Case: M/S. Indian Dairy Machinery Co. Ltd Vs. Asst. Commnr. Of Commercial Taxes

The appellant is a limited company and has its registered office at Gujarat and branch office at Bangalore, Karnataka. It is a sub-contractor for M/s Larsen and Toubro Ltd. for execution of works contract. It is registered as a dealer under the Act as well as Central Sales Tax Act, 1956 (in short the. It had opted for composition under Section 17(6) of the Act. But the benefit of composition was denied in view of the amendment to sub-section (7) of Section 17. The appellant undisputedly had received goods from the head office situated at Gujarat for execution of the work inof the appellant before the departmental authorities and the Tribunal was that the receipt of goods from the head office does not amount to receiving of goods. The Tribunal referred to sub-section (7) of Section 17 as amended by Act No.5 of 2002 w.e.f. 1.4.2002 and held that in fact the provision clearly applied to the case of the appellant.

Reasoning: the dealer wanted the benefit of sub-section (6) of Section 17, it was required to submit an application within one hundred twenty days from the date of commencement of the assessment year. The amended provision of sub-section (7) of Section 17 came into effect from 1.4.2002. The amended provision clearly excludes the dealer from the benefit of sub-section (6) of Section 17 of the Act if he purchases or receives goods from outside the State for the purposes of using such goods in the execution of the works contract. If for any reason, the assessee had intended to opt for composition of tax under Section 17 (6) of the Act, necessarily he had to submit the application within one hundred and twenty days from the date of commencement of such year before the assessing authority to accept in lieu of tax payable under Section 5-B of the Act on the total value of the works contract being executed by him. The key words under Section 17 (6) of the Act are the tax payable during the year by way of composition an amount on the total consideration for the works executed by the contractor in that year in the year in the State. Option to be exercised for composition benefit is not dependent on the dates of the agreements entered into by the parties for execution of the works contract Under Rule 8B(1) of the Rules, the dealer/assessee is required to submit the application seeking composition benefit for each assessment year within the time prescribed from the date of commencement of such year or of the business, if he has commenced the business during the course of the year. That again means, it is irrelevant, when the parties had entered into an agreement for the execution of works contract in the State. As already noticed, the relevant assessment year in question is 2002-2003 (ending on 31.3.2003) and the assessee if it elected to compound the tax for this year, it was required to submit the application as provided under rule 8-B (1) of the rules. The amended provisions of sub-section (7) of Section 17 were given effect to from 1.4.2002. In view of the restriction imposed under the amended provision, the assessing authority could not have permitted the appellant company to elect to pay the tax under Section 17(6) of the Act, since admittedly the appellant received the goods by way of stock transfers from outside the State for the purpose of using such goods in the execution of works contract. Therefore, the first question of law raised by the appellant has been rightly answered against thelanguage used in sub-section (7) of Section 17 is very clear. It is to the effect that if a dealer purchases or receives goods from outside the State for execution of works contract within the State it is not entitled to the benefit of composition in terms of sub-section (6) of Section17 and undisputedly, the appellant has received the goods by way of stock transfer. In view of the language employed in the amended provision, the appellant was clearly disentitled from composition for availing the benefit under sub-section (6) of Section 17. The expressionwould encompass receipt in any manner. Receipt by branch transfer is covered by the said expression. The High Court was, therefore, justified in dismissing the Revision Petition. We find no scope for taking a different view in view of the clear language of sub-section (7) of Section 17 as amended w.e.f. 1.4.2002.