IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 24.09.2008 Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN and THE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJA Tax Case (Revisions) Nos.466 to 470, 472, 473, 477, 478 and 512 of 2006 M/s. Vinayaga Engineering Works Petitioner in T.C (R) No.466, 467, 469 470, 472, 473, 477 478 of 2006 M/s. Vinayaka Metal Section Petitioner in T.C (R) No.512 of 2006 M/s.Vinayaga Agencies Petitioner in T.C (R) No.468 of 2006 v. State of Tamilnadu, represented by the Deputy Commissioner (CT), Chennai (East) Division. Respondent in all the tax case revisions Tax Case Revisions filed under section 38 of the Tamilnadu General Sales Tax Act, 1959 before the Tamilnadu Taxation Special Tribunal against the order of the Sales Tax Appellate Tribunal (Additional Bench) Chennai dated 04.03.2004 made in STA No.89, 93, 95, 90, 91, 88, 94 of 2002, 1183, 1184 of 2001 and order dated 13.11.2003 made in STA No.1418 of 2001 against the order of the Appellate Assistant Commissioner (CT) Chennai in A.P.Nos.227/96, 470/96, 313/97, 351/97, 11/98, 55/98. 329/97 dated 23.8.2000, in A.P.Nos.296, 333/01 dated 24.09.01 and in A.P.No.301/98 dated 1.8.2000 respectively against the orders in TNGST No.015185/88-89 dated 18.6.97, TNGST No.1280055/95-96 dated 17.11.97 passed by the Commercial Tax Officer, Washermenpet II, Assessment Circle - II, Chennai - 81, order in TNGST No.011726/94 dated 11.3.96 passed by the Commercial Tax Officer, Royapuram Assessment Circle, Order in TNGST No.1280055/96-97 dated 31.1.98, TNGST No.959067/92-93 dated https://hcservices.ecourts.gov.in/hcservices/ 29.12.2000, in TNGST No.959067/93-94 dated 29.12.2000, in TNGST No.015185/90-91 dated 18.6.97 in TNGST No.6196/85-86 dated 15.7.97, in TNGST No. 959067/94-95 dated 31.10.96 passed by the commercial Tax officer, Washermenpet Assessment Circle - II, Chennai - 81 and in TNGST No.1180381/96-97 dated 15.5.98 passed by the commercial Tax Officer, Royapuram Assessment Circle, Chennai. For petitioner : Mrs.Anitha Sumanth For respondent : Mr.R.Tholgappian, Government Advocate ORDER (Order of the Court was made by K.RAVIRAJA PANDIAN, J.) The correctness of the orders of the Sales Tax Appellate Tribunal, (Additional Bench), Chennai, dated 04.03.2004 and 13.11.2003 is assailed before this Court in these revisions. The relevant assessment years are 1985-86, 1988-89, 1990-91, 1992-93, 1993-94, 1994-95, 1995-96 and 1996-97. Tax Case (Revisions) Nos.466 to 469, 473, 477, and 478 of 2006 2. The revision petitioners in these revisions are dealers in rolling shutters and assessees on the file of the respondent. They were originally assessed in respect of the turnover of the transaction of sale of rolling shutters as works contract taxable at 5%. The assessees have taken the matter on appeal to the First Appellate Authority, who allowed the appeals on the premise that the goods with which the shutters were made up of had already suffered tax. The Joint Commissioner of Commercial Tax took up the matter on suo motu revision, set aside the order of the appellate authority and remitted the matter back to the assessing officer, for de novo consideration. 3. On remand, the assessing officer, after taking note of the transaction and the material evidence available in respect of manufacture of rolling shutters again framed an assessment treating the transaction of sale of rolling shutters as one of works contract. On appeal, once again the First Appellate Authority accepted the contention of the assessees that they effected sale of tax suffered goods, such as guide channel, bottom plate, ball bearing, steal tubes, and angles; that the rolling shutters emerged only at the place of customers, and set aside a portion of the assessment order. Aggrieved by that portion of the order, the assessees filed appeals before the Tribunal. The revenue filed enhancement petitions for restoration of taxable turnover deleted by the Appellate Assistant Commissioner. The Tribunal, by reason of the impugned order, set aside the order of the Appellate Assistant Commissioner by holding https://hcservices.ecourts.gov.in/hcservices/ that the manufacture and supply of rolling shutters is taxable as 'works contract'. The levy of penalty for filing of incorrect and incomplete return under section 12(5)(iii) of the TNGST Act, was confirmed, but the levy of penalty under section 12(3)(b) of the Act was deleted as unsustainable. The correctness of the same is questioned before us. 4. Heard the learned counsel and perused the materials available on record. These revisions are coming up for admission only. 5. The assessing officer, in his assessment order, recorded a factual finding to the effect that the assessees/dealers are manufacturers of rolling shutters purchased steel section etc., locally and manufactured rolling shutters in their factory premises and all the rolling shutters were moved from the factory as a finished rolling shutters to the customers place under Excise Gate pass issued under the Central Excise Act. He further recorded a negative finding to the effect that there is no evidence to suggest that the parts of the rolling shutters were transferred to the place of buyers in the same form individually and the shutters were assembled in the place of the customers, but the shutters were fabricated in the factory of the assessee itself. The assessee has undertaken the works contract of fabrication of the rolling shutters and assembled the rolling shutters in their factory with their trade name. There was no material available on record to prove that the customers have given any specification of the materials to be used in fabrication of the rolling shutters. The contract is one for delivery and affixing of the rolling shutter in the customer's place in a particular size and length prescribed by the customers. Payments were made for the entire work for manufacture of rolling shutters and installation of the same. On the face of the above finding, the contention of the assessee that they have effected sale of tax suffered goods such as guide channel, bottom plate, etc., to the customers and the rolling shutters were manufactured in the place of customers and therefore, the sale of guide channel and other goods are not liable to tax as they have already suffered tax, cannot at all be accepted, in the absence of any material to establish the fact and having regard to the factual position recorded by the assessing officer. Useful reference can be had to the judgment of the Supreme Court in the case of Sentinel Rolling Shutters and Engg. Comp. (P) Ltd. v. Commissioner of Sales Tax, (1978) 42 STC 409, wherein it was held that the transaction of the present nature, i.e., manufacture of rolling shutters and erection at the customer's place would be a works contract. 6. It is true that once it was the position that indivisible contract of sale and service cannot be exigible to tax. However, after the 46th amendment, the works contract is also deemed to be 'sale' under Article 366 (29-A) (b) of the Constitution of India. The 46th amendment was made precisely with a view to empower the State https://hcservices.ecourts.gov.in/hcservices/ to bifurcate the contract and to levy sales tax on the value of the material involved in the execution of the works contract notwithstanding that the value may represent a small percentage of the amount paid for consideration of the works contract. Even if the dominant intention of the contract is rendering of service, which will amount to works contract after the 46th amendment, the State would now be empowered to levy sales tax on the material used in such contract. After the 46th amendment, the State of Tamilnadu has incorporated a charging section, section 3-B for levying tax on works contract in the Tamilnadu General Sales Tax Act. The Constitutional validity of the amended provision was upheld by the Supreme Court, which requires no reproduction. The history of the amendment has been elucidated in the judgment of the Supreme Court in the case of BSNL v. Union of India, (2006) 145 STC 91. 7. From the facts, it is clear that the revision petitioners are dealers in rolling shutters and they have manufactured the rolling shutters in their factory and erected the same in the customer's place. The contention of the assessee is also that they have sold tax suffered goods like guide channel, frame, ball bearing etc., to the customers has also not been established. On the other hand, the manufacture of the rolling shutters by the assessees themselves under their trade name has been established by materials. In such circumstances, we do not find any irregularity in the order of the appellate Tribunal in coming to the conclusion that the sale of rolling shutters by the assessee is taxable as works contract under section 3-B of the Act. Now, coming to the imposition of penalty under section 12(5)(iii) of the Act, which was obtaining during the relevant period, if the assessing authority is satisfied that the return filed by the dealer is incorrect and incomplete, he may impose penalty, which penalty shall not been less than 50% and shall not be more than 150% of the difference in tax payable on the turnover disclosed in the return and determined by the assessing authority. Hence, the imposition of tax under section 12(5)(iii) of the Act is legally sustainable. 8. For the foregoing reasons, we are of the view that there is no question of law, much less a substantial question of law arising out of the order of the Tribunal, so as to entertain the revisions. Hence, the revisions in T.C.(Rs) Nos.466 to 469, 473, 477, and 478 of 2006 are dismissed. T.C. (R) No.512 of 2006 9. Though the case is in respect of the very same assessee, the point involved in this case is that whether the rolling shutters fabricated and manufactured with the tax paid goods, such as guide channel, bottom plates, ball bearing, steel tubes, angles, etc., and the sale of shutters by the respondent is taxable at 4% as declared goods or 8% and 11% under item No.63-D of the First Schedule. https://hcservices.ecourts.gov.in/hcservices/ 10. It is the case of the assessee that it manufactured the rolling shutters with the tax paid goods, such as guide channel, bottom plates, ball bearing, steel tubes, angles, etc., which are iron and steel coming under declared goods taxable at the point of First sale at 4%. The Tribunal has rejected the claim by following the Division Bench decision in the case of Apparels and Handloom Exporters Association v. State of Tamilnadu, 129 STC 167, wherein the Court has held that if a person who is engaged in manufacture of rolling shutters, buys iron and steel for the purpose of manufacture, after paying tax on such purchase, he cannot contend while selling the shutters that no tax should be levied on the shutters as they having been manufactured from iron and steel on which he has already paid tax. The iron and shutters are commercially distinct commodities and are charged to tax accordingly. The said decision is squarely covering the issue. The Tribunal has held that the shutters manufactured by the appellant is commercially different commodity than iron and steel and liable to be taxed at 8% and 11% for the two different period. This finding of the Tribunal is correct and is not warranting any interference . This revision in T.C. (R) No.512 of 2006 is dismissed. Tax Case (Revision) Nos.470 and 472 of 2006 11. These revisions are filed against the order of the Sales Tax Appellate Tribunal dated 04.03.2004 made in STA Nos.1183 and 1184 of 2001. The relevant assessment years are 1992-93 and 1993-94. In respect of these assessment years, on remand, the assessing officer assessed the sale turnover of rolling shutters as works contract and levied penalty under section 12(3) of the TNGST Act. Aggrieved by the same, the assessee filed appeals before the first appellate authority, who dismissed the appeals. The assessee carried the matter on further appeal to the Appellate Tribunal. The Tribunal confirmed the order of assessment, however, deleted the penalty. The correctness of the same is canvassed before this Court. 12. In this case, the assessing officer has recorded a finding that the assessee is a manufacturer of rolling shutters. The shutters are manufactured within the factory premises of the assessee and removed to the customers' place. As per the document relating to the Central Excise, i.e., the gate pass, the assessee had manufactured the rolling shutters and the gate pass under the Central Excise Act also referred to the value of the shutters. The shutters manufactured out of the locally purchased materials are commercially differently identifiable commodity and taxable under section 3-B of the TNGST Act at applicable rate and value. We do not find any ground to interfere with the concurring finding of the authorities https://hcservices.ecourts.gov.in/hcservices/ under the Act and that of the Tribunal. These revisions in T.C. (Rs) Nos.470 and 472 of 2006 are also dismissed. No costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar To 1. THE ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL III FLOOR, RAJAJI BHAVAN, BESANT NAGAR, MADRAS 2. THE SECRETARY CENTRAL BOARD OF REVENUE NEW DELHI 3. THE SALES TAX APPELLATE TRIBUNAL (ADDITIONAL BENCH) CHENNAI 4. THE APPELLATE ASSISTANT COMMISSIONER OF COMMERCIAL TAX - II CHENNAI 5. THE COMMERCIAL TAX OFFICER WASHERMENPET - II CHENNAI 6. THE COMMERCIAL TAX OFFICER ROYAPURAM ASSESSMENT CIRCLE CHENNAI 9 ccs To M/s.Anita Sumanth Advocate, SR.54684 & 54683 2 ccs To Government Pleader, SR.Nos.54965 & 54967 Tax Case (Revisions) Nos.466 to 470, 472, 473, 477, 478 and 512 of 2006 KGK(CO) SRA(21/10/2008) https://hcservices.ecourts.gov.in/hcservices/