Tuesday, 13 February 2018

HC : Pipes manufactured using steel plates for use in pipeline laying contract, constitutes 'sale'


HC upholds Tribunal, manufacture and supply of steel pipes for use in execution of lump-sum engineering, procurement and construction (EPC) contract for supply and laying of pipeline qualified as ‘sale’ within definition of Section 2(28) of Gujarat Sales Tax Act, 1969 (Act), liable to tax; Rejects assessee’s plea that steel plates were purchased from vendor enjoying exemption u/s 49(2) which were used by assessee to manufacture steel pipes for further use in work contract execution, therefore, they are sold and hence, claim of re-sale deduction is admissible; Relying upon SC decision in Pyare Lal  Malhotra and Arihant Tiles and Marbles Pvt. Ltd, states that not only there is manufacture but also an activity which is something beyond manufacture and which brings a new product into existence post which the steel pipes are supplied, which amounts to 'sale' within definition of Section 2(28); Accepts Revenue’s argument that, merely because steel pipes were required to be used of a particular brand/company and/or specification or because payment was directly made to assessee’s vendor, it cannot be said that there was a contract for sale of steel plates, remarks that said stipulations are required to ensure quality work for quality payment; Also, upholds penalty, stating that there is no material which suggests that assessee had consulted any expert or applied for determination order which could prompt him for a bona-fide belief that it was not required to pay tax : Gujarat HC

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