Motilal B. Naik, J.These two special appeals arise out of the common order passed by the Commissioner of Commercial Taxes relating to assessment years 1986-87 and 1987-88. Since the grounds of appeals and issues are common in these two special appeals, they are being disposed of by this common order.

2. When these special appeals are taken up for consideration, the learned Special Government Pleader for Taxes appraised us about the Department filing T.R.C. No. 14 of 1999 against the order passed by the Sales Tax Appellate Tribunal and stated that the said TRC is also connected with these two Special Appeals and urged this Court to decide T.R.C. No. 14 of 1999 along with these two special appeals. Hence, we called for the records relating to T.R.C. No. 14 of 1999 and took up for consideration along with these two special appeals.

3. Before we set out to decide the controversy arising out of these two Special Appeals and T.R.C. No. 14 of 1999, few facts are necessary to be recorded for the purpose of convenience.

4. The appellant is a Public Limited Company engaged in manufacturing, fabrication, supply, erection and commissioning of various projects. The nature of work carried out by the appellant is a works contract. During the assessment years 1986-87 and 1987-88 the appellant had entered into a contract with Visakhapatnam Steel Plant and other public sector undertakings. The contract entered into by the appellant for designing, manufacturing, fabrication, installation and commissioning specified project is composite in nature. The appellant, in order to discharge the obligation arising out of the contract into with various contractees, has manufactured specified goods in their factory at Bombay, which is within the State of Maharashtra, and also purchased certain goods from outside the State as well as from the local registered dealers. The contracts specify separate prices for supply of various items required for execution of the project as well as the commissioning and installation charges. The manner and method to be followed by the appellant in execution of the contract works are as under :

(a) Goods/equipments described in the contract of specific nature are manufactured in their Powai (Mumbai) Factory and dispatched directly in favour of contractee after inspection and approval by them. The turnover is liable for declaration in the State of Maharashtra as provided u/s 3(a) of the Central Sales Tax Act, 1956.

(b) Appellant also purchases goods/equipments from outside the State vendors and effect transfer of documents of title in favour of contractee. Such turnovers are claimed exemption being transit sales, not liable to be taxed in view of Section 6(2) read with Section 3(b) of CST Act.

(c) For the above nature of transaction pertaining to contracts, contractees furnished "C" forms to the appellants and the same filed during assessment proceedings.

(d) Appellants undertake installation/erection of such goods/ equipments, which are handed over by the contractees along with other goods required for commissioning the project.

5. The appellant claimed exemption from payment of local tax as the transaction in which the goods involved is an inter-State transaction and that such goods, which are manufactured, purchased in fulfilment of the contract were transmitted to the State of Andhra Pradesh and that levy of tax on works contract is subject to the restrictions and conditions provided under Articles 269 and 286 of the Constitution of India read with entry 92-A, List I of the Seventh Schedule to the Constitution.

6. The assessing authority seems to have ignored the legal position with regard to subjecting such goods under the Andhra Pradesh General Sales Tax Act, 1957 and the evidence placed in support of its claim for exemption on transit sale of the goods which are brought to the State of Andhra Pradesh and subjected the transit sales under the APGST Act holding as if the transaction is an intra-State transaction.

7. Aggrieved by the order of the assessing authority, dated February 21, 1991, the appellant preferred an appeal before the Appellate Deputy Commissioner, Secunderabad Division, Hyderabad, The disputed issues before the Appellate Deputy Commissioner were in two counts, viz.,

I. Turnover disputed :

(i) Sales effected in the course of inter-State trade and commerce involved in the execution of works contracts assessed to tax under APGST Act : Rs. 1,60,97,016,

(ii) Computation of turnover under various works contract : Rs. 6,35,46,048.

II. Rate of tax disputed :

(i) Sales of valves treated as sales of electrical goods : Rs. 19,88,402.

(ii) Rate of tax on fabricated steel structural : Rs. 44,91,410.

8. The Appellate Deputy Commissioner, on being appraised on a part of the disputed turnover, satisfied that the goods involved in the works contracts, where the movement was occasioned in the course of inter-State sales and assessed to tax under the APGST Act relating to Rs. 1,60,97,016, should not have been brought under the net of APGST Act and to that extent set aside the order and the appeal was remanded to the assessing authority with a direction to assess such turnover under the CST Act keeping in view the guidelines rendered. In so far as the disputed turnover relating to Rs. 6,35,46,048 is concerned, the Appellate Deputy Commissioner felt that the issue requires a detailed verification of the facts with reference to 13 contracts and set aide the order of the assessing authority and remanded the matter.

9. As far as the second issue regarding the disputed rate of tax relating to fabricated steel structurals to the tune of Rs. 44,91,410 is concerned, the Appellate Deputy Commissioner dismissed the appeal.

10. In regard to another sum of Rs. 19,88,402 relating to sales of valves, which were treated as sales of electrical goods, in the light of the decision in J.B. Advani-Oerlikon Electrodes Pvt. Ltd. v. Commissioner of Sales Tax [1972] 30 STC 337 (MP), the Appellate Deputy Commissioner while setting aside the order of the assessing authority, remanded the matter to the assessing authority with specific direction to examine the issue again in the light of the guidelines issued in the case cited supra. Thus, the Appellate Deputy Commissioner partly allowed, partly remanded and partly dismissed the appeal filed by the appellant.

11. The appellant preferred appeals before the Sales Tax Appellate Tribunal with regard to the rejection of the claim of the appellant on certain aspects separately. However, the Commissioner of Commercial Taxes, who seems to have exercised powers u/s 20 of the APGST Act proposed to revise the order made by the Appellate Deputy Commissioner on certain aspects, was of the view that the Appellate Deputy Commissioner could not have remitted the matter and given a specific direction to the assessing authority to decide the issue in a particular way. If the said direction is given effect to, Revenue would suffer loss, exercised the powers u/s 20 of the APGST Act and revised the order of the Appellate Deputy Commissioner.

12. Thus these two special appeals have fallen for consideration before this Court.

In so far as the appeal filed by the appellant against the dismissal of the appeal by the Appellate Deputy Commissioner, disallowing certain exemption granted by the assessing authority, the matter was carried by the appellant before the Sales Tax Appellate Tribunal and the Sales Tax Appellate Tribunal having regard to the facts and circumstances of the case allowed the appeal, which is challenged before this Court by the department in T.R.C. No. 14 of 1999.

13. Thus these two Special Appeals and T.R.C. No. 14 of 1999 are taken up for consideration.

On behalf of the appellant Sri Natarajan, learned Senior Counsel, primarily contended that as per the terms of the contract, which was entered into with Visakhapatnam Steel Plant, the appellant was not only to supply various goods, but also the activity of installation has to be undertaken by the appellant. For installation necessary material was also supplied by the appellant to the contractee, which was made on order to the specification of the contractee at the workshop of the appellant at Bombay. It is also stated that the material, which was manufactured by the appellant, which was made on order to the specification, was also inspected by the representatives of the contractee and after clearance, the goods were transmitted to the State of Andhra Pradesh. It is also stated by the learned Senior Counsel that since the contract is composite in nature, no element of sale is involved within the State of Andhra Pradesh and it is only an inter-State contract and that on the turnover of such contract there is no liability to pay tax to the State of Andhra Pradesh under the Andhra Pradesh General Sales Tax Act, since the goods were manufactured and sale was effected in the State of Maharashtra and that for that inter-State transaction the State of Maharashtra has collected tax under the CST Act and as such the State of A.P. is not entitled to levy and collect tax under the APGST Act. Learned Senior Counsel also stated that though the assessing authority rejected the stand taken by the appellant, the appellate authority has rightly accepted the version relating to certain aspects of the matter and held that the transaction is an inter-State transaction and no element of deemed sale is involved in the State of Andhra Pradesh. It is further stated that the Appellate Deputy Commissioner, accepting the claim of the appellant in respect of certain turnovers, remanded the matter to the assessing authority for re-examining the claim on certain other items and that the appellant, and that aggrieved by the rejection of the claim of exemption on the items involved in the inter-State transaction, the appellant carried the matter before the Sales Tax Appellate Tribunal, however in the meantime the Commissioner of Commercial Taxes invoked jurisdiction u/s 20(1) of the APGST Act and revised the order of the Appellate Deputy Commissioner. Learned Senior Counsel strenuously contended that it is not a case of deemed sale in the State of Andhra Pradesh, but it is a case of inter-State transaction as the goods were transported from the State of Maharashtra to the State of Andhra Pradesh for the purpose of installing in Visakhapatnam Steel Plant. In support of his contention learned Senior Counsel took us to various provisions of the Central Sales Tax Act as well as the Andhra Pradesh General Sales Tax Act and also cited the following decisions of the Supreme Court.

(1) K.G. Khosla and Co. Vs. Deputy Commissioner of Commercial Taxes, ; (2) K.G. Khosla and Co. Pvt. Ltd. Vs. Chief Commissioner, Delhi and Others, ; (3) Oil India Ltd. Vs. The Superintendent of Taxes and Others, ; (4) Union of India (UOI) and Another Vs. K.G. Khosla and Co. Ltd. and Others, ; (5) Builders Association of India and Others Vs. Union of India (UOI) and Others, and (6) Gannon Dunkerley and Co. and Others Vs. State of Rajasthan and Others, .

14. Relying on the ratio laid down in the above decisions learned Senior Counsel stated that as held by the Supreme Court in Gannon Dunkerley and Co. and Others Vs. State of Rajasthan and Others, , if the movement of the goods occasioned in terms of the contract and that goods reached destination though in transit sale, it is only inter-State transaction and such goods shall not be subjected to any local tax. It is also submitted by the learned Senior Counsel that the agreement was entered into for a particular purpose, pursuant to which certain items were manufactured in the factory owned by the appellant in the State of Maharashtra on a specified order placed by the contractee and that the representatives of the contractee visited the place, inspected the goods manufactured and later on clearance, goods were moved to the State of Andhra Pradesh and that 90 per cent of the payment was also received. Learned Senior Counsel therefore stated that the turnover involved in that transaction is liable to be taxed only under the Central Sales Tax Act, but not otherwise. He also stated that the manner in which the Commissioner of Commercial Taxes interfered by invoking the provisions u/s 20(1) of the APGST Act ignoring several decisions of the Supreme Court, the latest being Gannon Dunkerley and Co. and Others Vs. State of Rajasthan and Others, , is illegal and therefore, the special appeals are to be allowed.

15. Referring to T.R.C. No. 14 of 1999 filed by the department against the order made by the Sales Tax Appellate Tribunal, learned Senior Counsel for the appellant stated that now the law is well-settled and therefore, the TRC is liable to be dismissed.

16. Learned Special Government Pleader for Taxes, on the contrary, submitted that sufficient material was not placed by the appellant before the assessing authority to show that these items were specifically made on the order placed by the contractee and that they were transmitted to the site of the contractee. It is also stated that the effort made by the appellant is to avoid payment of tax to the State of Andhra Pradesh and it is not a case of inter-State transaction, but it is a case of intra-State sale, therefore, the authorities are justified in bringing the turnover under the net of the Andhra Pradesh General Sales Tax Act, 1957.

17. It is also submitted by the learned Special Government Pleader for Taxes that it is a divisible contract and that the responsibility of the appellant ends when once the goods are appropriated in a State other than the State in which they were manufactured and that event is a deemed sale and attracts the provisions under the APGST Act. He placed reliance on a decision of the Supreme Court in Carona Sahu Co. Ltd. Vs. State Maharashtra, . It is also submitted that if it is a local deemed sale after 46th Amendment, the State of Andhra Pradesh is entitled to bring such turnover under the APGST Act and therefore, the findings recorded by the Commissioner of Commercial Taxes cannot be held to be incorrect and pleaded for dismissal of the special appeals and allowing T.R.C. No. 14 of 1999.

18. On the basis of the submissions made by the learned Senior Counsel for the appellant and the learned Special Government Pleader for Taxes and on a perusal of the material available on record, the controversy that arises for consideration is whether the transaction is an inter-State transaction or intra-State transaction. It is not in dispute that the appellant entered into an agreement with the contractee, i.e., Visakhapatnam Steel Plant for the purpose of supply of certain goods and that the entire project work has to be completed by the appellant which includes installation of machinery and supervision up to certain point of time, that is to say, the contract is composite in nature. By merely supplying material to the contractee, the responsibility arising out of the agreement does not cease there, the appellant has to install the machinery and watch the performance for a period of 15 months. It is noticed that certain goods were manufactured by the appellant on the specification of the contractee at their factory near Bombay and that the representatives of the contractee inspected the goods and after satisfied with the quality of goods clearance was given. It is also noticed that 90 per cent of the value of the goods was already received by the appellant from the contractee.

19. On an analysis of the submissions made on behalf of the appellant and the learned Special Government Pleader for Taxes and on perusal of the orders of the Appellate Deputy Commissioner and the Commissioner of Commercial Taxes, we can say without any hesitation that the movement of goods had occasioned pursuant to the contract only. The documents available on record would go to show that these goods have reached the destination as per the terms of contract. It is not the case of the department that the goods are diverted and not utilised for the project purpose. The movement of goods was occasioned only pursuant to the contract between the appellant and the contractee, certain goods were, manufactured to the specification of the contractee and were transmitted to the State of Andhra Pradesh. Central sales tax was paid to the State of Maharashtra under the scheme of the. In view of the law laid down in various decisions referred to above, in particular, Gannon Dunkerley and Co. and Others Vs. State of Rajasthan and Others, , it is difficult for us to appreciate the stand taken on behalf of the department as to how this contract could be presumed as a deemed sale within the State of Andhra Pradesh. Though the learned Special Government Pleader for Taxes submitted that it is an indivisible contract, we are afraid, this submission may not be appropriate, having regard to the fact that there are two facets of the contract, one is supply of goods and the other is installation of machinery with the labour of the appellant and as such this contract is a divisible contract.

20. Learned Special Government Pleader though submitted that the contract is an indivisible contract and the goods were appropriated only in the State of Andhra Pradesh and as such it is a deemed sale and attracts tax under the APGST Act, it is difficult to appreciate the said contention also in view of the law laid down by the Supreme Court in Gannon Dunkerley and Co. and Others Vs. State of Rajasthan and Others, , wherein the Supreme Court observed thus :

"...........the State Legislature, in exercise of its legislative power to impose a tax on the transfer of property in goods involved in the execution of a works contract under entry 54 of the State List read with Article 366(29-A)(b), cannot levy such a tax in respect of transactions which are in the nature of sales in the course of inter-State trade and commerce or are sales outside the State levying such tax or are sales in the course of import inasmuch as it is beyond the legislative competence of the State Legislature to impose a sales tax on inter-State sales as well as sales outside the State and sales in the course of import or export........."

21. This authoritative pronouncement of the honourable Supreme Court in the said decision would dispel the doubts, if any, about the competency of the State to levy sales tax as per the State Act when inter-State sales as well as sales outside the State and sales in the course of import or export take place.

22. It is seriously contended by the State that the deemed sale resulting from transfer of property in goods involved in the execution of a particular works contract, there can never be any sale in the course of inter-State trade or commerce or an outside sale, or sale in the course of import in respect of goods which are involved in the execution of a contract since the transfer of property in such goods takes place only in the State in which work is to be executed. On behalf of the appellant it is urged that the works contract can involve transaction constituting sale in the course of inter-State trade and commerce as well as outside or a sale in the course of import and that they will have to be considered in accordance with the principles contained under Sections 3, 4 and 5 of the Central Sales Tax Act. In a similar issue the honourable Supreme Court observed, "we do not propose to go into this controversy because the question whether a deemed sale resulting from transfer of property in goods involved in the execution of a particular works contract amounts to a sale in the course of inter-State trade or commerce u/s 3 of the Central Sales Tax Act or an outside sale u/s 4 of the Central Sales Tax Act or a sale in the course of import u/s 5 of the Central Sales Tax Act has to be decided in the light of the particular terms of the works contract and it cannot be decided in the abstract."

23. This observation clarifies the position to find out from the material placed before the authorities as to whether the movement of goods occasioned pursuant to the terms of the works contract and as such there cannot be any difficulty to hold that this transaction is an inter-State transaction and it is not an intra-State transaction. Therefore, the turnover arising on this transaction cannot be brought under the net of the APGST Act.

24. These appeals are preferred u/s 23 of the A.P. General Sales Tax Act. Since we have declared that the transaction is an inter-State transaction and that the movement of the goods was occasioned pursuant to the terms of the contract and the turnover under this transactions is not accessible to tax under the APGST Act, a doubt is expressed by the learned Special Government Pleader for Taxes whether such declaration could be made by this Court. Having regard to the submission made by the learned Special Government Pleader with regard to the scope and ambit of Section 23 of Andhra Pradesh General Sales Tax Act, 1957, it is necessary to look into the provisions u/s 23 of the Andhra Pradesh General Sales Tax Act, 1957, which reads as under :

"Section 23 : On appeal to High Court (1) any dealer objecting to an order relating to assessment passed by the (Commissioner of Commercial Taxes) suo motu under Sub-section (1) of Section 20 (Joint Commissioner) suo motu under Sub-section (4-C) of Section 14 or under Sub-section (2) of Section 20 may appeal to the Special Appellate Tribunal within sixty days from the date on which the order was communicated to him:

Provided that the High Court may admit an appeal preferred after the period of sixty days aforesaid if it is satisfied that the dealer had sufficient cause for not preferring the appeal within that period.

(2) The appeal shall be in the prescribed form, shall be verified in the prescribed manner and shall be accompanied by a fee which shall not be less than five hundred rupees but which shall not exceed two thousand rupees as may be prescribed.

(3) The High Court shall, after giving both parties to the appeal, a reasonable opportunity of being heard, pass such order thereon as it thinks fit."

25. A reading of Sub-section (3) of Section 23 of thewould show that this Court, while exercising powers conferred u/s 23 of the, on the basis of material available on record, is empowered to decide the matter and to pass such an order as is deemed fit and proper in the circumstances of the case. It is therefore, not open to the respondent to say that this Court while exercising powers u/s 23 of the cannot pass such an order as indicated above. When the Legislature has not put any fetters on the powers of the Court to grant a relief as it thinks fit and proper in the circumstances, we are of the view, the plea of the department that the High Court cannot grant such a relief, amounts to reading something, which is neither here nor there and cannot be accepted. The department cannot think too big about it and has to necessarily function under the scheme of the and cannot encroach upon the powers, which are left to the judiciary. We may also add that the department cannot give a new meaning to the provisions and interpret in such a way as if that the department alone is competent to decide things and pass appropriate orders in given circumstances.

26. In view of our declaration that transaction in question is inter-State transaction, but not intra-State transaction and in view of the powers conferred on this Court u/s 23 of the APGST Act, we allow both the Special Appeals filed by the appellant and dismiss T.R.C. No. 14 of 1999 filed by the department. No order as to costs.