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2012 Supreme(Del) 2235
DELHI HIGH COURT
S.Ravindra Bhat, R.V.Easwar, JJ.
ABB Limited - Appellant
Versus
Commissioner, Delhi Value Added Tax - Resopndent
ST. APPL. 51/2012, ST. APPL. 52/2012, ST. APPL. 53/2012, ST. APPL. 54/2012, ST. APPL. 55/2012, ST. APPL. 56/2012, ST. APPL. 57/2012, ST. APPL. 58/2012, ST. APPL. 59/2012, ST. APPL. 60/2012, CM. No. 13198/2012, ST. APPL. 61/2012, ST. APPL. 62/2012, ST. APPL. 63/2012, ST. APPL. 64/2012, ST. APPL. 65/2012, ST. APPL. 66/2012, ST. APPL. 67/2012, ST. APPL. 68/2012, ST. APPL. 69/2012 & ST. APPL. 70 of 2012
Decided On : 28-09-2012
For the Petitioner:Mr. S. Ganesh, Sr. Advocate with Mr. R. Jawahar Lal, Ms. Vrinda Aghi, Mr. Maank Kshirsagar, Advocates.
For the Respondent:Mr. Vineet Bhatia, Advocate.
The main legal point established in the judgment is that the movement of goods through import and inter-state sales is integrally connected with the contract for their supply, and the sale could be deemed to have taken place in the course of import of the goods into the territory of India, attracting the provisions of the Central Sales Tax Act.
Headnote:
Central Sales Tax Act - Sale Transactions - Sections 3(a), 5(2) - The court considered whether the sale transactions were in the course of inter-state trade, attracting the provisions of the Central Sales Tax Act, and whether the sale made to the Delhi Metro Rail Corporation was exempt from the Delhi VAT Act. The court analyzed the terms of the contract, movement of goods, and importation, and concluded that the sale transactions were in the course of import and inter-state sales, attracting the provisions of the Central Sales Tax Act.
Fact of the Case:
The Appellant, a public limited company, was engaged in the manufacture and sale of engineering goods. It responded to a Notice Inviting Tenders issued by Delhi Metro Rail Corporation (DMRC) for supply, installation, testing, and commissioning of traction electrification, power supply, power distribution, and SCADA systems for Line 3 Barakhamba Road-Connaught Place-Dwarka Section of Delhi Metro Project.
Finding of the Court:
The court found that the sale transactions were in the course of import and inter-state sales, attracting the provisions of the Central Sales Tax Act. It held that the movement of goods was integrally connected with the contract for their supply, and the sale could be deemed to have taken place in the course of import of the goods into the territory of India.
Issues: The issues involved whether the sale transactions were in the course of inter-state trade, whether the sale made to the Delhi Metro Rail Corporation was exempt from the Delhi VAT Act, and whether the movement of goods occasioned import.
Ratio Decidendi: The court's decision was based on the analysis of the terms of the contract, movement of goods, and importation. It considered the integrally connected nature of the movement of goods with the contract for their supply, and the specific conditions and approvals by DMRC, leading to the conclusion that the sale transactions were in the course of import and inter-state sales.
Final Decision: The court held that the sale transactions were in the course of import and inter-state sales, attracting the provisions of the Central Sales Tax Act. The appeals were allowed in favor of the dealer/assessee.
C.M. No. 13198/2012 (for exemption from filing fair typed copies of dim annexures) IN ST. APPL.60/2012 Allowed, subject to just exceptions.
ST.APPL.51/2012, 52/2012, 53/2012, 54/2012, 55/2012, 56/2012, 57/2012, 58/2012, 59/2012, 60/2012, 61/2012, 62/2012, 63/2012, 64/2012, 65/2012, 66/2012, 67/2012, 68/2012, 69/2012 & 70/2012
1. The questions of law which arise for consideration in this case are:
(i) whether the sale transactions in the present case were in the course of the inter-state trade, so as to attract the provisions of Central Sales Tax Act, 1956 and
(ii) Whether an inter-state trade is deemed to have been taken place in the course of movement of goods into and inside the country;
(iii) Whether the sale made to the Deli Metro Rail Corporation in the course of import and consequently exempt from the Delhi VAT Act, 2004, especially Section 7 (c) of DVAT Act, read with Section 5 (2) of the Central Sales Tax Act.
2. The brief facts of the case are that the Appellant, a public limited company, inter alia, is engaged in the manufacture and sale of engineering Goods including power distribution system and SCADA system. It is a market leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. It is a subsidiary of ABB LTD., Zurich, Switzerland, which has operations in over 100 countries and employs about 130,000 personnel. The appellant responded to an Notice Inviting Tenders (“NIT”) dated May 15, 2003 issued by Delhi Metro Rail Corporation (DMRC) for supply, installation, testing and commissioning of traction electrification, power supply, power distribution and SCADA systems for Line 3 Barakhamba Road-Connaught Place-Dwarka Section of Delhi Metro Project.
3. As part of the scope of the Contract, the Appellant had to provide transformers, switch-gear, High Voltage cables, SCADA System and also provide complete electrical solution, including Control room for operation of metro trains, between Barakhamba Road-Connaught Place-Dwarka Section. The Bid Document contained detailed Bill of Goods, Quantities and specifications for the Goods, sources (i.e. name of the manufacturer/brand), detailed terms and conditions including app royal of sub-contractors/suppliers, testing, certification and Acceptance of Goods and components of work, were provided. The NIT was in two parts i.e. Technical Bid and Financial Bid. The Bidders had to quote a lump sum price for the entire scope of work, covered under the Bid document with individual break up of price of Goods, among other details. The bid was submitted with price break up for individual items. The Appellant submitted its offer. DMRC considered the Technical Bids of the participants and short listed the Appellant and others. Thereafter, on consideration of the Financial Bid, the Bids of the Appellant and other Bidders were shortlisted and DMRC conducted detailed discussions/price-negotiations, with the shortlisted Bidder. After this process the DMRC accepted the Bid submitted by the Appellant and executed a contract with the Appellant on August 4th, 2004 (the “DMRC Contract”) along with Special Conditions of Contract, General Conditions of Contract etc. The NIT was to be treated as and read as part of the Contract, in terms of Clause I of the Contract Agreement.
4. The Appellant contended that the provisions of the Contract in relation to Sale amounted to sale “in the course of imports” covered under Section 5 (2) of the Central Sales Tax Act read with Section 7 (c) of the Delhi VAT Act and therefore exempted from payment of VAT under the Delhi VAT Act. Reliance was placed on various terms and conditions of the contract, such as Clause 19 (13.1) of the Special Conditions of Contract, by which DMRC unequivocally expressed that it was pursuing for VAT exemption on works contract, read with Entry 8 of the Sixth Schedule to the Delhi VAT Act (which entitles to seek and obtain refund of the enti
