High Court of Judicature at Allahabad
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The Commissioner Trade Tax,U.P.Lko. v. S/S, Indian Railway Construction Co.Ltd. Agra - SALES/TRADE TAX REVISION No. 1167 of 1999  RD-AH 2444 (31 January 2006)
Court no. 55
Trade Tax Revision no. 1167 Of 1999.
Trade Tax Revision no. 1170 Of 1999.
Trade Tax Revision no. 1175 Of 1999.
The Commissioner of Trade Tax, U. P. Lucknow. ... Applicant.
M/S Indian Railway Construction Col Ltd., Agra. ... Opp. Party.
Hon'ble Rajes Kumar, J.
These three revisions under Section 11 of U.P. Trade Tax Act (hereinafter referred to as "Act") are directed against the order of Tribunal dated 02.06.1999 relating to the assessment years 1988-89, 1989-90 and 1990-91 under the U. P. Trade Tax Act.
Dealer/Opposite Party (hereinafter referred to as "the Dealer") is an Enterprise undertaken by the Government of India under the Ministry of Railways and is a contractor engaged in the execution of works awarded by the Indian Railways for making Electrification, Installation of Sub Stations and Transmission Lines etc.
During the execution of the above works contract for Indian Railway, dealer used various items of Electric goods, Iron & Steel and Hardware etc. purchased from the registered and unregistered dealers from U. P. and also from approved Ex- U. P. manufacturers who have manufactured the goods as per the specification, design and standard and after inspection by the Railway Inspection Body i.e. Rail India Technical and Mechanical Services (RITES) at the manufacturers Depot. Before the Assessing Authority, it was claimed that the goods used in the execution of works contract were imported from outside the State of U. P. in the course of import, covered under Section 3, 4 or 5 of the Central Sales Tax Act and therefore, the value of such goods were liable to be excluded from the gross turnover in view of Section 3-F (2) (b) (i) of the U. P. Trade Tax Act. Assessing Authority, however, had not allowed such claim and levied tax on the value of the goods imported from outside the State of U. P. by adding 15% profit. First appeals filed by the dealer were dismissed. Dealer filed Second Appeals before the Tribunal, which have been allowed in part. Tribunal has allowed the claim of dealer in respect of the goods purchased from outside the State of U. P. and up held the levy of tax on the goods purchased within U. P. from unregistered dealers, used in the works contract.
Heard learned Counsel for the parties.
Both the parties agree that the issue involved in the present revisions is squarely covered by the decision of this Court in the case of dealer itself Commissioner of Trade Tax Vs. Indian Railway Construction Company Ltd., Agra reported in 2005 UPTC page 984 for the subsequent assessment years. However, it is useful to refer the modus operandi and terms and conditions of the contract which are referred in the order of the Tribunal:-
(a) INDIAN RAILWAYS is a body of Union Government, who has been a contractee in the present case.
(b) CENTRAL ORGANISATION FOR RAILWAY ELECTRIFICATION (CORE) is the internal department of Indian Railways, who carried out the work of Railway Electrification through out India, as also in the present cases.
(c) RESEARCH DESIGN AND STANDARDS ORGANISTAION (RDSO) is also an internal department of Indian Railways, which organizes the designs and standards of the work to be done by the contractors for Indian Railways throughout the country.
(d) RAIL INDIA TECHNICAL AND MECHANICAL SERVICES (RITES) is an enterprises undertaken by Ministry of Railway providing inspection and technical services under the separate contract for that purpose with contractee/Indian Railways.
(e) IRCON INTERNATIONAL LTD., the appellant here is also a Ministry of Railway Undertaking, and in the instant cases has executed the work contract for Railway Electrification, Installation of Sub Stations and Transmission lines awarded by Indian Railways.
The terms and conditions of the written agreement/tender documents, prevailing over the imported goods in the present cases are as follows:-
(i) The goods to be supplied and used in the work contract, are to be procured only from those manufacturers, which are approved by CORE/contractee as per condition no. 1, 2 19 of the tender document.
(ii) The goods to be procured from such manufacturers are necessarily to be inspected by the Inspection body (RITES) of the contractee at the site of manufacturers, for which inspection fee is paid by Indian Railways to RITES as per condition no. 2, 4, 5 of the tender document.
(iii) Specific Railway identification codes would be assigned by contractee as per the drawing and Deep Railway Identification codes have to be embossed on individual goods at the time of manufacturing by the manufacturers.
(iv) The dispatches of the goods duly inspected by RITES are made by the manufacturers vide their invoices alongwith RITES inspection Certificate which mention the description of goods, quantity, R.I. number and paying authority as Indian Railway.
(v) The material dispatched by the manufacturers will be delivered at the depot of appellant on behalf of Railway in presence of Railway's Representative. The material received Certificate (MRC) shall be signed by appellant/contractor as well as the Representative of Indian Railway/Contractee.
(vi) The Contractee/Indian Railway will make the payment of the material to the contractor after obtaining the indemnity bond from the appellant for the safe custody of material on Railway's behalf.
The aforesaid terms and condition have been examined by this Court in the case of dealer itself for the assessment years 1991-92 and 1992-93 and this Court concluded that the goods purchased from outside the State of U. P. and imported in the course of inter-State, used in the execution of works contract, were liable to be deducted from gross turnover under Section 3-F (2) (b) (i) of the Act being transactions covered under Section 3, 4 and 5 of the Central Sales Tax Act.
Respectfully following the decision of this Court in the case of Commissioner of Trade Tax Vs. Indian Railway Construction Company Ltd., Agra (supra), the order of Tribunal is up held.
In the result, revision fails, and is, accordingly, dismissed.
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