The Uttarakhand High Court in Commissioner Commercial Tax vs. M/s. Jai Durge, held that as the entire raw materials were supplied by the Contractee, the contract was for work.
The assessee-respondent was assessed to pay tax of Rs.5.28 Lacs on the ground that it had sold cement tiles to Government Department, the Contractee. The Assessing Officer found that material documents such as Form 3-D, the agreement, Account Books, Bill Books were produced for scrutiny. The Trade Tax Tribunal had construed the transaction as job work in the assessment year 1986-87. Holding this view, the assessee claimed benefit, but the same was rejected by the A.O on finding that the supply of cement tiles were made in large quantities and that the Department had provided some facilities to the dealer.
The First Appellate Authority dismissed the appeal filed. On Appeal to the Tribunal, it found that the matter is to be governed by the decision in the AY 1986-87. The Tribunal found that the transaction was in the nature of contract for work and that the A.O had made mistake in construing the payment of Rs. 18.98 Lacs received to the Dealer having being received as labour charges under job work, as amount for sale. Appeal was made before the High Court.
The Counsel for the Revenue submitted that neither agreement nor Form 3-D was produced. The Counsel for the respondent-assessee reiterated the order of the Tribunal and submitted that the matter was a case of a ‘job-work’. He contended that the entire raw materials were provided by the Department including land and electricity and that he had only supplied the labour.
The bench comprising of Chief Justice K.M Joseph and Justice Sharad Kumar Sharma observed that Form 3-D pertains to a declaration in regards to the goods sold to any Company / Corporation or Undertaking referred to under Section 3-G. The form ends by a certification to the effect that the goods are meant for our own requirement and are not meant for re-sale or for use in the manufacture or packing of any goods, other than electrical energy, for sale. Therefore, the Court said that it might not be correct on the part of the revisionist to contend that non-production of Form 3-D by the assessee is fatal to his setting up the case of job work.
“In this case, the contract was of the year 1986-87. It is in regard to the said assessment year, that finding has been rendered, which has become final that what is involved is only a job work and not a contract of sale of goods. We do not see, why the said principle should not hold good in respect of the tiles, which have been supplied in terms of the said contract for the year 1987-1988. It is true no doubt that the contract as such has not been made available, but in the light of the fact that the Tribunal has rendered a finding at any rate that all the materials, including land and electricity, have been supplied by the Contractee Department, we are of the view that what is involved is a job work. Therefore, we would answer the substantial question of law, which has been raised, against the revisionist.” said the bench.
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