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2025 DIGILAW 1447 (TS)

State of A. P. v. Bhel, Palvoncha, Khammam Dist.

2025-11-11

P.SAM KOSHY, SUDDALA CHALAPATHI RAO

body2025
ORDER : 1. The present Tax Revision Case is filed by the petitioner/Revenue assailing the orders passed by the learned Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad (for short ‘the learned STAT’) in T.A.No.328 of 2006 dt.18.02.2009, whereby the said appeal preferred by the respondent/assessee was allowed by setting aside the order of revision passed under Section 20(2) of APGST Act by the Deputy Commissioner(CT), Warangal Division, Warangal for the assessment year 2000-01 2. The brief facts of the case are that, the respondent/assessee namely M/s Bharat Heavy Electricals Limited, Paloncha, Khammam District Palvancha Khammam District, is a Government of India undertaking engaged in executing works. It is a registered dealer under the provisions of APGST Act, 1957 (for short ‘the Act’) and is on the rolls of the Commercial Tax Officer, Kothagudem. For the assessment year 2000-01, the Assessing Authority granted exemption to the respondent/assessee treating 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 20(2) of the Act vide order dt.10.04.2006, alleging that the assessing authority had erroneously exempted the value of materials supplied in the works undertaken by the assessee. 4. Challenging the said order, the respondent/assessee filed appeal before the learned STAT in TA.No.328/2006. 5. The learned STAT while examining the issue of limitation, held that the revision order dated 10.04.2006 was passed within the prescribed period of limitation u/s.20(2) of the Act. The learned STAT however, held that the Revisional Authority had failed to discharge the burden of proving that there was transfer of goods in the execution of works by the assessee, and consequently, set aside the revisional order and restored the order of the Assessing Authority, dt.10.04.2002. 6. Aggrieved by the order of restoration passed by the learned STAT, the petitioner/Revenue has filed the present Tax Revision Case. 7. The present Tax Revision Case is admitted to consider the following questions of law: 1. Whether STAT is right in setting aside the order of the Deputy Commissioner, Warangal? 2. Whether enquiry is necessary when revision was taken up by the revisional authority? 8. Heard Sri T.Chaitanya Kiran, learned Asst. Government Pleader representing the Special Government Pleader for State Tax appearing for petitioner/Revenue and Sri G.N.G.Shankar, learned counsel representing Sri G.Narendra Chetty, learned counsel for the respondent/assessee. 9. The learned Asst. 2. Whether enquiry is necessary when revision was taken up by the revisional authority? 8. Heard Sri T.Chaitanya Kiran, learned Asst. Government Pleader representing the Special Government Pleader for State Tax appearing for petitioner/Revenue and Sri G.N.G.Shankar, learned counsel representing Sri G.Narendra Chetty, learned counsel for the respondent/assessee. 9. The learned Asst. Government Pleader for petitioner/Revenue would contend that the learned STAT grossly erred in holding that no transfer of material involved in the execution of works by the assessee, without appreciating the factual position and the evidence on record, which clearly established that materials were, in fact, transferred in the course of execution of the works by the assessee and hence, contended that the order of the learned STAT suffers from legal infirmity and is liable to be set aside. 10. Per contra, learned counsel 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 any materials and the STAT, upon appreciation of several spiral binding volumes containing the erection invoices raised for the works of KTPS Units and supporting documents, rightly concluded that the payments received were towards labour and service charges, and there is no transfer of material involved in the works carried out by the assessee. He 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 well considered orders of the assessing authority. Thus, prayed to dismiss the Revision. 11. We have given earnest consideration to the submissions made by the counsel appearing on either side and perused the record. 12. It is pertinent to note that the impugned order is a common order passed by the learned STAT in T.A. Nos. 328 of 2006 and 659 of 2007 for the assessment years 2000-01 and 2001-02 respectively, and that TREVC.No. 205 of 2009, preferred against the order in T.A. No. 659 of 2007 for the assessment year 2001-02, was dismissed by this Court on 14.10.2025. 13. 328 of 2006 and 659 of 2007 for the assessment years 2000-01 and 2001-02 respectively, and that TREVC.No. 205 of 2009, preferred against the order in T.A. No. 659 of 2007 for the assessment year 2001-02, was dismissed by this Court on 14.10.2025. 13. The very same issue as arose in TREVC.No.205 of 2009 arises for consideration in this revision i.e., whether the findings of the Assessing Authority, as affirmed by the learned STAT, insofar as treating the transactions as purely relating to labour and service charges and consequential grant of exemption in the absence of any evidence of supply of materials by the assessee, are legally sustainable and valid. 14. On a perusal of the impugned order of the learned STAT, it is evident that in similar matters concerning the same assessee, the learned STAT in T.A. No.1496 of 2004, dt.28.04.2005 allowed the appeal, setting aside the order of the Additional Commissioner, dt.15.06.2004. Likewise, for the other assessment year 1995–96, the Commissioner of Commercial Taxes, Hyderabad, by order dated 10.07.2003, dropped the proposed revision on identical facts. Further, for the assessment years 1997 to 2000, similar revision 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 Full Bench of the learned STAT as extracted in the impugned order, is reproduced hereunder: “As there is no transfer of material involved in the wroks contract, even if the said work is assumed to have been executed by the appellant there will be no taxable turnover as there is no transfer of material from the appellant to the contractee. Hence, it is immaterial whether the sub contractors are registered or unregistered dealers. As the payments were made towards the labour contracts, the said labour charges are exempted from payment of tax. Only when there is transfer of material, tax can be levied only to the extent of transfer of material. As it is found that there is no transfer of material in this case and the expenditure incurred by the appellant in execution of the works is only towards labour and establishment charges and consumables etc., which are entitled for deduction, there is no taxable net turnover as held by the Appellate Deputy Commissioner. As it is found that there is no transfer of material in this case and the expenditure incurred by the appellant in execution of the works is only towards labour and establishment charges and consumables etc., which are entitled for deduction, there is no taxable net turnover as held by the Appellate Deputy Commissioner. We are of the considered view that the Additional Commissioner erred in setting aside the orders of the Appellate Deputy Commissioner (CT), without sufficient reasons and he also erred in remanding the matter without any specific directions. As the documents have already been verified by the Appellate Deputy Commissioner (CT), on two occasions, further remand is unnecessary. Moreover, the appellant is no other than the Government of India undertaking and they have no reasons to give false statements to the effect that there was no material transfer in the execution of work. Hence, for all the above said reasons, the impugned revision orders are not sustainable in law. Thus, these two points are found in favour of the appellant.” 15. Upon perusal of the orders of the learned STAT, dt.18.02.2009 and the Assessing Authority, dt.10.04.2002, it is evident that there is no transfer of any material from the respondent/assessee in relation to erection of towers in KTPS plant and the Dy. Commissioner (CT), Warangal Division, i.e., revisional authority, has also failed to indicate or substantiate in what manner and to what extent any material was allegedly transferred by the assessee to KTPS/APGENCO in the execution of the works. 16. Further, when in fact, no materials were supplied and there is no transfer of goods, the question of furnishing particulars does not arise, and the finding of the revisional authority that the assessee had not furnished the particulars of materials involved, appears to be perverse. In the case of this nature, burden lies on the Revisional Authority to conduct an enquiry and establish the alleged transfer of materials in the works before revising the assessment, which obligation was not discharged by the revisional authority. 17. In the case of this nature, burden lies on the Revisional Authority to conduct an enquiry and establish the alleged transfer of materials in the works before revising the assessment, which obligation was not discharged by the revisional authority. 17. On the other hand, the revisional authority failed to consider the payments made to sub-contractors, salaries of personnel, and other administrative expenses, and failed to appreciate the assessment orders in proper perspective and ought to have compiled the figures with reference to the invoices raised on the customers before arriving at the findings 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 absence of any evidence indicating transfer of material, the amounts paid towards services are liable to be exempted under Section 38 of the Act. Consequently, we hold that the revisional order passed was not based on valid reasoning and is thus, perverse and unsustainable. 19. In view of the above findings, we are of the considered opinion that the learned STAT was justified in setting aside the revisional order of the Deputy Commissioner (CT), Warangal Division, Warangal, dt.10.04.2006. The questions of law are accordingly answered against the petitioner/Revenue and in favour of the respondent/assessee. Hence, the Tax Revision Case is devoid of merits and is liable to be dismissed. 20. Accordingly, the Tax Revision Case is dismissed. No order as to costs. As a sequel thereto, miscellaneous petitions pending if any, shall stand closed.