9911796707
TMI Blog2011 (4) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... om outside the State and the goods are used in the execution of the works contract. It is not the requirement of law that in the course of using such goods, title to the goods should be transferred to the customer. In the nature of things, when machinery is purchased or received from outside the State for use in the execution of the works contract, neither does title in the machinery pass on to the customer nor is that machinery used as raw material in the works to be carried out. The appellant-dealers, engaged in the execution of works contract of asphalting of roads, opted for composition assessment as provided under section 17(6) of the Karnataka Sales Tax Act, 1957. Subsequently, the dealers filed a rectification application contending that they had purchased goods from outside the State for use in the execution of works contract and sought reassessment under section 5B read with section 12 of the Act. The Deputy Commissioner rejected the request, but on appeal the Joint Commissioner (Appeals) held that the dealers having purchased goods from outside the State and put such goods to use in execution of works contract, were not entitled to the benefit of composition of tax, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, no case for rectification or reassessment is made. Aggrieved by the said order/endorsement, the assessees preferred an appeal before the Joint Commissioner of Commercial Taxes (Appeals) under section 20(5) of the Act. The Commissioner after careful scrutiny of the entire material on record held that the assessees have purchased the goods from outside the State and have put to use such goods in execution of works contract. Therefore, they are not entitled to the benefit of composition of tax, as the assessees have infringed the provisions of section 17(7) of the Act, they have to lose the benefit of composition tax leviable under section 17(6) of the Act. Therefore, he took into consideration the turnover declared by the assessee and proceeded to assess them under section 5B of the Act. In fact, at the time of hearing the appeal, the assessees filed revised return of turnover in form No. 4 disclosing the total and taxable works contract receipts and also enclosed the taxes payable on the works contract receipts under section 5 of the Act. They have also filed audited profit and loss account. It is on consideration of the aforesaid additional material, which was made available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t? (ii) Whether the appellant that has purchased machinery spares from outside the State and used the same in the execution of works contract of asphalting of road is eligible or otherwise for composition assessment under section 17(6) of the Act? The learned counsel for the assessee assailing the impugned order contends, in section 17(7) of the Act, nowhere it is mentioned that, only the goods that are used in the execution of works contract resulting in transfer of property in goods are entitled to the benefit of composition under section 17(6) of the Act. Virtually the revisional authority has rewritten the said provision, which is ex facie illegal and the impugned order is required to be set aside. The learned counsel for the Revenue supporting the impugned order contends, that in law a clear distinction has to be made between the purchase or receipt of goods from outside the State for the purpose of using such goods in execution of works contract, from using such goods in the execution of works contract resulting in transfer of property. Therefore, the order passed by the revisional authority is legal and valid, as in the instant case, there is no transfer of property in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of property in goods involved in the execution of works contract mentioned in column (2) of the Sixth Schedule at the rates specified in the corresponding entries in column (3) of the said Schedule. However, sub-section (6) of section 17 which starts with a non obstante clause provides that, notwithstanding anything contained in section 5B, but subject to such conditions and in such circumstances as may be prescribed, the option is given to the dealer to elect to pay tax by way of composition on the total consideration for the works contracts executed by him in that year in the State in respect of works contracts or he may choose to pay tax under section 5B. Section 17(6) is a beneficial piece of legislation, which permits an assessee to pay composition tax at four per dispensing with meticulous maintaining of accounts, payments and receipts and other requirements of the Act. The aforesaid provision makes it clear that the said benefit is subject to such conditions and in such circumstances as may be prescribed. One such condition, which is prescribed, is found in subsection (7) of section 17 of the Act. Sub-section (7) of section 17 provides that, nothing contained in sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
