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Tax - Levy of tax on chemicals used as consumables in the process of job work of dyeing of fabric by assuming property

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Haryana Value Added Tax Act, 2003 - Whether the Tribunal is justified in upholding the levy of tax on chemicals used as consumables in the process of job work of dyeing of fabric by assuming that property in the goods has passed on to the principals and ignoring the quantity of dyes, which were not transferred to the principals 

HELD - the chemicals used in the job work are taxable, however, the pertinent question to be answered would be as to how much of dyes/colours are taxable which is transferred to the fabric when the whole quantity of consumable is not transferred - 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 - what is taxable under the HVAT and CST Acts 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 works contract if such user or consumption does not result in transfer of property in those goods in any form to the customer.

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 - the impugned orders passed by the Tribunal in all the three appeals are set aside and the matter is remanded to the Assessing Officer to decide the matter afresh


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