The Jammu & Kashmir And Ladakh High Court has held that no sales tax is exigible for the supply of goods for erecting transmission lines, substations, and power grids.
The bench of Justice Sanjeev Kumar and Justice Rajesh Sekhri has observed that the transaction between the assessee and the contractors in which the assessee has supplied the goods and material purchased by it from outside the State against C-Forms for the purpose of erecting transmission lines, sub-stations, and power grids for itself did not amount to “sale” as it was defined under Section 2(L) of the GST Act before 15.05.1997.
The assessee/appellant is a Government of India undertaking engaged in establishing its own grid stations and laying wires for the transmission of electricity. It is in the execution of its works, the assessee purchased some goods, materials, and machinery, etc. from outside the State. The assessee
has taken registration under the Central Sales Tax, 1956.
The assessee first buys goods, material, and requisite machinery from outside the State and hands over the same to the contractors for consumption, fixation, and laying out in the works of the assessee. As is claimed, the ownership and possession of the property used in the execution of the works of the assessee remains with it and the contractors are only engaged to execute the work on payment of labor charges.
The assessee submitted that since no property in goods is transferred to the contractors, as such, no payment against such material handed over to the contractors, to be used in the execution of works
of the assessee, is charged. Since the assessee was not making any local sales under the GST Act, as such, was not initially registered under the Act.
The Assessing Authority held that as the assessee had taken registration under the CST Act to import goods from outside the State against C-Forms, was, therefore, a dealer It was the plea taken by the Assessing Authority that only a dealer, who is registered as such under CST Act can use C-Forms to
purchase goods for personal use. It was concluded by the Assessing Authority that the transactions made by the assessee were liable to tax. Consequently, the Assessing Authority also imposed
interest and penalties under the GST Act
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