S. H. KAPADIA, J.

( 1 ) LEAVE granted.

( 2 ) THIS civil appeal filed by the appellant (assessee) is directed against the judgment and order dated August 14, 2007 delivered by the Karnataka High Court in STRP No. 85 of 2005.

( 3 ) APPELLANT is a company incorporated under the Companies Act, 1956 and engaged in execution of electrical works contracts. Appellant is a registered dealer both under the Karnataka Sales Tax Act, 1957 and the Central Sales Tax Act, 1956 ("cst ACT 1956", for short ). Appellant was awarded three independent contracts towards - (i) supply of capacitor banks, (ii) execution of civil works and (iii) erection and commissioning of capacitor banks at various sub-stations of the Karnataka power Transmissions Corporation Limited ("kptcl", for short) in the State of karnataka. Pursuant to the contracts, appellant appointed M/s. Bay West Power and energy Pvt. Ltd. ("m/s. Bay West", for short) as EPC contractor located outside the state of Karnataka for procuring the capacitor banks ("equipment", for short)because the said EPC contractor had a prior arrangement with the manufacturers of the said equipment. In that transaction four parties were involved, namely, the appellant, M/s. Bay West, manufacturers of the equipment and KPTCL being the ultimate consumer. Although four parties had intervened, in substance, there were three independent contracts involved in the transaction. The first contract was between the appellant and KPTCL for supply of the equipment. The second was between the appellant and M/s. Bay West. It was a procurement contract. The third contract was between M/s. Bay West and the manufacturers.

( 4 ) FOR the assessment year 2000-01, the appellant filed its return of turnover under the CST ACT 1956. Before the AO, appellant contended that the goods originated from the manufacturers and ultimately reached KPTCL though the title to the goods vested originally with M/s. Bay West as the EPC contractor who in turn transferred the title to the goods to the appellant when they were in transit and in turn the appellant transferred the title by endorsing the lorry receipt in favour of kptcl. According to the appellant, there were three sales. According to the appellant, the second and the third sales were subsequent sales, hence, the appellant claimed exemption from tax for such sales under Section 6 (2) of the CST ACT 1956. This argument of the appellant stood rejected by the AO holding that the appellant's turnover fell under Section 3 (a) of the CST ACT 1956. According to the AO, the first sale by the manufacturers to M/s. Bay West was a Section 3 (a) sale; that, the second sale by M/s. Bay West to the appellant was also a Section 3 (a) sale and not a sale under Section 3 (b) and that even the subsequent sale by the appellant to KPTCL (ultimate purchaser) was also a sale under Section 3 (a) and not under Section 3 (b)and consequently it was held that the appellant was not entitled to exemption under section 6 (2) of the CST ACT 1956. Consequently, the claim for exemption made by the appellant stood dismissed. However, relying on the proviso to Section 9 (1) of the cst ACT 1956, the AO held that the State of Karnataka was competent to levy the tax.

( 5 ) AGGRIEVED by the decision of the AO, the appellant herein preferred appeals before the Joint Commissioner of Commercial Taxes (Appeals), Bangalore (hereinafter referred to as "faa" ). That Authority took the view that the AO had erred in holding that the goods stood appropriated by KPTCL at the premises of the manufacturers. However, FAA proceeded to hold that the subsequent sale stood concluded before the movement of the goods and, therefore, there was no first inter-State sale and thus Section 6 (2) of the CST ACT 1956 was not applicable. Accordingly for different reasons, the FAA upheld the levy of tax under the CST act 1956.

( 6 ) THE matter was carried in appeal to the Karnataka Appellate Tribunal, bangalore by the appellant. It was held that mere fai