1995 (7) TMI 386 - HC - VAT and Sales Tax

Summary

Issues:
Whether respondent No. 3 is entitled to deduct trade tax under section 8-D(1) of the U.P. Trade Tax Act from the running bill of the petitioner for works of painting and coloring under a works contract dated January 24, 1995.

Analysis:
The judgment addresses the question of whether the respondent is permitted to deduct trade tax under section 8-D(1) of the U.P. Trade Tax Act from the petitioner's bill for painting and coloring works under a specific contract. The court delves into the provisions of sub-section (1) of section 8-D, which mandates a deduction of four percent towards tax payment for works contracts. The notification dated April 27, 1987, specifies various types of works contracts, including civil works like construction of buildings, bridges, roads, dams, etc. The petitioner argues that painting and coloring do not fall under the definition of civil works as per the notification, while the respondent contends otherwise.

The court examines the definition of civil works under type No. 6 of the notification and applies the principle of ejusdem generis to interpret the term. It emphasizes that the illustrative nature of the definition restricts it to works similar to those explicitly mentioned. The court concludes that the petitioner's activities do not align with the specific civil works listed in the notification and, therefore, do not qualify as works contracts under section 8-D(1) of the Act. The petitioner had also sought the benefit of a compounding scheme under section 7-D, which was denied based on the nature of the works. The court highlights the inconsistency in denying the compounding scheme while asserting that the works are civil under the notification.

In the final decision, the court rules in favor of the petitioner, directing respondent No. 3 not to deduct any amount from the petitioner's bill for the painting and coloring works. The judgment clarifies that the petitioner's activities do not meet the criteria for works contracts as defined in the relevant provisions of the U.P. Trade Tax Act. The court's analysis focuses on the specific language of the statute and the notification to determine the applicability of tax deductions in the given scenario.