Home › GST Law › Commissioner, DVAT v. ABB Ltd (2016) 6 SCC 791/AIR 2016 SC 1901/(2016) 55 GST 293 (SC)

Commissioner, DVAT v. ABB Ltd (2016) 6 SCC 791/AIR 2016 SC 1901/(2016) 55 GST 293 (SC)

Central Sales Tax Act, 1956
S. 3: When is sale or purchase of goods said Movement of goods in the course of import or inter-state or commerce – Deemed sale – when can be held to be covered by Section 3(a) and Section 5(2) of the CST Act, 1956 [S. 3(a), 5(2), Constitution of India, Art. 286(2), Delhi Value Added Tax Act, 2004, S. 7, 74]

Facts

Delhi Metro Railway Corporation Ltd. (DMRC) had invited tenders for supply, installation, testing and commissioning of traction electrification, power supply, power distribution and SCADA system. The respondent was shortlisted and then executed the contract under which the respondent had to provide transformers, switchgears, high voltage cables, SCADA system and also completeelectrical solution, including control room for operation of metro trains on the section concerned. The High Court found that the terms of the contract envisaged interstate movement/import of goods. Such movement of goods was within the knowledge of DMRC because there was total ban on setting up/working of heavy industries in Delhi and DMRC had approved 18 places within the country from where the equipment and goods had to be supplied. These included the premises and factories of the respondent, located in India and outside India. On these  facts, the High Court allowed deemed sale in the course of import as well as interstate trade. The decision of theHigh Court was challenged before the Supreme Court.

 

Issue

Whether the movement of goods by way of imports or by way of interstate trade, in this case, was in pursuance  of the  conditions and/or  as  an incident of the contract between the assessee and DMRC and therefore the transaction was covered by section 3(a) and section 5(2) respectively of the  Central Sales Tax Act, 1956.

 

View

The High Court had in its judgement enumerated various conditions in the contract between DM RC and the respondent which were as follows :

  1. Specifications were spelt out by DMRC;
  2. Suppliers of the goods were approved by DMRC;
  3. Pre-inspection of goods was mandated;

 

 

  1. The goods were custom made, for use by DMRC in its projects;
  2. Excise duty and customs duty exemptions were given, specifically to the goods, because of a perceived public interest, and itsneed by
  3. The Project Authority Certificate issued by DMRC the name of the subcontractors as well as the equipment/goods to be supplied by them were expressly stipulated;
  4. DMRC issued a certificate certifying its approval of foreign suppliers located in Italy, Germany, Korea, etc. from whom the goods were it to be procured;
  5. Packed goods specially marked as meant for DMRC use in its

The Supreme Court found that there was no attempt to rebut the aforesaid findings of the High Court or any factual error therein. Therefore, after considering these salient features of the contract and the entire conspectus of the law applicable thereto the Supreme Court was of the opinion that the deemed sale under consideration was in the course of import and was also in the course of interstate trade.

 

Held

The sale under consideration was covered by section 3(a) and section 5(2) respectively of the Central Sales Tax Act, 1956. (CA Nos 2989-3008 of 2016 (Arising out of SLP (C) Nos 30045-30064 of 2013 dt. 5-4-2016)

Editorial : The statutory framework under GST has now changed and this decision is not entirely relevant under the new law however the pending cases under earlier laws can be benefited by this case.

“If your heart acquires strength, you will be able   to remove blemishes from others without thinking evil  of them.”

– Mahatma Gandhi