Judgment :- P.P.S. JANARTHANA RAJA, J. 1. These tax case revisions are filed against the order of the Sales Tax Appellate Tribunal (Main Bench), Chennai, in TA No.770 and 62 of 2001 dated 17.08.2001 raising the following substantial questions of law. "1.Whether the exchange of a defective compressor with a reconditioned compressor along with receipt of repair charges will amount to a transaction of deemed sale under Section 3-B of the TNGST Act, 1959? 2. When the defective compressor collected is sent to the Hyderabad factory of the petitioner for necessary repairs, and in the absence of any transfer of property in goods taking place in Tamil Nadu, is it open to the Appellate Tribunal to sustain the levy of tax on such transaction in spite of the specific exclusion provided under Section 3-B(2)(a) of the TNGST Act, 1959? 3. In respect of other assessees engaged in similar business for the assessment years TNGST: 1989-90 and 1993-94, which are subsequent to Forty-sixth amendment to the constitution, the First Appellate Authority held that the orders of the Appellate Tribunal in T.A.No.1546 of 1979 dated 17.6.1979 is applicable, and similar transaction are not liable to tax. After initiating proceedings under Section 34 of the Act, the Joint Commissioner dropped the suo motu proceedings by his order dated 23.11.1998 on the same issue. In such circumstances, is it open to the Tribunal to proceed to consider the issue once again in detail, and take a view different from the view already taken by the earlier Bench? 4. Whether in the absence of any "taxable event", in the State of Tamil Nadu is the Tribunal justified in affirming the levy of tax on the transactions relating to mere "Exchange" which are outside the purview of levy of sales tax?” 2. The petitioner-assessee is a manufacturer of compressors. The goods are manufactured at their factory in Hyderabad and thereafter, they are transferred to Chennai. The relevant assessment years are 1989-90 and 1986-87 respectively. For the assessment year 1989-90, the petitioner/assessee was originally assessed on a total and taxable turnover of Rs.1,51,42,036/- and Rs.1,51,31,748/- respectively. Later the assessment was revised by the assessing officer in pursuance of the order of the Tamil Nadu Sales Tax Appellate Tribunal in O.P.No.4047 of 1997 dated 19.11.1998 and the assessment was completed and the assessing officer held that replacement of defective compressor is assessable under Section 3-B of the Act. Later the assessment was revised by the assessing officer in pursuance of the order of the Tamil Nadu Sales Tax Appellate Tribunal in O.P.No.4047 of 1997 dated 19.11.1998 and the assessment was completed and the assessing officer held that replacement of defective compressor is assessable under Section 3-B of the Act. For the assessment year 1986-87, the assessee was assessed on the total and taxable turnover of Rs.1,31,26,284/- by the assessing officer. Subsequently, the place of business was inspected by the Enforcement Wing on 11.11.1989. During inspection it was found that the petitioner/assessee had done works contract of repairing the defective compressor received from their customers at Chennai, and also the assessee had received repair charges of Rs.59,44,585/- during the year. Therefore, the assessing officer issued notice. Challenging the notice, the petitioner/assessee had filed a writ petition in W.P.No.18113 of 1994 before this Court and the said writ petition was disposed of on 22.01.1993. In consequence of the disposal of the writ petition, the assessing officer revised the assessment and determined the total taxable turnover at Rs.1,72,87,493/-. While determining the turnover, the assessing officer added a sum of Rs.41,61,209/-and treated the transaction as works contract. For both the assessment years, the assessing officer gave relief of deduction at 30% towards labour charges and levied tax at 70% of the turnover in respect of the works contract and levied penalty. Aggrieved by that order, the assessee filed appeals before the Appellate Assistant Commissioner. After hearing the arguments, the Appellate Assistant Commissioner had dismissed the appeals and confirmed the penalty. Aggrieved by that order, the petitioner/assessee filed an appeal before the Tamil Nadu Sales Tax Appellate Tribunal. The Tribunal confirmed the order of the lower authority in respect of levy of tax and set aside the order of the lower authority in respect of penalty. Aggrieved by that order, the petitioner/assessee has filed the present revisions raising the above substantial questions of law. 3. The learned counsel appearing for the petitioner/assessee contended that the Tribunal was wrong in holding that it is a deemed sale. He further contended that the Tribunal is wrong in holding that the transfer of property by way of replacement of defective parts in the compressors while undertaking repair works took place within the State of Tamil Nadu and hence, the transactions are liable to tax. He further contended that the Tribunal is wrong in holding that the transfer of property by way of replacement of defective parts in the compressors while undertaking repair works took place within the State of Tamil Nadu and hence, the transactions are liable to tax. He further submitted that the authorities have failed to appreciate the fact that the petitioner/assessee received defective compressors from their dealers, who had earlier received the same from their respective customers to whom the said compressors were sold by them and later, these defective compressors were despatched to the factory at Hyderabad for repair and reconditioning; that the repaired compressors were taken into the petitioner's/assessee's floating stock in due course on receipt from Hyderabad. But soon after the receipt of defective compressors, the reconditioned compressor was given to the authorised dealer from their floating stock and flat rate was charged as repairing charges, therefore, the assessing officer ought to have appreciated that the transactions partake the character of an exchange not exigible to tax under the provisions of the Tamil Nadu General Sales Tax Act. He further contended that the authorities below erred in levying tax under Section 3-B of the Tamil Nadu General Sales Tax Act and it was alternatively submitted that in any event, under the works contract, what is taxable is the value of the material and in the case of the petitioner/assessee, use of spare parts is very negligible and hence, adopting the table provided under the provisions of law at 70:30 basis for the purpose of levy of tax is excessive. He further contended that the Tribunal has disregarded the fact that the sale by appropriation under Section 4 of the CST Act took place only in the State of Andhra Pradesh and therefore, the Tribunal is wrong in holding that the sale by appropriation has taken place only in Tamil Nadu and hence, it is liable to tax and hence sought to set aside the order of the Tribunal. 4. The learned Government Advocate appearing for the Revenue contended that the Tribunal is correct in holding that it is a deemed sale and correctly levied tax under Section 3-B of the Act. Therefore, the finding given by the authorities below is based on valid materials and the revisions are liable to be dismissed. 5. Heard the learned counsel appearing on either side and perused the materials available on record. Therefore, the finding given by the authorities below is based on valid materials and the revisions are liable to be dismissed. 5. Heard the learned counsel appearing on either side and perused the materials available on record. 6. The petitioner/assessee is the manufacturer of compressors and the said compressor is an important component in the air-conditioner/ refrigerator. The petitioner/assessee supplied refrigerators to the customers. There is no factory with repairing facility within the State of Tamil Nadu. The defective compressors were brought to the petitioner for repairs. When the defective compressor is handed over, a rectified compressor is immediately supplied by the petitioner. The petitioner, in order to have quick servicing, replaced the defective compressor by a re-conditioned compressor of the same model. The defective compressor received was subsequently transferred to the factory in Andhra Pradesh for rectification of the defects. The appellant/dealer collected repair charges for the defective compressors. The whole transaction is completed within the State. Therefore, the authorities below have taken a view that the transaction is works contract and the transfer of property in goods involved in the execution of works contract and thereby, imposed sales tax on such transfers. The authorities have also held that there is no separate particulars towards labour charges and value of the property transferred. The provision of Section 3-B of the Act was attracted and the lower authorities correctly allowed 30% deduction towards labour charges and the remaining 70% was taxable at the appropriate rate. From the transaction it is clear that the supply of defective compressor has been returned as a rectified compressor and therefore, the authorities below held that it amounted to works contract. After the 46th amendment, the definition of "sale" was enlarged including the transfer of property of goods involved in the execution of the works contract and thereby, imposed sales tax on such transfer and therefore, the tax on transfer of property in goods "whether as goods or in some other form" involved in the execution of works contract falls within the ambit of Article 366(29-A) of the Constitution of India. In this case, the defective compressor is repaired and regarding the same, the assessee also produced certain invoices wherein it is categorically stated that the repair charges were charged. 7. In this case, the defective compressor is repaired and regarding the same, the assessee also produced certain invoices wherein it is categorically stated that the repair charges were charged. 7. The learned counsel appearing for the petitioner/assessee brought to the notice of this Court paragraph 9 of the order made by CEGAT Special Bench, New Delhi in SHRIRAM REFRIGERATION INDUSTRIES LTD. V. COLLECTOR OF CENTRAL EXCISE, HYDERABAD reported in 1986 (26) E.L.T. 353, wherein the process employed by the dealer was given and the same reads thus: "9. Let us now see what the evidence on record shows the appellants were doing to the defective compressors received in their factory. According to the show cause notice in the case and further particulars given to us during the hearing, the process employed by them was as follows:- (i) The outer shell of the compressors was cut open. (ii) The inner components of the compressors were then dismantled piece by piece. (iii) The individual parts so obtained were sent to the respective sections in which similar new parts were manufactured. In these sections the received parts were tested and repaired. Irreparable parts were rejected and were replaced by new parts. (iv) After such testing/repairs/replacements, the parts were brought back to a separate repair assembly line set up in 1971. Here, the parts were re-assembled to make a compressor. (v) In about 60% cases, bottom shells of the returned compressors required replacement. Serial number of the compressor is engraved on the bottom shell. So, when the bottom shell itself was replaced, serial number of the returned compressor was re-engraved on the new bottom shell of the re-assembled compressor with a prefix 'R' (to denote repair). In the remaining 40% or so cases, where bottom shells wee not replaced, the serial number was nevertheless re-engraved with the prefix 'R' since the original engraving became distinct because of wear and tear, acid bath etc. The appellants used to receive about 600 to 800 defective compressors per month. Because of the large scale operations, they could not dismantle and reassemble each compressor individually and separately. They were doing this work in batches. It was quite common, because of the batch operation that original components of one defective compressor would go into the re-assembly of another defective compressor, of course, of the same model and specification." 8. Because of the large scale operations, they could not dismantle and reassemble each compressor individually and separately. They were doing this work in batches. It was quite common, because of the batch operation that original components of one defective compressor would go into the re-assembly of another defective compressor, of course, of the same model and specification." 8. The Tribunal after noting the same, held that the activities were one of repairs and remaking and it would not amount to manufacture of any new article. From this, it is clear that they are repairing the compressors. After considering all the activities of the petitioner, the Tribunal, in paragraph 26 held that it is only "works contract" and the same reads thus: "26.While looking deep into the nature of transaction, it is found that the customer is never aware of the repair work being carried out in other State. The customer is not placing orders with the factory at Hyderabad for repair and return of the repaired compressor from Hydrabad to him. On the other hand the transaction is made across the counter of the appellant, by the customer by delivering the defective compressor and receiving the repaired compressor. The point to be noted is that the parts to be replaced in the defective compressor and labour charges are arrived at and collected and even before the same compressor could be got repaired and given a replacement by a repaired compressor is made, from the godown-stock. The parts to be replaced and the "work to be carried out are clearly identified as soon as the defective compressor is handed over to the appellant by the customer an charges therefor are collected and the transaction is completed within the State. Thus the standard parts with particular reference to the 'type and make' of the compressor are determined, and thus they are only standard goods or ascertained goods. In the case of ascertained goods in a transaction of 'sale' the transfer of property takes place when the contract of sale or purchase is made. According to settled position of law, the principles that apply to 'sale' will apply to "deemed sale" as well." From a reading of the above finding, it is clear that the whole transaction forms part of an implied contract for repair of the defective compressor in the State. According to settled position of law, the principles that apply to 'sale' will apply to "deemed sale" as well." From a reading of the above finding, it is clear that the whole transaction forms part of an implied contract for repair of the defective compressor in the State. It is only a replacement with a re-conditioned compressor of the same model instead of a defective compressor. Therefore, the authorities below are correct in coming to the conclusion that there is no contract for sale of compressors. Therefore, the transaction has to be treated only as works contract. The reconditioned compressors are handed over and the defective compressors were received by the assessee after charging repair charges and the whole transaction is within the State. After considering the nature of the transaction, all the authorities have given a categorical finding that there is a works contract and the transfer of property acquired within the State in the said contract. Further the authorities below are correct in holding that in the absence of separate particulars towards labour charges and the value of property transferred, the provisions of Section 3-B of the Act were attracted and allowed 30% deduction towards labour charges and only the remaining turnover was chargeable to tax at the appropriate rate. The concurrent findings given by the authorities below are based on valid materials and there is no error or illegality in the order of the Tribunal warranting interference. Accordingly, we confirm the order passed by the Tribunal and answer the questions of law as against the assessee and in favour of the Revenue and the Tax Case Revisions are dismissed. No costs.