2018 (12) TMI 147 - HC - VAT and Sales Tax

Valuation - includibility - works contract sales - composition amount - whether the amount of service tax charged separately in the invoice will not be included in total contract value? - Held that - Once the State has accepted that service tax would not form part of the sale price and informed the trade, the same would bar the Revenue from taking a contrary view. The State has to apply the law uniformly to all the assessees. Appeal not entertained and is dismissed.

Summary

Issues:
Challenge to order under Maharashtra Value Added Tax Act, 2002 regarding composition amount for works contract sales.

Analysis:
The appellant challenged an order by the Maharashtra Sales Tax Tribunal regarding the composition amount for works contract sales. The main issue was whether the service tax charged separately in the invoice should be included in the total contract value for determining the composition amount. The Tribunal's decision was based on a previous case involving M/s. Sujata Printers, where it was held that the service tax collected separately cannot be considered part of the sale price and, therefore, not liable to tax under the MVAT Act. This decision was accepted by the State as per Trade Circular No. 6T dated 14.5.2015, which clarified that service tax should not form part of the sale price in works contract transactions where it is collected separately. The Tribunal relied on this circular while allowing the respondent's appeal.

The appellant argued that a similar issue was admitted by the Court in another case, but the Trade Circular was not brought to the Court's attention at that time. However, the Court noted that once the State has accepted the Tribunal's decision through the Trade Circular, the Revenue cannot take a contrary view. The State must apply the law uniformly to all assesses. In light of the State's acceptance of the Tribunal's decision regarding service tax not forming part of the sale price, the Court found no substantial question of law to entertain the appeal. Therefore, the appeal was disposed of accordingly.

In conclusion, the judgment upheld the Tribunal's decision regarding the treatment of service tax in works contract sales, based on the State's acceptance of the Tribunal's view through a Trade Circular. The Court emphasized the importance of uniform application of the law by the State and rejected the appellant's challenge to the Tribunal's order.