ENERCON INDIA LTD Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THE petitioner is a limited company and is registered as non-resident dealer under the provisions of the Karnataka Sales Tax Act ('kst Act' for short) and Central Sales Tax Act ('cst act' for short ). The petitioner company is engaged in the activity of execution of works contract of supply, erection and commissioning of wind mills for power generation. During the assessment year 1997-1998, the petitioner company had supplied, erected and commissioned wind mills at Medakaripura Village, Chitradurga District, for M/s. Jindal Aluminium Limited, bangalore, as per the agreement entered into between them on 12th day of June, 1997 and 11th day of July,1997.

(2.) THE petitioner company had filed its annual returns for the assessment year 1997-1998 showing the gross receipts of Rs. 19,67,50,000. 00 and claimed exemption for payment of tax under the Act on its entire turnover on the ground that the sales of wind mills and contract receipts relating to wind mills are exempt under entry 57 of the Fifth Schedule to the Act. The assessing authority has concluded the best judgment assessment by giving deductions to the turnovers relating to wind mills (blades and generators); wind mills (parts i. e. baskets and studs, towers bolts and nuts and other accessories); transformers, boob transformers; sub-contract of labour (Drawing, survey, soil investigation and drainage); labour involved in sub-contract and has disallowed the exemptions claimed on a turnover of Rs. 2,13, 78,032/- out of total contract receipt of Rs. 19,67,50,000- on the ground that the foundation work, electrical work of Rs. 58,22,476/-, Rs. 37,11,024/- and Rs. 35,89,014/- relating to sale of wind mills are turnovers of work contract and therefore, the said turnovers cannot be exempted under entry 57 of Fifth schedule to the Act and consequently, has levied a tax of Rs. 28,86,034. 00 on a turnover of Rs. 2,13,78,032. 00.

(3.) THE petitioner company aggrieved by the quantification of liability for payment of tax under the Act by the assessing authority had filed the first appeal before the appellate authority interalia contending that the entire turnover involving supply, erection and commissioning of wind mills was exempt from payment of tax under entry 57 of the Fifth Schedule to the Act, which included the turnover of electrical and foundation work, and that therefore, the assessing authority was not justified in levying tax, cess and turnover tax on the turnover relating to foundation work and electrical work. The first appellate authority vide its order dated 20. 1. 2001 has not only rejected the contention of the appellant for the total exemption claimed, but also has held that the exemption given by the assessing authority in respect of the items mentioned earlier was not correct and consequently, has set aside the order of assessment and has remanded the matter to the assessing authority to redo the assessment in accordance with law and in the light of the observations made by him in the course of his order.