M/S. Hindustan Aeronautics Limited vs. State Of Telangana

Facts

M/s. Hindustan Aeronautics Limited (HAL), Avionics Division, filed four writ petitions challenging assessment orders passed by the Assistant Commissioner of Commercial Taxes, Hyderabad Rural Division. The impugned orders, dated October 1, 2018, levied tax under the CST Act, 1956, on transactions involving the dispatch of defense equipment production, specifically avionic electronic component parts, from HAL's Hyderabad division to its Nasik division. These parts were intended for fitment and assembly into SU-30 MKI Light Combat Aircrafts, property of the Ministry of Defence, for the Indian Air Force. HAL contended that these were job work transactions and not sales, making the tax levy illegal. The petitions sought to quash these orders and prevent coercive action. Subsequent to the filing of the petitions, the petitioner and respondents reached a resolution.

Held

The Court was informed by the learned counsel for the petitioner that the matters have been resolved between the petitioner and the respondents (State) subsequent to the filing of the writ petitions. Consequently, the petitioner sought permission to withdraw the writ petitions. The Court granted the permission as sought. Therefore, the Court dismissed all four writ petitions as withdrawn. The operative directions were to dismiss the writ petitions as withdrawn, with no order as to costs. Any pending miscellaneous petitions were also closed.

Key Issues

1. Whether the transactions of dispatch of avionic electronic component parts from the petitioner's Hyderabad division to its Nasik division for fitment/assembly into SU-30 MKI Light Combat Aircrafts, owned by the Ministry of Defence, constitute a 'sale' attracting tax under Section 64(1) of the CST Act, 1956? Petitioner's contention: The petitioner argued that these transactions were not sales but job work, as the ultimate property belonged to the Ministry of Defence. They relied on Supreme Court judgments reported in 55 STC 314 and 327 to support their claim that such transfers do not amount to sale. Revenue's contention: The judgment does not record any specific arguments presented by the revenue or state. However, the impugned orders indicate that the revenue considered these transactions as taxable sales. The petitions were filed under Article 226 of the Constitution of India.