The High Court · 2025

Sri G. Narendra Chetty The Court made the following: ORDER / 1 THE HON'BLE SRI JUSTICE P.SAM KOS HY AND THE HON'BLE SRI JUSTICE SUDDALA CHALAF ATHI RAO TREVC No.L77 of 2OO9 O R D E R: per the llon'ble Sn../ustice Suddqlc Chatapathi Raol The present Tax Revision Case is tl ed by the petitioner/ Revenue assailing the orders passed Lr the lear.ned Sales Ta-x Appellate Tribunal, Andhra pradesh, I I 'derabad (for short 'the learned STAT') in T.A.No.328 of 2OO6 l .18.02.2009, u,hereb,v the said appeal preferred by the responc ent/assessee u,as allou'ed by setting aside the order of revision I zrssed under Section 2O(2) of APGST Act by the Deputy Com-l issioner(CT), Warangal Division, Warangal for the assessment yea - 2OOO O I

2. The brief facts of the case are that, the respon 1 :nt/ assessee namelu M/s Bharat Heavy Electricals Limite:. I)riloncha, Khammam District Palvancha Khammam Di; ric1, is a Government of India undertaking engaged in executin 1 works. It is a registered dealer under the provisions of ApGST .\:t, 1957 (for short 'the Act') and is on the rolls of the Commerciel Ta_x Officer, Kothagudem. For the assessment year 2O0O-01, 1t e Assessing Authorit.v granted exemption to the respondent/ asst,, see treating 1 .t\r \l l l \t\ 2 the transactions as labour contracts, as there is no transfer of goods.

3. The Deputy Commissioner(CT) Warangal Division, Warangal (for short 'the revisional authority') revised the said assessment under Section 2O(2) of the Act uide ordet dt. 10.04.2006, alleging that the assessing authority had emoneously exernpted the value of materials supplied in the works undertaken by the assessee.

4. Challenging the said order, the respondent/ assessee appea-l before the learned STAT in TA No'328/2006'

5. The learned STAT while examining the issue of limitation, held that the revision order clated lO.O4.2006 was passed within the prescribed period of limitation u/s.2O(2) of the Act. The lealned STAT however, held that the Revisional Attthority had failed to discharge the burden of proving that there was transfer of goods ir-r the executicn of rvorks by the assessee, and consequently, set aside the revisional order and restored the orcler of the Assessing Authority, dt.lO.O4.2OO2. \ i{& 3

6. Aggrieved by the older of restoration passed t y the learned STAT, the petitioner/ Revenlle has filed the present Tax Revision Case 7 . The prcsent Tax Revision Case is admitted t: consider. the following questions of law: 1 2 Whether STAT is right in setting aside th I order of the Deputy Commissioner, Warangal? Whether enquiry is necessary when revis;r rn r,vas taken up by the revisional authority? B. Heard Sri T.Chaitanya Kiral, learned Asst. Government Plcader representing the Special Government pleader for State Tax appearing for petitioner/Revenue and Sri G.N.G.Shrr rkar, lear.ned counsel representing Sri G.Narendra Chetty, learne I counsel for the respondent/ as sessee.

9. The learned Asst. Government . t) eader petitioner/ Revenue would contend that the learned }TAT grossly erred in holding that no tramsfer of material in ,, rlved in the execution of works by the assessee, without app eciating the factua-l position and the evidence on record, .,r hich clearly estabiished that materia-ls were, in fact, transferred . r the course 4 .- * \l iE!€ra 1 of execution of the works by the assessee and hence, contended ..1 that the order of the learned STAT suffers from lega_l inlirmity and is liable to be set aside

10.. Per contra, learned counsei for the respondent/assessee would submit that the assessee, being engaged in erection and commissioning of power plants, had executed only labour contracts and had not supplied aly materials and the STAT, upon appreciation of severa-l spiral binding volumes containing the erection invoices raised for the rvorks of KTPS Units and supporting documents, rightly concluded that the payments received were towards labour and service charges, and there is no tralsl-er of material involved in the works carried out by the ASSESSCE FI: further contended that the assessing authority was justified in exempting the said amount and the revisional authority under erroneous views and findings, has set aside the r.vell considered orders of the assessing authority. Thus, prayed to dismiss the Revision. I 1. We have given earnest conslderation to the submissions macie by the counsel appearing on either side and perused the recorcl

12. It is pertinent to note that the impugned ordet is a common order passed by the ieamed STAT in T.A. Nos. 323 of 2006 and 659 of 2OOT for the assessment years 2000_01 urd. 2OOI_O2 respectively, and that TREVC.No. 205 of 2OO9, prel:rred against the order in T.A. No. 659 of 2OOZ for the assessmer t year 200 1_ 02, was dismissed by this Court on 14.lO.2O2S.

13. The very same issue as arose in TREVC.No. lO5 of 2009 arises for consideration in this revision i.e., whether the finclings of the Assessing Authority, as affirmed by the le Lrned STAT, insofar as treating the tralsactions as purely relati; Lg to labour ald service charges ar.ld consequential grant of exerr ption in the absence of any evidence of supply of materials by the z ssessee, ar.e legally sustainable and valid.

74. on a perusar of the impugned order of the rearn,: r STAT, it is evident that in similar matters concerning the sarne ir isessee, the learned STAT in T.A. No. 1496 of 2OO4, dt.28.O4.2OOS ellowed the appeal, setting aside the order of the Additional ccr rmissioner, dt. 15.06.2004. Likervise, for the other assessment ye€ r 1995_96, the Commissioner .of Commercial Taxes, Hyderabal bv order dated 1o.07.20o3, dropped the proposed revision rr r identical ::ii;&,.,. !-I \ . \l "f-rti!q 6 n\' ! facts. Further, for the assessment years 1997 to 2000, similar revls10n proceedings were also dropped by the Additional Commissioner (CT), following the Full Bench decision of the learned STAT on the same issue. The relevant portion of the said decision of the FulI Bench of the learned STAT as extracted in the impugned order, is reproduced hereunder: "As there is no tronsfer of mateiol inuolued in the utroks controc| euen if the said work is ossumed to haue been executed bg the appellant there uill be no taxable tuntouer as there is no transkr of mateial from the appellont to the controctee. Hence, it is immateial uhetlrcr the sub controctors are registered or unregistered dealers. As the paAmetlts uere made touards the labour contracts, the said labour charges ore exempted from pagment of tax. OnIg tuhen there is transfer of mateia[ tex can be leuied only to the extent of transfer of moteial. As it is found that there is no transfer of material in this case and the expenditure incurred bg the appellant in execution of the ruorks is only tou.tards labour ond establishment charges ond consumables etc., which are entitled for deduction, there is no to-xable net turnouer as held by the Appellate Deputy Commissioner. We are of the considered uieut that tLe Additional Commissioner erred -in setting aside the orders of the Appellate Deputy Commissioner (CT), tttithout sufficient reosons and he also erred in remanding the matter utithout any specific directions. As the docttments haue already been ueifted bg tLLe Appellote Deputy Commissioner (CT), on tttto occasions, further remand is unnecessary. Moreouer, the appellant is no other than the Gouentment of India undertaking and th.eg haue no reosorl-s to giue false statements to the effect that there utas no mateial tronsfer in the execution of uork. Hence, for all the oboue said reosons, the impugned reuision orders are not sustainable in lanu. Thus, these two points are found in fouour of the appellant." 7

15. Upon perusal of the orciers of the I 'arned STAT, dt.L8.O2.2OO9 and the Assessing Authority, dt.10 evident that there is no transfer of arry mat: resporrdent/assessee in rclation to erection of t,t plant and the Dy. Commissioner (CT), Waranga

04.2002, it is -iaL from the vers in KTPS Division, i.e., revisional authority, has also failed to indicate or s what manner and to '"r.hat extent any material rbstantiate in was allegedly transferred by the assessee to KTpS/ApGENCO in t: e execution of the works.

16. Further, whcn in fact, no materials were supl) ied and there is no transfer of goods, the question of furnishing p,r not arise, ald the finding ol the revisional auth c 'ticulars does rity that the assessee had not furnished thc particulars of mate r ials involved, appears to be perverse. In the case of this nature. : rrden lies on the Revisional Authority to conduct an enquiry anc alleged tralsfer of materials in the rvorks before :stablish the revising the assessment, which obligation was not discharged by r he revisional authoritY.

17. On the other hand, the revisional authority fail,_, I to consider the payments made to sub contractors, salaries of p: 'sonnel, and I/' // 8 other administrative expenses, and failed to appreciate the .i assessment orders in proper perspective and ought to have compiied the figures with reference to the invoices raised on the customers before arriving at the finclings and thus, the order of the revisional authority are not based on proper appreciation and is totally by non-application of mind.

18. In the ahsence of any evidence indicating transfer of material, the amounts paid torvards services are liable to be exempted under Section 38 of the Act. Consequently, we hold that the revisi()llal order passed rvas not based on valid reasoning and is thus, perverse and unsustainable.

19. In vierv ol the above findings, lt'e are of the considered opinion that the learned STAT rvas justilied in setting aside the revisional order of the Deputy Commissioner(C'l'), Warangai Division, Warangal, dt. 10.04.2006. Tire questions of law are accordingly anss,ered against the petitioner/Revenue and in favour of the r.'spondent/ assessee. Hence, the Toi Revision Case is clevoid of merits and is liable l-o be dismissed 9

20. Accordingly, the Tax Revision Case is dismr s sed. No order as to costs As a sequel thereto, miscellaleous petitions; pending if any, shall stand closed //TRUE COPY// sdl-r.sRtNtvASARAO . OINT REGISTRAR " { EcTtoN oFF|CER 1 The Sales Tax Appellate Tribunal, Andhra pradesh, tlyc -abad. 2. Two CCs to Gp FOR TAX, High Court for the Stat, of Telangana at 3. One CC to Sri G. Narendra Chetty, Advocate [OpUC] 4. Two CD Cooies Hyderabad. [OUT] To, Kam/PR ty' kn) HIGH COURT DATED:1 111112025 ORDER TREVC.No.177 of 2009 -.':\ J;, ,B LiC M :- "\ ,,/ ,,, ,.2,, DISMISSING THE TAX REVISION CASE