DR. MOTILAL B. NAIK, J.

These two special appeals arise out of the common order passed by the Commissioner of Commercial Taxes relating to assessment years 1986-87 and 1987-88. Since the grounds of appeals and issues are common in these two special appeals, they are being disposed of by this common order.

When these special appeals are taken up for consideration, the learned Special Government Pleader for Taxes appraised us about the Department filing T.R.C. No. 14 of 1999 against the order passed by the Sales Tax Appellate Tribunal and stated that the said TRC is also connected with these two Special Appeals and urged this Court to decide T.R.C. No. 14 of 1999 along with these two special appeals. Hence, we called for the records relating to T.R.C. No. 14 of 1999 and took up for consideration along with these two special appeals.

Before we set out to decide the controversy arising out of these two Special Appeals and T.R.C. No. 14 of 1999, few facts are necessary to be recorded for the purpose of convenience.

The appellant is a Public Limited Company engaged in manufacturing, fabrication, supply, erection and commissioning of various projects. The nature of work carried out by the appellant is a works contract. During the assessment years 1986-87 and 1987-88 the appellant had entered into a contract with Visakhapatnam Steel Plant and other public sector undertakings. The contract entered into by the appellant for designing, manufacturing, fabrication, installation and commissioning specified project is composite in nature. The appellant, in order to discharge the obligation arising out of the contract into with various contractees, has manufactured specified goods in their factory at Bombay, which is within the State of Maharashtra, and also purchased certain goods from outside the State as well as from the local registered dealers. The contracts specify separate prices for supply of various items required for execution of the project as well as the commissioning and installation charges. The manner and method to be followed by the appellant in execution of the contract works are as under :

(a) Goods/equipments described in the contract of specific nature are manufactured in their Powai (Mumbai) Factory and dispatched directly in favour of contractee after inspection and approval by them. The turnover is liable for declaration in the State of Maharashtra as provided under section 3(a) of the Central Sales Tax Act, 1956.

(b) Appellant also purchases goods/equipments from outside the State vendors and effect transfer of documents of title in favour of contractee. Such turnovers are claimed exemption being transit sales, not liable to be taxed in view of section 6(2) read with section 3(b) of CST Act.

(c) For the above nature of transaction pertaining to contracts, contractees furnished "C" forms to the appellants and the same filed during assessment proceedings.

(d) Appellants undertake installation/erection of such goods/equipments, which are handed over by the contractees along with other goods required for commissioning the project.

The appellant claimed exemption from payment of local tax as the transaction in which the goods involved is an inter-State transaction and that such goods, which are manufactured, purchased in fulfilment of the contract were transmitted to the State of Andhra Pradesh and that levy of tax on works contract is subject to the restrictions and conditions provided under articles 269 and 286 of the Constitution of India read with entry 92-A, List I of the Seventh Schedule to the Constitution.

The assessing authority seems to have ignored the legal position with regard to subjecting such goods under the Andhra Pradesh General Sales Tax Act, 1957 and the evidence placed in support of its claim for exemption on transit sale of the goods which are brought to the State of Andhra Pradesh and subjected the transit sales under the APGST Act holding as if the transaction is an intra-State transaction.

Agg