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2006 (10) TMI 483 - HC - VAT and Sales Tax
Issues involved: The deduction towards purchase value of iron and steel, consumables, and labor disallowed by the Assessing Authority, confirmed by the first appellate authority, and accepted by the Tribunal.
Issue 1: Deduction towards purchase value of iron and steel The Government challenged the Tribunal's decision to allow the claim of deduction towards the purchase value of iron and steel used in the manufacture of finished goods and in the execution of works contract. The Government questioned whether the iron and steel purchased from a registered dealer and used in making doors, window frames, and grills would retain their original character. The Tribunal's decision was based on the interpretation of Rule 6(4)(m) and (I) of the Rules and Explanation-III. The Government cited a previous Division Bench order supporting their position. Issue 2: Character of iron and steel purchased The Government raised concerns about the Tribunal's finding that the character of iron and steel purchased from a registered dealer would not change when used to make doors, window frames, and grills. They questioned whether the execution of works contract involving these materials would be considered "in the same form" as the materials purchased. The Government relied on a Division Bench ruling related to the use of iron and steel in the construction of a bridge to support their argument against the Tribunal's decision. Issue 3: Disallowance of deduction on purchase of iron & steel The Tribunal's decision to disallow the claim of deduction on the purchase of iron and steel from local registered dealers for the execution of works contract was challenged by the Government. They argued that the Tribunal's ruling contradicted the binding order of a Division Bench in a previous case. The Division Bench had determined that the use of iron and steel for construction purposes did not align with the provisions of Entry No. 6 of the sixth schedule to the Act. Consequently, the revision petition was allowed in favor of the Government, and the questions of law were answered against the assessee.
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