M.S. KUMARASAMY Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) This tax case revision, filed at the instance of the assessee, relating to the assessment year 1999-2000 was admitted on the following substantial questions of law:

(2.) The assessee's case is that it purchased steel items from registered dealers and after processing, it manufactured the shutters and installed them in the work place under the supervision of the engineers. In the circumstances, being a works contract, the liability on the erection at the customer's place would not attract the provisions of the Act. Apart from this, there is also a proposed assessment on the materials used in the works, such as sand and blue metal at the appropriate rate, they being purchased from unregistered dealers. The assessing officer rejected the contention of the assessee that the shutters came into existence only in the course of execution of the works contract. Thus, the value of the shutters was brought to tax. While so, the assessing officer also levied penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act.

(3.) The assessee preferred an appeal before the Appellate Assistant Commissioner, contending that being an indivisible works contract and that the shutters came into existence only by way of accretion at the work site, there could be no liability to tax. However, the first appellate authority dismissed the appeal on the liability, but however allowed the appeal on the levy of penalty.