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Ex. Engineer C.P.W.D., Sanjay Place, Agra v. Commissioner Of Trade Tax U.P., Lucknow - SALES/TRADE TAX REVISION No. 19 of 2006 [2006] RD-AH 776 (12 January 2006)


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Ex. Engineer CPWD,Sanjay Place, Agra. ....Applicant


Commissioner Trade Tax U.P., Lucknow.   .Opp.party


Hon'ble Rajes Kumar, J.

Present revision under Section 11 of U.P. Trade Tax Act (hereinafter referred to as "Act") is directed against the order of Tribunal dated 28.09.1995 relating to the assessment year 2001-02.

Applicant is a Central Government undertaking, engaged in the construction of buildings. For the construction of the buildings, applicant had engaged various contractors.  As per the agreement, applicant had supplied the material to the contractors and while making the payment to the contractors, value of the goods have been deducted. The claim of the applicant was that the material was supplied for the construction of its own buildings and, therefore, the supply of material was not sale within the meaning of section 2 (i) of U.P. Trade Tax Act.

Heard learned counsel for the parties.

I do not find any merit in the present case. Issue involved is squarely covered by the decision of the Apex Court in the case M/s N.M.Goel & Company Vs. Sales Tax Officer, Rajnandgaon and another, reported in 1990 UPTC, 865, Karya Palak Engineer, C.P.W.D., Bikaner Vs. Rajasthan Taxation Board, Ajmer and others, reported in JT 2004 (6) SC, 384.

At this stage, it is necessary to refer Clause 10 and 33 of the agreement, which reads as follows:

"The contractor shall place his indent in writing for issue of materials at least 7 days in advance of his requirement.

Clause 10. Such material shall be supplied for the purpose of the contract only and the value of the materials so supplied at the rate specified in the aforesaid schedule shall be set of deducted, as and when materials are consumed in items of work (including normal waste for which payment is being made to the contractor, from any such then due or which therefore become due to the contractor under the contract or otherwise or from the security deposit. At the time of submission of bills the contractor shall certify that balance supplied is available at site in original good condition. The contractor shall submit alongwith every running bill (on account or interim bill) matter  wise reconciliation statement supported by complete calculations reconciling total issue. Total consumption and certified balance. Any such stores/materials remaining unused shall be returned the Engineer-in-Charge in as good a condition in which they were originally supplled place directed by him, at a place of issue or any other place specified by him as he shall require, but in case it is decided not to take back the stores/materials the contractor have to claim for compensation on any account to such stores/materials so supplled him as aforesaid and not used by him or for any wastage in or damage to in such store materials on being required to return the stores/materials, the contractor shall hand over the store materials on being paid or credited such price as the Engineer-in-Charge shall determine having due regard to the condition of the stores/materials. The price allowed for credit in the contractor, however, shall be at the prevailing market rate not exceeding the amount charged to him, excluding the storage charge, if any. The decision of the Engineer-in-Charge shall be final and conclusive.

Clause 33. Notwithstanding anything contained to the contrary in this contract, where any materials for the execution of the contract are procured with the assistance of Government either by issue from Government  stocks or purchase made under orders or permits or licences issued by Government the contractor shall hold the said materials economically and solely for the purpose of the contract and no t dispose of them without the written permission of the Government and return, if required by the engineer-in-Charge, all surplus or unserviceable materials that may be left with him after the completion of the contract or at its termination for any reason whatsoever on being paid or credited such price as the Engineer-in-Charge shall determine having due regard to the condition of the materials. The price allowed to the contractor however shall not exceed the amount charged to him excluding the element of storage charges. The decision of the Engineer-in-Chief shall be final and conclusive. In the event of breach of the aforesaid condition the contractor shall in addition to throwing himself open to action for contravention of the terms of the licence or permit and/or for criminal breach of trust, be liable to Government for all moneys, advantages or profits resulting or which in the usual course would have resulted to him by reason of such breach."

On the facts of the case, issue involved is squarely covered by the decisions of the Apex Court, which has been followed by this Court in Trade Tax Revision No.1063 of 1999, The Commissioner, Trade Tax, U.P. Lucknow Vs. S/S Flex Pouches Pvt. Ltd., NOIDA decided on 02.01.2006. In the aforesaid cases, it has been held that the supply of material to the contractor has been held as sale and liable to tax.

In the result, revision fails and is accordingly, dismissed.




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