Petitioner is a contractor who had sub-contracted part of the works contract to another person. Department sought tax from Petitioner on the entire contract on\u00a0 the basis that there are two deemed sales: one from the sub-contractor to the Petitioner and another from thePetitioner to the employer.<\/p>\n
\u00a0<\/p>\n
Whether there are two or only one \u201cdeemed sale\u201d and whether main contractor\u00a0\u00a0\u00a0\u00a0\u00a0 is liable to pay tax on the portion of the workscontract which is sub-contracted?<\/p>\n
\u00a0<\/p>\n
Under Article 366(29A)(b), tax is levied on transfer of property in goods involved\u00a0 in the execution of works contract. There can be only one transfer of property in goods, in a works contract, when the goods are incorporated in the works. The goods are purchased by the sub-contractor and therefore he is owner of those goods. When the goods are subsequently used in the execution of the works contract, the transfer of property in goods takes place by way of accretion and hence the employer becomes the owner.\u00a0 Petitioner has no role to play and there\u00a0\u00a0\u00a0 is no transfer of property to or from the Petitioner in respect of these\u00a0 goods\u00a0 which fall within the sub-contractor\u2019s scope of work.<\/p>\n
\u00a0<\/p>\n
Petitioner is not liable to pay tax on the goods which are used by the sub- contractor in the execution of works contract. (CA No. 5239 of 2008 (Arising out\u00a0\u00a0\u00a0 of SLP (C) No. 12482 of 2007 dt. 26-8-2008)<\/p>\n
Editorial<\/em><\/strong>: This decision furnishes some first principles for application to new GST regime, though this must be done cautiously since the statutory framework has\u00a0 now changed. Under GST the term \u201cWorks Contract\u201d have been defined under<\/p>\n \u201cIt is any day better to stand erect with a broken and bandaged head then to crawl on one\u2019s belly,\u00a0\u00a0 in order to be able to save one\u2019s head.\u201d<\/em><\/p>\n – Mahatma Gandhi\u00a0<\/p>\n Andhra Pradesh Value Added tax, 2005\n
\u00a0<\/h4>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"
\nS. 4(7): Works Contract \u2013 Contractor & Sub-contractor \u2013 Only one taxable event in works contract, that is incorporation of goods in the works \u2013 tax leviable only once on transfer of property from sub-contractor directly to the employer \u2013 No liability of main contractor [Central Sales tax Act, 1956, S. 3, 4, 5, Constitution of India, Art. 366(29A(b)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5],"tags":[],"class_list":["post-12969","post","type-post","status-publish","format-standard","hentry","category-gst-law"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3nb","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12969","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=12969"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12969\/revisions"}],"predecessor-version":[{"id":12970,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12969\/revisions\/12970"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=12969"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=12969"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=12969"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}