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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
:ORDER:
S.B. Sales Tax Revision Petition No.62/2009.
(C.T.O., Jaisalmer Vs. M/s Karyapalak Engineer, C.P.W.D.)
DATE OF ORDER : April 15th, 2009.
PRESENT
HON'BLE MR. JUSTICE GOPAL KRISHAN VYAS
____________________________________
Mr. Sandeep Bhandawat, Government Counsel.
Mr. Dinesh Kumar Sharma for the respondent.
BY THE COURT :
Instant Sales Tax Revision Petition has been filed under
Section 86 (2) of the Rajasthan Sales Tax Act, 1994 against the
judgment dated 18.06.2008 passed by the learned Tax Board,
Ajmer by which the Tax Board dismissed the appeal filed by the
petitioner department and confirmed the order dated
20.07.2007 passed by the Deputy Commissioner (Appeals),
Jodhpur, in which, interest and penalty order dated 01.03.2007
passed by the assessing authority has been quashed.
Brief facts of the revision are that certain construction
work was assigned by the Union of India through its agency,
Central Public Works Department to the contractors and for the
purpose of construction various contractors were supplied
certain materials as per terms and conditions of the contract
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such as cement etc.
The controversy with regard to question of supply of the
material for the purpose of construction to the contractors by
the CPWD can be treated to be sale or not was finally
adjudicated by the Supreme Court in bunch of civil appeals filed
by the Karyapalak Engineer, C.P.W.D., Bikaner, decided on
12.08.2004, reported in Tax Up-Date Vol.IX Pt.8. In the said
judgment, Hon’ble Supreme Court has held that the Union
through its agency Central Public Works Department undertook
the work of erection of barbed-wire fencing along the Indo-Pak
border from 1991 onwards in the State of Rajasthan. In order
to get the construction work done the appellant awarded
contracts to various contractors and under the terms and
conditions of the said contract it had agreed to supply the
contractors materials such as cement, barbed wire, M.S. angles,
etc. The apex Court held that the use or consumption of
material supplied in the work of construction, there was passing
of property and by virtue of receipt of value of such transferred
property by way of adjustment in bills the consideration has also
passed which satisfies the definition of ‘sale’ in the local Sales
Tax Act.
Therefore, in view of the above judgment, the assessing
authority passed order of assessment from the year 1996
onward and the assessing authority imposed tax, penalty,
interest and penalty under Section 59, penalty under Section 61
of the Sales Tax Act vide assessment order dated 01.03.2007.
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Against the said order passed by the assessing authority, appeal
was preferred by the respondent before the Deputy
Commissioner (Appeals), Jodhpur, who, vide order dated
20.07.2007 partly allowed the appeal of the respondent and
while following the judgment of the apex Court in the case of
Karyapalak Engineer (supra) confirmed the order of the
assessing authority so far it relates to tax but quashed the order
of interest and penalty and remitted the matter to the assessing
authority for deciding the question of interest from the date of
judgment of the apex Court which is 12.08.2004; and, for the
purpose of penalty imposed under Section 61 of the Act of 1994
it has been held that the said penalty has not been imposed in
accordance with law, therefore, set aside the order of penalty
imposed under Section 61 and further upheld the penalty
imposed under Section 59 by the assessing authority.
Said judgment passed by the Deputy Commissioner
(Appeals), Jodhpur was appealed against both by the petitioner
and respondent before the learned Tax Board. The Tax Board,
however, vide its judgment dated 18.06.2008 upheld the finding
with regard to imposition of tax as per the judgment of apex
Court, so also, upheld penalty imposed under Section 59 and
quashing penalty under Section 61; but, the Tax Board has held
that tax cannot be levied without any assessment even if the
judgment was rendered by the apex Court on 12.08.2004. For
the purpose of levying tax the assessing authority is, however,
required to pass assessment order and, admittedly, assessing
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authority passed order on 01.03.2007, therefore, liability cannot
be imposed prior to 01.03.2007, the day on which assessment
order was passed by the assessing authority.
In this case, the department is challenging order of the
Deputy Commissioner (Appeals) as well as order passed by the
Tax Board on the ground that as per the judgment of the
Supreme Court the supply of cement for construction purpose as
per terms and conditions of the contract to various contractors
by the department was sale and they were required to pay tax
upon the said sale, therefore, if the tax was not paid in time,
then, obviously the petitioner department is entitled to levy
interest as well as impose penalty upon delayed payment of tax.
More so, now the apex Court has held that supply of cement
etc. to the contractors by the CPWD is sale and, upon which, tax
can be levied by the petitioner department of the State,
therefore, both the courts below have committed error while
quashing interest and penalty part of the assessment order
which has been assessed by the assessing authority because the
respondent was under obligation to pay tax as and when it
became due.
I have considered the rival submissions made by both the
parties.
It is true that the apex Court has held that material
supplied by the department of the Union of India shall be
treated to be sale but this verdict was given on 12.08.2004.
Therefore, after the judgment, it was the duty of the petitioner
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department to pass order within time. Admittedly, assessment
order was passed by the assessing authority on 01.03.2007,
therefore, in my opinion, both the Courts below have rightly
upheld the tax liability upon the respondent and, further, rightly
quashed order of penalty and interest made by the assessing
authority vide Annex.-1.
The Tax Board has rightly come to the conclusion that
after adjudication of the controversy by the Supreme Court with
regard to treating the supplied material to the contractors by
the CPWD as sale, it was the duty of the department to pass
order of assessment in time because without assessment order
it cannot be presumed what amount of tax the assessee is
required to pay. Accordingly, the learned Tax Board has rightly
adjudicated the matter that for the purpose of assessing interest
and penalty for delayed payment, the assessing authority is
required to pass order afresh and while passing such order he
shall take into consideration the fact that he has passed the
assessment order on 01.03.2007, after the judgment of the
apex Court on 12.08.2004 in the case of Karyapalak Engineer
(supra).
In view of afore-mentioned position in the case, no
substantial question of law emerges in this case because the
apex Court has only held that there is liability of tax upon the
respondent with regard to supplied material for construction
work which falls under the definition of “sale” but further it is not
adjudicated by the apex Court as to from which date interest or
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penalty can be imposed. It is settled law that any adjudication
made by the Apex Court has prospective effect unless it is
specifically otherwise directed by the Court. In the judgment of
Karyapalak Engineer (supra), it is nowhere adjudicated by the
Hon’ble apex Court that this adjudication will have retrospective
effect. In this view of the matter, I am of the opinion that no
error has been committed by both Deputy Commissioner
(Appeals), Jodhpur and learned Tax Board, Ajmer while
adjudicating the appeals. The revision petition is, therefore,
bereft of merit.
Accordingly, this revision petition is hereby dismissed.
(Gopal Krishan Vyas) J.
Ojha, a.