The Calcutta High Court in Joyrath Projects P ltd v. Sales Tax Officer [W. P. No. 19185 (w) of 2013], had occasion to examine ‘transfer of property’ and determine whether good purchased for use in works contract being a building contract amounted to sale as per the Central Sales Tax Act.
At issue was refusal by the Sales Tax Officer to issue C form to the dealer who had purchased a building rectifier from outside the state. The dealer was registered under CST and engaged in works contract.
Earlier cases on transfer & works contract
Both parties advanced case laws in support of their views. The court however was not persuaded by the citation of Ganon Dunkerly and Builders Association on India & anr. v. UOI. It opined that these cases dealt with the constitutional validity of levy of sales tax on materials supplied in a work contract. The petitioner cited the two judgements of the Kerala High Court where facts were more or less similar.
In Ajantha Colour lab, the assessee – engaged in business of photography and photo processing sought to avail concessional rate on purchase of film processor. The division bench had held that person executing the “works contract” is a dealer and the transfer of property involved in execution of such “work contract” is a sale. Again in Dlf Laing O’Rourke (India) Ltd, the Kerala high court held that a person engaged in a “works contract” of a building construction is a manufacturer and is entitled to be granted registration as a dealer under the CST Act and also entitled to issuance of “C” Form for effecting the interstate purchase.
The decision
Thus, in the instant case the Calcutta High Court held that sale and purchase of machines for execution of works contract is transfer. On facts, the assessee had also amended his registration certificate to include certain machineries.