Query Serial No. 9          Querist:  Keshav dayal            City:  Noida

        Contractor A, in State X, enters into a works contract with contractee B for building of residential apartments in the same State X. As per contract, the contractor has to incorporate certain goods in apartments bought from a particular vendor C of State Y. Such goods, before they are purchased, will be approved by the contractee. Contract also provides that contractor will not be at liberty to divert goods approved by the contractor for any other purpose. Contractor places purchase order with vendor C for inter-state purchase of goods subject to condition of approval of goods before the same are dispatched to the contractor. The contractee, after examining the goods, gives its approval. The contractor receives such goods dispatched by the ex-State vendor and thereafter incorporates such goods in the works contract. In the case, there are two inter-state sales. First inter-state sale is by vendor to contractor and second inter-state sale is by contractor to contractee in execution of the works contract. My query is: which State is competent for levying tax on inter-state sale by contractor A to contractee B? Alternatively, in which State contractor is required to submit his return of turnover and tax in respect of sale by it to contractee B?