LexLARSEN & TOUBRO LIMITED versus ADDITIONAL DEPUTY COMMISSIONER OF COMMERCIAL TAXES & ANR.
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[2016] 4 S.C.R. 739 LARSEN & TOUBRO LIMITED v. ADDITIONAL DEPUTY COMMISSIONER OF COMMERCIAL TAXES &ANR. (Civil Appeal No. 2956 of2007) SEPTEMBER 05, 2016 [A.K. SIKRI AND ROHINTON FALi NARIMAN, JJ.) Karnataka Sales Tax Act, 1957 - s.6B - Total Turnover - Computation of - Assessee has been into business of engineers and contractors and in this process executing projects under works contracts and is assigning a part of job to sub-contractors to execute the works contracts - Claim of assessee that the value of work entrusted to the sub-contractor not to be taken into account while computing total turnover for the purpose of taxation - Held: The value of the work entrusted to the sub-contractor or payments made to them shall not be taken into consideration while computing total turnover for the purposes of s.6B - Karnataka Sales Tax Rules, 1957 - r.6(1)(c) - Andhra Pradesh Value Added Tax Act, 2005 - s.4(7) - Andhra Pradesh Value Added Tax Rules, 2005 - r.17(1)(a) - Constitution of India - Art.366(29A)(b). Words and Phrases: Sale, taxable turnover, total turnover and turnover - Definitions discussed in terms of Karnataka Sales Tax Act, 1957. Allowing the appeals by assessee and dismissing the appeal by revenue, the Court HELD: In view of clause (c) of Sub-rule (1) of Rule 6 of Karnataka Sales Tax Rules, 1957, total amount paid or payable to the dealer as a consideration for 'transfer of property in goods', which is involved in execution of the works contract, is to be treated as 'total turnover'. This Rule, thus, specifically restricts the total turnover in respect of those goods, alone, where the property has been transferred. Thus, transfer of property in goods, becomes necessary event and unless there is a transfer of nronf'rtv. thf' 11mount naid is not to be included in the total A B c D E F G 740 A B SUPREME COURT REPORTS [2016] 4 S.C.R. of property in goods. Therefore, the value of the work entrusted to the sub-contractors or payments made to them shall not be taken into consideration while computing total turnover for the purposes of Section 6-B of the Karnataka Act. As a consequence, the two appeals which were filed by the assessee were allowed and the appeal preferred by the Revenue was dismissed. [ Paras 17, 18 and 20) (747-F-H; 748-B; 750-B] State of Andhra Pradesh & Ors v. Larsen & Toubro Limited & Ors. (2008) 9 SCC 191: 2008 (12) SCR 843 - relied on. c The State of Madras v. Gannon Dunkerley & Co. (Madra5~ Limited AIR 1958 SC 560 : 1959 SCR 379; Builders' Association of India & Ors. v. Union of India & Ors. (1989) 2 sec 645 : 1989 (2) SCR 320 - D referred to. Case Law Reference 2008 (12) SCR 843 1959 SCR 379 1989 (2) SCR 320 relied on Para 6 referred to Para 14 referred to Para 14 E CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2956 of F G H 2007. From the Judgment and Order dated 03 .02.2006 of the High Court of Karnataka in STRP No. 44 of 2004 C. A. No. 2318 of2013 C. A. No. 7241 of2016. WITH N. Venkatraman, K. N. Bhat, Sr. Advs., D. P. Mohanty, Ms. Sanjana Ramachandran, Abhinay, Mis. Parekh & Co., Sanand Ramakrishnan, V. N. Raghupathy, Parikshit P. Angadi, Advs. for the appearing parties. The Judgment of the Court was delivered by A.K. SIKRI, J. I. Same parties are entangled in these three appeals which arise out of the provisions of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the 'KarnatakaAct'). Two appeals LARSEN & TOUBRO LIMITED v. ADDITIONAL DEPUTY COMMISSIONER OF COMMERCIAL TAXES [A.K. SIKRI, J.] are, preferred by the assessee, viz. Larsen & Toubro Ltd., and one appeal is filed by the Revenue, i.e. the Sales Tax Department of Karnataka. 2. The assessee is doing the business of engineers and contractors and in this process it, inter alia, executes projects under contracts with public sector undertakings, local bodies as well as the Union and the State Governments, besides private sector. The assessee is registered under the Karnataka Act and files its returns for payment of sales tax thereunder. The contracts which are secured by the assessee are the works contracts and a part thereof is generally assigned to sub- contractors. For example, in Civil Appeal No. 2956 of2007, the assessee had secured a contract to construct an indoor stadium styled 'Sree Kanteerava Indoor Stadium' in Bengaluru and the assessee assigned the work of finding their own materials and laying foam concrete to
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