1deccan Brakesets Company, Bangalore vs Authority for Clarification and Advance Rulings, Bangalore

R. Gururajan, J.-All these three appeals are disposed of by this common order.

The assessees have approached the authority for clarification under Section 4 of the Karnataka Sales Tax Act, 1957 in the matter of indivisible works contract of supply and manufacture of electrical transformers; indivisible works contract of manufacture, supply and fixing of steel doors, door frames, windows and window frames and works contract of interior decoration. The authority after hearing the parties has chosen to pass the following order.-

"For the aforesaid reason the authority rules that:

(i) Indivisible works contract of supply and installation of electrical transformers;

(ii) Indivisible works contract of manufacture supply and fixing of steel doors, door frames, windows and window frames.

Appellant is not entitled to purchase against declaration in Form 37 under Section 5-A of the Karnataka Sales Tax Act, 1957, raw materials components and consumables for manufacture of intermediary goods and further use such manufactured goods in execution of works contract, whether taxable under Section 5-B or Section 17(6) of the Karnataka Sales Tax Act, 1957".

This order is challenged by the assessees in these appeals.

Heard Sri E.R. Indra Kumar, learned Senior Counsel appearing for the assessee in all these cases. He would say that the authority is wrong in the given circumstances in holding against the assessees. He would say that factually the assessees do manufacture in terms of the statement of facts made before the Advance Ruling Authority by them and unfortunately without properly adverting to the averments made in the application, the impugned order is passed. Per contra, Smt. Sujatha, learned Government Advocate supports the order. After hearing both the learned Counsels, we have carefully perused the order passed by the Advance Ruling Authority in the case on hand.

The Advance Ruling Authority at page 22 would hold that there is no manufacturing activity or that no new goods would emerge for the purpose of Section 5-A of the KST Act in the case on hand. We have been taken through the application filed by each one of the assessees. In the application, the assessees have stated that they do purchase the raw materials and thereafter they manufacture doors and window etc., in terms of the averment made therein. Unfortunately, the authority has not chosen to bestow his attention with reference to the averments in the advance ruling application. In the circumstances, we are satisfied that the matters have to be remitted in the light of the non-consideration of the material facts in accordance with law. In the circumstances, we deem it proper to dispose of the appeals by way of remand to the Advance Ruling Authority without expressing any opinion on the merits of the matter. The Advance Ruling Authority shall consider each one of the application with reference to the material facts and thereafter consider the ruling of this Court in S.T.R.P. No. 31 of 2003 disposed of on 12-8-2004 and S.T.R.P. No. 30 of 2006, dated 26-10-2006 in the facts of the case if applicable and thereafter proceed to pass orders. Ordered accordingly.

The parties are directed to appear before the Advance Ruling Authority on 28-3-2007 without waiting for any notice and the authority shall dispose of the application within three months thereafter without in any way being influenced by the earlier order or by this order. All contentions of the parties are left open. No costs.