 by the assessing authority. Said judgment passed by the Deputy Commissioner (Appeals), Jodhpur was appealed against both by the petitioner and respondent before the learned Tax Board. The Tax Board, however, vide its judgment dated 18.06.2008 upheld the finding with regard to imposition of tax as per the judgment of apex Court, so also, upheld penalty imposed under Section 59 and quashing penalty under Section 61; but, the Tax Board has held that tax cannot be levied without any assessment even if the judgment was rendered by the apex Court on 12.08.2004. For the purpose of levying tax the assessing authority is, however, required to pass assessment order and, admittedly, assessing 4 authority passed order on 01.03.2007, therefore, liability cannot be imposed prior to 01.03.2007, the day on which assessment order was passed by the assessing authority. In this case, the department is challenging order of the Deputy Commissioner (Appeals) as well as order passed by the Tax Board on the ground that as per the judgment of the Supreme Court the supply of cement for construction purpose as per terms and conditions of the contract to various contractors by the department was sale and they were required to pay tax upon the said sale, therefore, if the tax was not paid in time, then, obviously the petitioner department is entitled to levy interest as well as impose penalty upon delayed payment of tax. More so, now the apex Court has held that supply of cement etc. to the contractors by the CPWD is sale and, upon which, tax can be levied by the petitioner department of the State, therefore, both the courts below have committed error while quashing interest and penalty part of the assessment order which has been assessed by the assessing authority because the respondent was under obligation to pay tax as and when it became due. I have considered the rival submissions made by both the parties. It is true that the apex Court has held that material supplied by the department of the Union of India shall be treated to be sale but this verdict was given on 12.08.2004. Therefore, after the judgment, it was the duty of the petitioner 5 department to pass order within time. Admittedly, assessment order was passed by the assessing authority on 01.03.2007, therefore, in my opinion, both the Courts below have rightly upheld the tax liability upon the respondent and, further, rightly quashed order of penalty and interest made by the assessing authority vide Annex.-1. The Tax Board has rightly come to the conclusion that after adjudication of the controversy by the Supreme Court with regard to treating the supplied material to the contractors by the CPWD as sale, it was the duty of the department to pass order of assessment in time because without assessment order it cannot be presumed what amount of tax the assessee is required to pay. Accordingly, the learned Tax Board has rightly adjudicated the matter that for the purpose of assessing interest and penalty for delayed payment, the assessing authority is required to pass order afresh and while passing such order he shall take into consideration the fact that he has passed the assessment order on 01.03.2007, after the judgment of the apex Court on 12.08.2004 in the case of Karyapalak Engineer (supra). In view of afore-mentioned position in the case, no substantial question of law emerges in this case because the apex Court has only held that there is liability of tax upon the respondent with regard to supplied material for construction work which falls under the definition of “sale” but further it is not adjudicated by the apex Court as to from which date interest or 6 penalty can be imposed. It is settled law that any adjudication made by the Apex Court has prospective effect unless it is specifically otherwise directed by the Court. In the judgment of Karyapalak Engineer (supra), it is nowhere adjudicated by the Hon'ble apex Court that this adjudication will have retrospective effect. In this view of the matter, I am of the opinion that no error has been committed by both Deputy Commissioner (Appeals), Jodhpur and learned Tax Board, Ajmer while adjudicating the appeals. The revision petition is, therefore, bereft of merit. Accordingly, this revision petition is hereby dismissed. (Gopal Krishan Vyas) J. Ojha, a.