9911796707
TMI Blog2014 (4) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... 507 of 2009, filed by M/s. Mathias Aluminium Systems Private Limited (for short "M/s. Mathias") were partly allowed. Those appeals were directed against the common order dated 23rd December 2008 passed by the Joint Commissioner of Commercial Taxes (Appeals), being the First Appellate Authority, (for short "the FAA") in appeal Nos. KVAT/AP-26 to 34/07-08. The appeals before the FAA were preferred against the order dated 26th March 2007 passed by the Assistant Commissioner of Commercial Taxes (Audit)-2, DVO, Mangalore, being Assessing Authority, (for short the "AA"). Vide order dated 26th March 2007, the AA passed re-assessment order under Section 39(1) of the Act and directed the respondent-assessees to pay additional tax, interest and penalty for the tax periods between April, 2006 and November, 2006. 3. In the second set of Revision Petitions i.e., STRP Nos.17/2010 & 2 to 21 of 2014, the petitioner-State of Karnataka impugned the order dated 8th February 2010 passed by the Tribunal in STA Nos.2102-2122/2009. The Sales Tax Appeals, before the Tribunal, filed by the respondent-assessee i.e. M/s. S.P. Fabricators Private Limited (for short "M/s. S.P. Fabricators"), under Section 62( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Authority, however, after auditing the books of account and on the basis of the documents made available by the assessees came to the conclusion that the nature of works contract executed by them would fall under Entry 3, 4 and 23 of the Sixth Schedule of the Act and consequently, levied tax at 12.5%. The Assessing Authority also invoked the penalty provisions under Section 72(2) and levied penalty on the ground that there was under statement of tax liability. Further, the Assessing Authority levied interest under Section 36 of the Act, on the difference of the output tax payable by the assessees. 9. Thus, from the orders passed by the authorities below including the order of the Tribunal, the question that arise for our consideration on the facts and in the circumstance of the case and in law is, whether the Assessing Authority was justified in holding that the nature of works contract executed by the assessees, were composite contracts, and, therefore, would fall under Entry 23 in the Sixth Schedule of the Act and not only under Entry 4 thereof. In other words, it is necessary to decide whether the transaction/nature of works contracts, executed by the assessees were composi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was done by them or they procured it from the market. Entry 4 provides for works contract of fabrication and erection of "structural works" including fabrication, supply and erection of iron trusses, purlines, etc. Entry 22 speaks about composite contracts involving two or more of the above (Entry 1 to 21) categories. Entry 23 is a residuary entry which provides that all other contracts not specified in any of the above (Entry 1 to 22) categories including composite contracts with one or more of the categories enumerated in Entries 1 to 22. Different rates of tax are provided for different Entries such as 4% for Entry Nos.3, 4 and 22 while for Entry 23 it is 12½%. 11.1 From bare perusal of the Sixth Schedule, it is clear that it also provides for rate of tax for "composite contracts" involving two or more of the categories covered by entries 1 to 21 in this Schedule. For all other works not specified in any of the categories covered by entries 1 to 21, including composite contracts with one or more of the above categories, the rate of tax would be more, i.e. 12½%. The expression "composite contracts" as occurs in Entry 22 and Entry 23, is having different connota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc., of the concerned building with galvanized iron fastener clamps top create structures known as ' curtain walls' which serve as external walls of buildings. In the second type of glazing, glazed glass sheets of sufficient strength are bonded to rigid rectangular aluminium frames which in turn are fastened to the supporting RCC bases, pillars, roof edges etc., of the concerned building with galvanized iron fastener clamps. As a result of which a curtain wall made of glass/aluminium and steel is erected to serve as the external wall of the concerned building." 14. The works contract of M/s.Mathias are concerned, classified by the Tribunal as follows: " Structural works involving the construction of several cabins in large halls using structures of aluminium fitted with glass/ P.V.C. panels/poly carbonated panels with the result that a large open hall gets converted into a large number of small room-like cabins which are durable like any other permanent construction (if not subjected to any violent actions). Other works contracts which include works contracts of interior decorations with false ceilings and supply an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contract between the assessees with their clients including connected invoices and receipts from works contracts in the last paragraph of the order drawn its conclusions as follows : '1. The works contract undertaken by the assessee are in the nature of "STRUCTURAL GLAZING", "SUSPENDED GLAZING", "CURTAIN WALLING", "ACP CLADDING", "FIXED GLAZING" and fixing of aluminium & glass doors & windows and related work falling under Entry 23 of VI Schedule to KVAT Act, 2003 liable to tax at 12.5%. 2. The woks contract executed by the assessee is a composite works contract comprising of works relating to fabrication and supply of aluminium & glass panels, fabrication and erection of MS Structure, anodizing and powder coating, providing aluminium & glass partitions, doors & windows, providing anodized louvered ventilators, providing glass framed windows to the glazed exteriors, providing aluminium and glass partitions with internal interiors fall under entries 3, 4 & 23 of VI Schedule to KVAT Act 2003. ACP cladding, providing vision panels, spider glazing, suspended glazing, cladding to canopy, double glazed sky lite roofing, providing an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The works contract orders are for the execution of works contract of GLAZING WORKS not for any fabrication, erection of structural work. Therefore, the dominant feature of the works contract is "GLAZING" to the civil structure not fabrication and erection of structural work.. 11. The proceedings of the other case cannot be the basis for the assessee to determine the nature of works contract and admit the tax liability. 12. The website of the company www.spfab.net and the works contract orders clearly declare that, the works contract executed by the assessee company are in the nature of GLAZING WORKS and not fabrication, erection of structural work. Therefore, the dominant feature of the works contract is "GLAZING" to the civil structure not fabrication and erection of structural work. Therefore the contentions raised by the assessee are not correct. Hence tax at 12.5% is hereby levied.' 17. The Assessing Authority, thus, has held that the works contract executed by the assesses were covered by Entries 3, 4 and 23. In other words, works contract entered into by the assessees and executed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against this any works, such as ACP cladding and glass cladding on the existing wall, which only enhances aesthetic look or beauty/outer look of the building, as a substitute to conventional painting, in our view, would not fall in the category of "structural works" as contemplated by Entry 4. 21. The expression structural work as occur in Entry No.4 needs to be considered and understood so as to record a categoric finding whether any part of the works contract in the present case could be called "structural works" so as to find out whether it is covered by Entry 4 and, further to consider whether every work of glass cladding and ACP Cladding could also fall in the category of structural works. In other words, if such work is done only for enhancing aesthetic look/outer look of the building and not as substitute to external walls it cannot be treated as "structural works" within the meaning of the expression used in Entry No.4. The Tribunal has not considered whether the nature of works executed by the assessees would fall under any other entry as was considered by the Assessing Authority and the appellate authority. 22. Insofar as the works contract of M/s.Mathias are concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluminium partition he also undertook the contract work of fixing the furnitures work contract of interior decoration and works contract of fitting, Air conditions. Advance rulings given in respect of particular work contract differs from the works contract under taken and executed by the appellant. The works contract under taken and executed by the appellant certainly falls under entry No.23 of sixth schedule to KVAT act 2003 and for tax at 12.5% from 1-4-2006 onwards. Advance rulings cannot come to the rescue of the appellant because facts are different. The orders passed by the respondent authority are sustainable and hence they are upheld. Levy of penalty u/s 72(2) by the respondent authority is in accordance with KVAT Act 2003. I find no reason to interfere with the order passed by the respondent authority." 23.2 The Tribunal after considering the relevant entries namely, Entry Nos.4, 23 in the Sixth Schedule to the Act in concluding paragraphs 10, 11 and 12 observed thus: "10. In the Taxation Law as regards assessment of tax when a specific work is in the list, it has to be considered whether the work to be assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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