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2012 Supreme(Del) 3036
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 Respondent:Mr. Vineet Bhatia, Advocate.
The main legal point established in the judgment is that the sale transactions were deemed to have taken place in the course of import of the goods into the territory of India, and were therefore exempt from taxation under the Central Sales Tax Act, 1956 and the Delhi VAT Act, 2004.
Headnote:
Central Sales Tax Act - Sale Transactions in the Course of Inter-State Trade - Section 5(2) of the Central Sales Tax Act, 1956 - Summary of Acts and Sections: Central Sales Tax Act, 1956, Section 3(a), Section 5(2); Delhi VAT Act, 2004, Section 7(c) - The judgment discusses the applicability of the Central Sales Tax Act, 1956 and the Delhi VAT Act, 2004 to the sale transactions in the present case. It analyzes the provisions of the Acts and their interpretations in the context of the sale transactions, movement of goods, and import of goods, and how these influenced the court's decision.
Fact of the Case:
The Appellant, a public limited company, engaged in the manufacture and sale of engineering goods, 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. 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. The Assessing Officer rejected the exemptions claimed by the appellant, and the appeals to the Tribunal were also rejected.
Finding of the Court:
The Tribunal's findings were challenged, and the Court held that the sale transactions were in the course of inter-state trade and import, and therefore exempt from taxation under the Central Sales Tax Act and the Delhi VAT Act. The Court analyzed the provisions of the Acts, previous judgments, and the specific terms and conditions of the contract between the Appellant and DMRC to conclude that the sale transactions were integrally connected with the contract for their supply, and thus deemed to have taken place in the course of import of the goods into the territory of India.
Issues: The issues revolved around the applicability of the Central Sales Tax Act, 1956 and the Delhi VAT Act, 2004 to the sale transactions in the present case, specifically concerning the movement of goods, import of goods, and the interpretation of relevant provisions of the Acts.
Ratio Decidendi: The Court's decision was based on the interpretation of the provisions of the Central Sales Tax Act, 1956 and the Delhi VAT Act, 2004, and the analysis of previous judgments. The Court emphasized that to determine whether the sale was in the course of import, it had to see whether the movement of goods was integrally connected with the contract for their supply, and that questions such as passing of title or privity of contract were not determinative of the issue.
Final Decision: The Court held that the sale transactions were in the course of inter-state trade and import, and therefore exempt from taxation under the Central Sales Tax Act and the Delhi VAT Act. The appeals were allowed, and there was no order as to costs.
S. Ravindra Bhat, J.
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
