Indure Ltd. & Anr vs Commercial Tax Officer & Ors

7. Thereafter, a meeting was convened between the officials of N.T.P.C. and authorized representatives of C.A. No. 1123 of 2003 -4- the Company, at N.T.P.C's Office on 21.07.1988, wherein various terms and conditions were discussed between the parties regarding erection of plant for which the Company had submitted its bid.

9. The total contract was agreed to be divided into two separate contracts, (i) Supply Contract, and (ii) Erection Contract, with a cross fall breach clause wherein breach of either of the contracts would entitle the owner/ contractee (N.T.P.C) to cancel the other contract also. C.A. No. 1123 of 2003 -5-

19. Admittedly, there is no dispute that MS Pipes were imported from outside India (South Korea) and were sold to N.T.P.C., Farakka. According to Appellant such sales were covered under Section 5(2) of the Central Sales Tax Act, 1956 (hereinafter shall be referred as 'Act') and had been exempted from imposition of Sales Tax under Section 5(2)(a)(v) of the Bengal Finance (Sales Tax) Act, 1941 (for short 'BFST Act').

23. The Company, thereafter, filed its Return claiming benefit under Section 5(2) of the Act as sale in the course of import. The Commercial Tax Officer, Durgapur Charge, in assessment proceedings disallowed the claim of the Company and raised a demand of Rs. 12,60,795.00/- as Sales Tax. Company preferred an appeal under Section 11(1) of the BFST Act before Assistant Commissioner (Commercial Taxes) but the same also came to be dismissed and the order of the Commercial Tax Officer was confirmed. The Revision Application was moved against the said order before West Bengal Commercial Taxes Appellate and Revisional Board, but after contest the said Revision Application was also dismissed against the Company. It, thereafter, preferred an application under S.8 of the West Bengal Taxation Tribunal Act, 1987 before the West Bengal Taxation Tribunal, challenging the orders passed by the authorities below but the same was also rejected. The Appellants were then constrained to file a Writ C.A. No. 1123 of 2003 -12- Petition before Division Bench of the High Court of Calcutta, challenging the said orders. However, the Appellant's Writ Petition also came to be dismissed by the Division Bench of the said Court on 19.10.2001, giving rise to this appeal.

43. Apart from the aforesaid reasons, we are also of the considered opinion that such import would fall within the Constitutional umbrella. It is also to be noted that Company had admittedly imported the goods into India for completion of the Project on Turnkey Basis of N.T.P.C. Thus, by virtue of Article 286 (1) (b) of the Constitution, it would not be taxable. For ready reference, Article 286 (1) (b) of the Constitution is reproduced hereinbelow:

44. In the facts and circumstances of the case we are of the opinion that the order passed by Division Bench of the High Court as also the orders passed by Tribunal and other Authorities cannot be sustained in law. Same are hereby set aside and quashed. Appellant is held entitled to claim benefit of Section 5(2) of the Act.

45. We have been given to understand that pursuant to the demand notice issued by Respondents, the Company has already deposited the Sales Tax liability "under protest". Respondent State would refund the same to the Company with Simple Interest at the rate of 6 percent from the date of C.A. No. 1123 of 2003 -30- its deposit till its refund within a period of three months, from the date of communication of the said order. In case amount is not refunded within three months, from the date of communication of said order, then Respondents would be liable to pay Compound Interest on the amount deposited by Appellants with the Respondents at the rate of 12 percent per annum.

46. The Appeal thus, stands allowed with costs throughout, Counsel's fee Rs. 50,000/-.