2003 (11) TMI 559 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. The validity of the assessment order rejecting the petitioner's claim regarding the works not falling under section 5-B of the Karnataka Sales Tax Act, 1957.
2. The permissibility of the petitioner to retract from the composition scheme under section 17(6) of the Act after opting for it.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order:

The petitioner, Karnataka Construction Corporation Ltd., challenged the assessment order that rejected its claim that a portion of the work did not fall under section 5-B of the Karnataka Sales Tax Act, 1957. The petitioner argued that the portion of the work executed did not relate to works contract and thus should be exempt from assessment. The petitioner referred to clarifications issued by the Commissioner in support of this claim.

The assessing officer, however, rejected this claim, stating that once the petitioner opted for composition under section 17(6) of the Act, it could not retract this decision. This rejection was upheld by the Appellate Commissioner and the Karnataka Appellate Tribunal, leading to the present revision petition.

2. Permissibility to Retract from Composition Scheme:

The core issue was whether the petitioner, after opting for the composition scheme under section 17(6) of the Act, could later claim that certain works did not fall under the definition of works contract and seek exclusion from assessment. The petitioner argued that if certain contracts did not fall within the meaning of works contract, they should be excluded from assessment.

The court observed that sub-section (6) of section 17, introduced by Act No. 14 of 1997, provides a simplified and hassle-free method of tax assessment, which is optional for the dealer. Once a dealer opts for this composition scheme, they cannot later retract this decision, even if it is found that some works do not fall within the meaning of works contract. The court emphasized that the composition scheme is meant to provide convenience and reduce the complexities of regular assessment.

The court referred to the Supreme Court's judgment in Commissioner of Central Excise & Customs v. Venus Castings (P) Ltd., which held that once an assessee opts for a composition scheme, they cannot later request a regular assessment. The court also noted the Supreme Court's observations in State of Kerala v. Builders Association of India, which highlighted that the composition scheme is designed to relieve the dealer from the complexities of regular assessment and appeals.

The court concluded that the petitioner, having opted for the composition scheme, could not later seek to exclude certain works from assessment. The decision of the Tribunal and the subordinate authorities was upheld, and the petition was dismissed.

Conclusion:

The court held that once a dealer opts for the composition scheme under section 17(6) of the Karnataka Sales Tax Act, 1957, they cannot retract this decision and seek exclusion of certain works from assessment. The composition scheme is intended to provide a simplified and convenient method of tax assessment, and the dealer is bound by their initial choice. The petition was dismissed, affirming the decisions of the lower authorities.