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Case law on levy of tax on transfer of property in goods involved in the process of Job Work

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M/s A.P. PROCESSORS Vs STATE OF HARYANA

Haryana Value Added Tax Act, 2003 – Levy of tax on transfer of property in goods involved in the process of Job Work - Whether the Tribunal was justified in upholding the levy of tax on chemicals/consumables and entire value of dyes in the process of job work of dyeing of fabric by treating that property in the goods has passed on to the principals – validity of Tribunal ruling that property in the goods i.e. dyes and chemicals is transferred to be principals in the job work of dyeing the fabric - Works Contract - quantity of goods on which tax is to be levied.

HELD - what is taxable under the HVAT and CST Act is the value of the goods which get transferred to the customer in the execution of works contract either as goods or in any other form and not the value of goods used or consumed in the execution of the works contract - The tax on the entire value of chemicals consumed during the process of dyeing and job work are not to be included for the purpose of levy of VAT as substantial portion of the same is not transferred to the principal eventually as they are washed out and do not remain embedded on the textile or fabric - it would be essential to determine the value of consumables transferred in the goods on which tax is leviable.

While determining the actual loss of chemicals, dyes and colours where the fabric or textile undergoes various processes depends upon factual aspect which can be considered only by the Assessing Officer where parties can produce evidence in respect of their respective claims - The matter is remanded to the Assessing Officer to work out the details of quantity of chemicals, dyes and colours that would get washed out in the process of dyeing and printing of fabrics undertaken by the appellant -

the Assessing Officer would be at liberty to proceed in the matter for adding the percentage of chemicals, dyes and colours in the value of the turnover which are retained or embedded on the textile or fabrics, as the case may be - the appeals are disposed of.

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