SIEMENS LIMITED Vs. STATE OF KERALA

JUDGEMENT

(1.) This Writ Appeal is filed questioning the correctness of the judgment of the learned Single Judge upholding the validity of sub-s. (7B) of S.7 of the Kerala General Sales Tax Act, 1963 and R.22A(2) of the Kerala General Sales Tax Rules, 1963. Before going into the merits of the legal contentions, we may look into the facts.

(2.) The appellant is a company registered under the Indian Companies Act, 1956 having its registered office at Mumbai. It is a dealer registered under the Kerala General Sales Tax Act, 1963 (for short KGST Act and under the Central Sales Tax Act, 1956 (for short CST Act). Appellant is a manufacturer cum dealer of electrical and electronic goods. A customer from Ernakulam placed an order with the appellant for supply of one Somotom Ar. Whole Body CT Scanner at a total cost of Rs.55 lakhs. As per the above order, appellant had to supply the CT Scanner from its factory at ex - Goa and carry out the installation of the equipment at free of cost at Cochin. Installation work was incidental. According to the appellant, transaction was in a sense in inter State sale assessable at Goa. Appellant has remitted Rs. 1,07,843.14 as tax at Goa. Details of the contract can be seen from Exts. P1 and P2 and Ext. P3 is the invoice. But, by Ext. P4 dated 21.10.1999, appellants customer was issued with a notice directing them to deduct a tax at 8% on the bill amount and remit the same with 10% surcharge on it. By Ext. P5 dated 6.12.1999, appellant requested to issue a certificate for non deduction of TDS as it is mainly a direct inter State sale and appellant is a registered dealer. By Ext. P6, appellant was informed by the third respondent that provision of CST Act has no application since the appellant supplied the equipment and erected it and, therefore, pay tax under the KGST Act. Appellants representation to fourth respondent was also rejected by a one line letter stating that no intervention is required at that stage.

(3.) Similarly, appellant entered into a contract with the 6th respondent, a Kerala Government undertaking for construction of 110 K.V. Sub Station for a sum of Rs.3,93,90,523/-. Exts. P11 and P12 show the details of the contract. According to the appellant, after deducting the annual maintenance charges, local purchases, inter State supply and specified goods and pure labour value tax payable under K.G.S.T. Act will only be Rs. 31,94,995.04 and, therefore, they requested tax deduction certificate for Rs. 1,59,750/- being 5% value of Rs. 31,94,995.04 by Ext. P13. But, that was also refused. According to the appellant, provision for payment of advance tax to the entire value of the contract amount irrespective of the fact whether it is taxable or not is illegal and unconstitutional.