2023 (11) TMI 1125 - HC - VAT and Sales Tax

Valuation - works Contract - Reduction in turnover as per Rule 9 of the Value Added Tax Rules - cement imported from outside the State of U.P. - reduction in expenses from 21% to 10% - HELD THAT - The general rule of law in taxing statutes is that in case of any doubt the benefit should be given to the assessee. However, in case of exemption and deduction to be given, a stricter approach may be followed, as per catena of judgments of the Supreme Court, to examine whether the assessee is eligible for such benefit - In the present case, there is no factual dispute of goods having been imported from outside the State of U.P. and, therefore, the assessee clearly qualifies for the said benefit. In light of the same, the question is answered in favour of the assessee and against the Department - the revision application is dismissed.

Summary

Issues involved:
The judgment involves an application for revision u/s 58 of the U.P. Value Added Tax Act, 2008 for Assessment Year 2013-14. The questions of law framed are: 1. Whether the turnover of cement imported from outside U.P. is liable to be reduced u/s Rule 9 of the Value Added Tax Rules? 2. Whether the reduction of expenses from 21% to 10% by the 1st Appellate Authority was justified and confirmed by the Tribunal?

Issue 1:
The revisionist argued that the import of goods and specific execution of work contract were not established by the assessee, thus Rule 9(1)(e) of the Rules would not apply. It was contended that a previous judgment was not applicable as it did not involve a dispute regarding goods imported from outside U.P. The respondent contended that when goods are imported for a pre-existing works contract, the deduction under Rule 9(1)(e) should apply. The Tribunal found that goods were imported from outside U.P. for a project within the state, and as per Rule 9(1)(e), the petitioner was entitled to the benefit.

Issue 2:
The revisionist did not press the argument regarding the reduction of expenses. The Tribunal's finding that the goods were imported for a pre-existing works contract and applied solely for that purpose led to the conclusion that the assessee was entitled to the benefit of deduction under Rule 9(1)(e). The principle of giving the benefit to the assessee in case of doubt was highlighted, and it was concluded that the assessee qualified for the benefit due to the import of goods from outside U.P.

Conclusion:
The Tribunal's specific finding on the pre-existing works contracts and import of goods from outside U.P. supported the assessee's entitlement to the deduction under Rule 9(1)(e). The judgment favored the assessee, emphasizing the eligibility for benefits when goods are imported from outside the state. Consequently, the revision application was dismissed based on the above observations.