B.RAMADASS Vs. UNION OF INDIA

JUDGEMENT

(1.) This Writ Petition has been filed seeking to quash the show cause notice dated 12.05.2009 issued by the second respondent.

(2.) The petitioner submitted that he is a Class - I road contractor engaged in laying or relaying of roads for PWD and other local corporations based on the contracts awarded by the Government organizations or undertakings. When the petitioner was working in the State Highways Department/Local Authorities based on the contract, he used to purchase raw materials for laying or relaying of roads and after completion of the contract, there is a transfer of property in the goods utilized by the petitioner for the said work, from the petitioner to the Highways Department/Local Authority. The said nature of the contract awarded to the petitioner squarely falls under the definition of 'works contract' under the Tamil Nadu General Sales Tax Act, 1959 and the Tamil Nadu Value Added Tax Act, 2006 and the petitioner was a registered dealer under the erstwhile TNGST Act, 1959 and presently now under the TNVAT Act, 2006 and he has been regularly assessed to the levy of sales tax in respect of the contracts executed by him for laying or relaying of roads.

(3.) The petitioner further submitted that as per the provisions of the TNGST Act 1959 and 2006, the contractee deducts tax at source and pays the same to the State Government, and TDS under the Income Tax Act is also deducted by the contractee and paid to the Union Government. As per sub-clause (zzzza) to clause 65(105) of the Finance Act, 1994 was inserted by Section 135 of the Finance Act, 2007 (22 of 2007) with effect from 01.06.2007, where transfer of property in goods is involved in the execution of a contract leviable to tax as sale of goods, then such a contract is a "works contract". In the present case, there is transfer of property in goods involved in the execution of the contract and sales tax due on such transfer of property in goods as sale of goods has been duly paid over to the Commercial Taxes Department. Therefore, the contract undertaken and executed by the petitioner is a "works contract".