M/S Power Grid Corporation Of INDIA LTD vs. Assessing Authority Sales Tax Circle D Jammu

Held

The High Court answered the first question in the negative, holding that the transaction where the petitioner supplied goods and material purchased from outside the State against C-Forms for erecting transmission lines, sub-stations, and power grids for itself did not amount to a 'sale' as defined under Section 2(L) of the GST Act during the relevant period. Consequently, it was not exigible to sales tax, and the petitioner was not a dealer liable to pay tax under the GST Act for these transactions. Regarding the second question, the Court held that the Tribunal, and all subordinate authorities, are bound to follow and comply with the law laid down by the Tribunal to maintain judicial discipline and avoid uncertainty. While the Tribunal may deviate from its earlier view if there is a change in law or fact situation, subordinate authorities cannot take a contrary view without justification. The Court noted that the Assessing Authorities had repeatedly passed orders ignoring the Tribunal's mandate. The Court also made observations regarding the potential for a single composite contract between the petitioner and contractors, suggesting tax authorities could investigate further, but this did not directly impact the outcome of the references. The references were answered accordingly, and the Registry was directed to send a copy of the judgment to the Tribunal.

Facts

The petitioner, M/s Power Grid Corporation of India Ltd., a Government of India undertaking, engaged in establishing grid stations and transmission lines, purchased goods and machinery from outside the State and handed them over to contractors for consumption in its works. The petitioner claimed ownership and possession remained with it, with contractors only paid labour charges, and no property in goods was transferred. The Assessing Authority, noting the petitioner's registration under the Central Sales Tax Act, 1956 (CST Act) for importing goods using C-Forms, deemed it a 'dealer' and liable for tax, interest, and penalty under the GST Act for accounting years 1996-97 to 2001-02. Appeals to the Appellate Authority provided partial relief, reducing taxable turnover by 20%. The petitioner then appealed to the Jammu and Kashmir Sales Tax (Appellate) Tribunal, challenging the finding of transfer of property in goods.

Key Issues

1. Whether, on the facts and circumstances, the applicant supplied 'goods' as defined under Section 2(h)(ii) and 2(h)(iv) of the GST Act, which were deemed a sale before 15.05.1997 under Section 2(L), making the applicant a dealer amenable to tax? 2. Whether the Tribunal was bound by its earlier orders in the applicant's own cases, which had attained finality, and whether the principle of consistency required the Tribunal to adhere to its prior rulings? Petitioner's arguments: The petitioner contended that goods were only handed over to contractors for use and fixation in its own works, with ownership and possession remaining with the petitioner, thus no transfer of property occurred. They argued no local sales were made and no works contract was completed by contractors during the material supply period, and one cannot sell goods to oneself. Revenue's arguments: The Assessing Authority argued that registration under the CST Act for importing goods against C-Forms indicated the petitioner was a 'dealer' liable for tax, as C-Forms are for personal use by registered dealers. The Tribunal, in its impugned order, held that the transactions constituted a sale, either as goods under Section 2(h)(ii) and 2(h)(iv) before 15.05.1997, or as works contract deemed a sale under Section 2(g)(i-b) after that date, including transfer of the right to use goods.