LexSMT. B. NARASAMMA versus DEPUTY COMMISSIONER COMMERCIAL TAXES KARNATAKA & ANR.
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A B c D E F G H (2016] 7 S.C.R. 760 SMT. B. NARASAMMA v. DEPUTY COMMISSIONER COMMERCIAL TAXES KARNATAKA & ANR. (Civil Appeal No. 4149 of2007) AUGUSTil,2016 [A.K. SIKRI AND R.F. NARIMAN, JJ.) Taxation - Central Sales Tax Act, 1956 - ss.14 & 15 - Goods declared to be of special importance - Rate and point of taxabi/ity - Such deplored goods, taxable under Karnataka Sales Tax Act and Karnataka Value Added Tax Act, if remain the same or lose their identity as declared goods at the point of taxability when used in execution of works contracts - Held: Works contracts liable to be taxed after the 46''' Constitution amendme/11 are subject to drill of Art. 286(3) r/w s.15, Central Sales Tax Act - Declared goods in question (iron and steel products) that are used in execution of works contract, for reinforcement of cement concrete used in buildings, remain exactly the same goods at the point of taxabi/ity, i.e. the point of accretion (the point of incorporation into the building or structure) - Mere cutting into different shapes and bending does not make these items lose their identity - Hence, would only be taxed at the rate of 4% in accordance with the restrictions contained in s.15, Central Sales Tax Act - Karnataka Sales Tax Act, 1957 - ss.5(4), 5-B - Sch. !Vth/Vlth - Karnataka Value Added Tax Act, 2003 - s.4 - Sch. 111"1/Vfh - Constitution of India - Arts. 286(3) and 366(29A) . Disposing of the appeals, the Court HELD: 1.1 By the 46'h Amendment of the Constitution, Article 366 (29A) was added, by which it became possible by a deeming fiction to tax sale of goods involved in a works contract. The Karnataka Sales Tax Act was amended by inserting Section 5-B to tax goods involved in works contracts. The Fourth Schedule of the said Act deals with declared goods in respect of which a single point tax is leviable under Section 5(4). [Paras 6 and 71 1765-B; 766-AJ 760 SMT. B. NARASAMMA v. DEPUTY COMMISSIONER COMMERCIAL TAXES KARNATAKA 2. Two important propositions emerge on a conjoint reading of Builders Association and M/s. Gannon Dunkerley. First, the works contracts that are liable to be taxed after the 46•h Constitution Amendment are subject to the drill of Article 286(3) read with Section 15 of the Central Sales Tax Act, namely, that they are chargeable at a single point and at a rate not exceeding 4% at the relevant time. Further, the point at which these iron and steel products are taxable is the point of accretion, that is, the point of incorporation into the building or structure. In light of the law laid down in Builders Association and Mis. Gannon Dunkerley, the declared goods in question could only be taxed at the rate of 4%. [Paras 13 and 18] [769-G-H; 770-A; 778-E] State of Karnataka and etc. etc. v. Mis. Reddy Structures Pvt. Ltd. and etc. etc. Builders' Assn. of India v. Union of India (1989) 2 SCC 645 : 1989 (2) SCR 320; Gannon Dunkerley and Co. v. State of Rajasthan (1993) 1 SCC 364 : 1992 (3) Suppl. SCR 103 - relied on. State of Tamil Nadu v. Mis. Pyare Lal Malhotra and Ors. (1976) 1 SCC 834 : 1976 (2) SCR 168 - referred to. 1976 (2) SCR168 1989(2) SCR320 Case Law Reference referred to Para 12 relied on Paras 13, 14 & 18 761 A B c D E 1992 (3) Suppl. SCR 103 relied on Paras 13, 14 & 18 . F CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4149 of2007. From the Judgment and Order dated 12.08.2004 of the High Court of Karnataka in STRP No. 34 of 2003 WITH C.A. Nos. 4318 and4319 of2007. C.A. Nos. 7400, 7401-7872 and 7873-7916 of2016. G H 762 A B c D E F G H SUPREME COURT REPORTS [2016) 7 S.C.R. N. Venkat Raman, Basava Prabhu S. Patil, S. K. Bagaria, K. V. Vishwanathan, K. N. Bhat, Sr. Advs., Yashraj Singh Deora, Ms. Priyadarshinee Singh, Ms. Ashmita Singh, (For Mis. Mitter & Mitter Co.), Sumit Goel, Ms. Rukhmini S. Bobde, K. Ray, (For Mis. Parekh & Co.), Mis. Keswani & Co., V. N. Raghupathy, Anirudh S., Parikshit Angadi, Chinmay Deshpande, Amjid Maqbool, Sanjay Kunur, Ramesh Keswani, Anand San jay M. Nuli, Dharm Singh, Mis. Nuli & Nuli, Vikas Mehta, Raghavendra S. Srivatsa, Mahesh Agarwal, Ms. Parul Shukla, Vibhor Agrawal, Himanshu Satija, K. Ajit Singh, E. C. Agrawala, Roh it Bhat, Mohammad Saffiq, Purushottam, Surya Prakash, V. Shyamohan, Manish Kumar, Mohit Arora, Ms. Divya Roy, T. R. B. Sivakumar, V. Vijaya Kumar, V. Lakshmikumaran, M. P. Devanath, Aditya Bhattachaya, Anandh K., Ms. L. Charnaya, Hem
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