2018 (2) TMI 370 - HC - VAT and Sales Tax

Works Contract - rate of tax - iron and steel items - taxable at 4% or otherwise? - Held that - The issue involved herein is no longer res integra in view of the dictum enunciated by the Hon ble Apex Court in the case of Gannon Dunkerley & Co. Versus State of Rajasthan & Larsen & Toubro Ltd. & Union of India 1992 (11) TMI 254 - SUPREME COURT OF INDIA , where it was held that the declared goods in question can only be taxed at the rate of 4% - revision petition dismissed - decided against Revenue.

Summary

Issues Involved:
Challenge to Tribunal's judgment on assessment of tax turnover related to sales of "Iron and Steel" in a works contract for Assessment Year 2003-2004.

Analysis:
1. Jurisdiction of Revisional Authority:
The State challenged the Tribunal's decision, questioning the Revisional Authority's jurisdiction to revise the assessment order. The State contended that the Revisional Authority's conclusion on the Assessing Authority's order was not sustainable. The Tribunal allowed the appeal, setting aside the revisional order. The State raised concerns about the peculiar facts and circumstances of the case. However, the Court noted a recent Supreme Court judgment favoring the respondent-assessee, rendering specific answers unnecessary.

2. Taxation on Iron and Steel in Works Contract:
The State further contested the Tribunal's decision on the sale of "Iron and Steel" in works contracts, even when used with other goods. The State argued against the Tribunal's finding, claiming it contradicted the nature of the contract and the predominant intention behind it. The State also questioned the taxation on "Iron and Steel" specifically, as opposed to taxing the goods incorporated in the civil structures. The Court referenced previous Supreme Court judgments and the recent case of Smt. B. Narasamma, emphasizing the taxation of declared goods at a single point and rate, not exceeding four percent.

3. Prejudicial to Revenue:
The State raised concerns about the transaction escaping tax levy and its impact on revenue interests. However, the Court highlighted the settled legal position following recent Supreme Court decisions, particularly the case of Smt. B. Narasamma, which favored the respondent-assessee. The Court acknowledged the State's submissions but ultimately dismissed the revision petition, citing the applicability of Supreme Court judgments to the present case.

4. Impact of Recent Supreme Court Judgments:
The Court acknowledged the evolving legal landscape due to recent Supreme Court judgments, including the resolution of similar issues pending before higher courts. The respondent's counsel highlighted the settled nature of the controversy post the Smt. B. Narasamma case, emphasizing the consistency in legal interpretation across various decisions. The State's advocate concurred with the respondent's position, leading to the Court's decision to uphold the Tribunal's judgment based on the prevailing legal principles established by recent Supreme Court rulings.

In conclusion, the High Court dismissed the revision petition, upholding the Tribunal's judgment in light of recent Supreme Court decisions, particularly the case of Smt. B. Narasamma, which clarified the taxation principles concerning works contracts and the treatment of declared goods like "Iron and Steel." The Court's decision reflected the established legal position and the consistent interpretation of tax laws in similar contexts.