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2018 (4) TMI 887 - HC - VAT and Sales TaxWorks Contract - Mosaic - includibility of materials and labor used in execution of works contract - exemption under Section 3-B(2)(c) of the TNGST Act, 1959. Held that - Appellate Authority and Tribunal are the final fact finding authorities and when the books of accounts were produced, the Appellate Authority has analysed the same and found that the dealers were having separate accounts for the materials that had been purchased and utilised in the course of works contract and that they have also maintained separate figures for various charges that had been incurred during the course of works contract. As per section 3B 2(B) of the TNGST Act 59, the amount for which any goods in the first schedule or second schedule are purchased from the registered dealers liable to pay tax under this Act and used in the works contract in the same form in which such goods were purchased are eligible for deductions - In a similar case before the High Court of Madras S. Chandrasekaran Versus State of Tamil Nadu 1990 (3) TMI 334 - MADRAS HIGH COURT , it was held that t is a works contract and in such case, the appellants come under section 3B and is eligible for various deductions. When the appellants is eligible for various deduction, he is also eligible for deductions under section 3B 2(b) and also other deductions that are available under Section 3B. Revision petition dismissed.
Issues Involved:
1. Determination of taxable turnover based on the execution of works contract. 2. Eligibility for deductions under Section 3B of the TNGST Act. 3. Levy of penalty under Section 12(3)(b) of the TNGST Act. 4. Treatment of sand and other materials used in the works contract. 5. Validity of the Appellate Tribunal's decision. Detailed Analysis: 1. Determination of Taxable Turnover: The Assessing Authority determined the taxable turnover based on the entire amount received by the assessees for executing works contracts involving mosaic tiles. Since the assessees did not separately show the value of goods and labor charges, the Assessing Authority allowed a 30% deduction for labor charges and assessed the remaining 70% as the sale of finished goods. 2. Eligibility for Deductions under Section 3B of the TNGST Act: The Appellate Assistant Commissioner remanded the matter back to the Assessing Authority to consider the charges and deductions allowable under Section 3B of the TNGST Act. The Tribunal later held that the sand used for the execution of works contracts alone would be taxable, and the value of other items used should be exempt under Section 3-B(2)(c) of the TNGST Act, 1959, as they had already suffered tax and were used in the same form. 3. Levy of Penalty under Section 12(3)(b) of the TNGST Act: The Appellate Assistant Commissioner set aside the penalty levied by the Assessing Authority, stating that the assessment was not a best judgment assessment and the turnover was available in the books of accounts, thus not constituting suppression. 4. Treatment of Sand and Other Materials Used in the Works Contract: The Tribunal noted that the entire raw materials used for the execution of works contracts were purchased within the state and had suffered tax, except for sand. Therefore, only the sand used for the execution of works contracts was taxable. The Tribunal also referenced a notification that exempted sand from tax for specific years. 5. Validity of the Appellate Tribunal's Decision: The Tribunal found that the dealers maintained separate accounts for the materials purchased and used in the works contract and had separate figures for various charges incurred. The Tribunal concluded that the sand used was taxable, but other items should be exempt under Section 3(B)(2)(c) of the TNGST Act. The Tribunal's decision was based on detailed records and judicial pronouncements, and there was no perversity in the finding. Conclusion: The High Court upheld the Tribunal's decision, stating that the Appellate Authority and Tribunal had properly analyzed the facts and evidence. The Tax Case Revision Petitions were dismissed, and no costs were awarded. The judgment emphasized that the deductions and exemptions claimed by the assessees were valid, and the assessment of sand as the only taxable material was correct.
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