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2023 (1) TMI 338 - HC - VAT and Sales TaxTaxable Turnover - works contract - earth work - deduction of 30% as labour charges - violation of provisions of Sub-Section 3, 7 and 9 of Section 3 of the Uttarakhand Value Added Tax Act, 2005 or not - HELD THAT - A plain reading of sub-section 7, especially Clause (ii) therein of Section 3 which deals with the case involving execution of work contract, taxes shall be levied when the taxable quantum Rs. 5,00,000/- onwards. It is admitted in this case that the contractor was paid of Rs. 1,11,930/- towards the work executed of Rs. 4,61,670/- being not liable to be included in the turnover of the Assessee revisionist while calculating the taxable quantum. The Assessee revisionist is not liable to pay any tax on the same, especially in view of the fact that neither the Assessing Authority nor the First Appellate Court nor the Second Appellate Court has held that Assessee revisionist has income from other sources for the assessment year, therefore, the imposition of tax of Rs. 1,11,930/- is illegal, hence, to be set-aside. The revision is allowed. The impugned judgments are set-aside, hence, the Assessee revisionist is not liable to pay any sales/commercial tax for the period in consideration.
Issues:
1. Interpretation of provisions of the Uttarakhand Value Added Tax Act, 2005 regarding taxable turnover for a civil contractor. 2. Applicability of deductions for labour charges under Rule 14(2)(e) of the Act. 3. Assessment of taxable quantum for a contractor involved in the execution of work contracts. 4. Legal implications of the taxable turnover being below the threshold amount as per Section 3(7) of the Act. Issue 1: Interpretation of Provisions of the Uttarakhand Value Added Tax Act, 2005 The case involved a civil contractor challenging the assessment of taxable turnover by the Commercial Tax Tribunal under the Uttarakhand Value Added Tax Act, 2005. The contractor argued that the amount received for execution of work contracts should not be fully considered as taxable turnover, citing provisions under Section 3 of the Act. The High Court analyzed the relevant sections and previous judgments to determine the scope of taxation on transfer of property in goods involved in work contracts. Issue 2: Applicability of Deductions for Labour Charges The contractor claimed a deduction of 30% as labour charges under Rule 14(2)(e) of the Act for the amount received for work contracts. The First Appellate Authority accepted this contention, leading to a reduced taxable turnover. The High Court reviewed this deduction and its compliance with the Act to ascertain if the deduction was correctly applied in determining the taxable quantum for the contractor. Issue 3: Assessment of Taxable Quantum for a Contractor The primary dispute revolved around the calculation of the taxable quantum for the contractor involved in executing work contracts. The High Court examined the provisions of Section 3(7) of the Act, which specified the threshold amount for tax liability based on turnover. The court analyzed the contractor's income, deductions, and the applicability of tax based on the received amounts for work contracts to determine the correct taxable turnover. Issue 4: Legal Implications of Taxable Turnover Below Threshold The contractor contended that the taxable turnover determined by the First Appellate Authority was below the threshold specified under Section 3(7) of the Act, thus arguing against the liability to pay tax. The High Court delved into the legal implications of taxable turnover being below the threshold amount, considering the provisions of the Act and relevant case laws to decide on the tax liability of the contractor based on the assessed turnover. In conclusion, the High Court allowed the revision filed by the contractor, setting aside the judgments of the lower authorities. The court ruled that the contractor was not liable to pay sales/commercial tax for the period under consideration, emphasizing the correct interpretation of the Act's provisions, deductions for labour charges, assessment of taxable quantum, and the legal implications of taxable turnover being below the specified threshold amount.
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