SIEMENS INDIA LIMITED Vs. STATE OF KERALA

JUDGEMENT

(1.) THESE T. R. Cs. are filed against the common order passed by the Sales Tax Appellate Tribunal, Additional Bench, Ernakulam, in 12 appeals. The assessment years are 1986-87 to 1991-92 and from 1992-93 to 1995-96. Assessee is M/s. Siemens Limited. The facts necessary for the disposal of this case are as follows : Petitioner is an assessee on the rolls of the Assistant Commissioner (Assessment), Sales Tax, Special Circle II, Ernakulam. While completing the assessment in respect of the assessee for the relevant years, the assessing authority disallowed the following claims of exemption made under section 6 (2) of the Central Sales Tax Act, 1956 (hereinafter referred to as "the CST Act") : 1986-87. . . Rs. 50,17,537. 00 1987-88. . . Rs. 31,84,914. 00 1988-89. . . Rs. 46,00,265. 00 1989-90. . . Rs. 4,53,114. 00 1990-91. . . Rs. 27,99,864. 00 1991-92. . . Rs. 29,63,052. 00 1993-94. . . Rs. 7,63,225. 00 1994-95. . . Rs. 1,42,15,090. 00 1995-96. . . Rs. 62,42,389. 00

(2.) THE assessee claimed exemption on the ground that the related turnovers represent subsequent sale of goods du ring its movement inter-State. THE disallowance of the claims of exemptions was on the ground that the disputed turnovers relate to execution of works contract, which is a deemed sale taxable under section 5 (1) (iv) read with section 5c of the Kerala General Sales Tax Act, 1963 (herein-after referred to as "the KGST A ct" ).

(3.) THE main contention raised before us is that the authority was wrong in holding that the contract is an indivisible contract. As a matter of fact, the work order will show that there are two separate works; supply order and service order. We are only concerned here with the supply order. According to the assessee, so far as the supply order is concerned, the materials which are not available with the assessee would be directed to be manufactured by the other units. Many clauses in the supply order show that the company is entitled to verify the supplies even before their despatch and those goods are insured with the Insurance Company. It has also come in evidence that the assessee has endorsed the receipts in favour of Cominco Binani Zinc Limited. Thus, according to the learned counsel, if we read the supply order, it will definitely show that it is actually a sale taking place inter-State. On the other hand, learned Government Pleader submitted that the goods are actually arrived in Kerala and delivery has to be effected only after that. Hence, according to him, sale takes place in the State and not inter-State. This Court had occasion to consider this question in Siemens Ltd. v. State of Kerala [2001] 122 STC 1. In that decision, this Court held that Explanation 4 (c) to section 2 (xxi) of the KGST Act has to be read down and it does not apply to inter-State sales. Learned counsel also brought to our notice the decisions in Bharat Heavy Electricals Ltd. v. State of Orissa [1996] 102 STC 324 (Orissa), Gannon Dunkerley & Co. v. State of Rajasthan [1993] 88 STC 204 (SC), State of Andhra Pradesh v. Usha Breco Ltd. , Calcutta [2001] 121 STC 621 (AP) and Sundaram Industries v. State of Tamil Nadu [1992] 86 STC 554 (Mad.) to drive home the point that there is inter-State sale in this case. As already stated, there was an original petition challenging Explanation 4 (c) to section 2 (xxi) of the KGST Act. Dealing with that question, this Court had held that by a deeming provision, the State Government cannot change the character of the sale and in such cases also inter-State sale is made. In that original petition, after the finding that Explanation 4 (c) to section 2 (xxi) of the KGST Act cannot be treated as indivisible, the assessing authority was directed to reconsider the matter. After hearing the parties, and after going through the records, we are of the opinion that the matter has to be considered again by the assessing authority. THE assessing authority takes the view that in this case, there is indivisible contract. So far as this case is concerned, according to us, it is not indivisible. It contains two parts : supply order and service order. According to us, the Tribunal was not correct in holding that there was only one contract. THE work order will show that it contains two parts; supply order and service order. Price is also shown separately. THE right of the buyer to inspect the goods before they are transported is also preserved. So also, the goods are insured. When the goods were transmitted, the assessee transferred the title to the property to Cominco Binani Zinc Limited. THE Tribunal has not considered this matter in detail. THE Tribunal has relied on the decision of the Madras High Court in Sundaram Industries v. State of Tamil Nadu [1992] 86 STC 554. A perusal of the above decision will show that the facts are different from the facts of the present case and there is also dispute as to whether the delivery notes were transmitted to the company. It was in these circumstances that it was held by the Tribunal that there was no transfer of sale. According to us, the decisions in Bharat Heavy Electricals v. State of Orissa [1996] 102 STC 324 (Orissa) and Gannon Dunkerley & Co. v. State of Rajasthan [1993] 88 STC 204 (SC) have a bearing in the present case. We find that this Court had earlier in Siemens Ltd. v. State of Kerala [2001] 122 STC 1 had remanded back to the assessing authority the case of the same assessee for another year.