Ashok Bhushan JUDGMENT
A.K. Sikri, J.
1. All these appeals are filed by the same Appellant, namely, M/s. India Hume Pipe Co. Ltd. (hereinafter referred to as the 'assessee'). The singular issue that arises is also identical in all these appeals. The only reason for filing number of appeals is that the said issue pertains to different Assessment Years.
2. The issue that has arisen in these appeals is as to whether Works contract given to the Assessee is divisible in nature, in the facts of the case, and hence the imposition of tax and penalty made Under Section 7AA of the Rajasthan Sales Tax Act, 1954 is justifiable and sustainable in law.
3. In order to have clarity in the matter and better grasp of the lis, it is necessary to glance through the relevant facts under which the aforesaid issue has arisen for consideration.
4. In the year 1954, the State Government of Rajasthan enacted the Rajasthan Sales Tax Act in order to tax the sales and purchase of any goods. The Assessee is a company engaged in manufacturing and laying of pipelines for water supply schemes. The Public Health and Engineering Department (for short, 'PHED') of the State Government invited tenders for providing and laying of pipes complete with suitable jointing material specials, valves and construction of valve chamber, anchor blocks table crossing, including testing and commissioning of pipelines. On August 23, 1988, a work order was issued by PHED in favour of the Assessee and the Assessee, under the contracts/agreement dated January 11, 1989, agreed to provide PSC pipes manufactured by it and had entered into the contracts with PHED for providing and laying of pipelines.
5. On June 28, 1989, a notification inserting Rule 10B in the Rajasthan Sales Tax Rules, 1955 granting exemption to Works contract came to be issued with retrospective effect from May 28, 1987. Another work order was placed by the Respondent in favour of the Assessee on July 10, 1989. Pursuant to this, another notification dated March 04, 1992 came to be issued by the Respondent wherein it exempted tax on Works contract relating to dams and canals. The Respondent issued another work order dated August 10, 1992 in favour of the Assessee for commission of pipeline in a dam. Meanwhile, the Assessee filed an application dated September 17, 1992 before the Commercial Tax Officer seeking exemption from paying tax. However, the same was rejected by the Commercial Tax Officer vide his order dated September 26, 1994 making it clear to the Assessee that the pipes manufactured and supplied by it fall within the definition of 'sale of goods' and that the contract is divisible in nature. 75% value of the contract was treated as consideration for sale of goods.
6. The appellate authority, Single Judge as well as the Division Bench of the High Court of Rajasthan, after dealing with merits of the case, affirmed the order passed by the