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TMI Blog2019 (12) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... authority had rightly taxed @ 2%, thus the order of authorization for re-assessment under Section 29(7) of the VAT Act cannot be sustained on the premises that plant and machinery has not been included. Once the matter of the assessee for previous year was accepted by the Tribunal as far as the capital goods are concerned, which were outside the Composition Scheme, the respondentauthority was not correct to pass order of authorisation under subsection 7 of Section 29 for the re-assessment, as the same had attained finality and was binding - As the order of authorisation for re-assessment is based on the fact that the capital goods should have been included in the value of work contract and was liable to be assessed @ 6%, respondent no.2 had no other material on record to form the basis for reason to believe that the income has escaped assessment. The order dated 15.3.2019 authorising the respondent no.3 for re- assessment for assessment year 2010-11 is against the well settled principle of law and is unsustainable. Once the Assessing Authority has assessed the value of work contract and passed assessment order and taxed the assessee @ 2%, since the value of goods imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and tools required for construction was also purchased from outside the State amounting to ₹ 55,19,53,672.74/-. An assessment order for year 2010-11 was made on 31.3.2014. The said assessment order took note about the quantum of turnover of Compounding Scheme as well as about the year under consideration and also use of 33 declaration form for import. 5. It has further been stated that as per Compounding Scheme, if imported goods used in execution of work contract, was to the extent of 5% of total contract money, then tax liability stood at 2%. Thus, total contract money required to be considered during assessment year 2010-11 of Composition Scheme was only ₹ 1,80,71,92,729/- and petitioner had imported goods from outside the State for a value of ₹ 3,36,13,446/- which was less than 5% of the total amount of contract money, therefore, assessing authority had rightly taxed the same at 2%. Further levy of tax at 2% was not disputed by Department in any manner either by filing any appeal before First Appellate Authority or before the Tribunal. It was on 21.01.2019 that respondent no.2 issued notice under Section 29(7) of the VAT Act s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides that the State Government is empowered to accept a lum sum amount in lieu of tax that may be payable by the dealer in respect of such goods or class of goods and for such period as may be agreed upon. For that purpose, the dealer is obliged to execute an agreement of undertaking to pay the sales tax in lump sum and the same is assessed at an agreed rate as envisaged under the Act itself. The scheme as introduced by the legislature provides for a bilateral agreement between the assessee and the Sales Tax Authorities with an object to dispense with the requirement of regular assessment and for the easy purpose of levy and collection of the tax payable under the Act. A dealer, who has opted for payment of lump sum amount in lieu of tax, is not required to file monthly, quarterly or annual returns of his turnover. It is the choice of a dealer to opt for compounded payment of tax and if the said choice is in accordance with the scheme and is ultimately accepted by the authority concerned, it becomes an agreed amount of tax. The department and the dealer are thereafter bound by the said agreement. 10. Reliance has also been placed on judgment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of road was considered by the department in proceedings under Section 56 and the matter was carried upto the Tribunal, wherein it was held that plant machinery is not covered under sale as defined in Section 2(ac)(ii). 14. It is also evident that plant and machinery is only used for construction of road, which is capital goods and the same remains with the petitioner-assessee, even after construction of road, and, thus it cannot be included in value of work contract executed by petitioner. 15. Section 2(ac) defines sale . Sub-section (ii) of Section 2(ac) provides that sale with its grammatical variations and cognate expressions means any transfer of property in goods by person to another, for cash or for deffered payment or for any other valuable consideration and includes a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. Section 2(f) defines capital goods which includes plant, machine, machinery, equipment, apparatus, tool, appliance or electrical installation used for manufacture of processing of any goods for sale. Section 2(au) defines works contract which includes an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to be assessed @ 6%, respondent no.2 had no other material on record to form the basis for reason to believe that the income has escaped assessment. 21. In view of the above, we are of the considered opinion that the order dated 15.3.2019 authorising the respondent no.3 for re- assessment for assessment year 2010-11 is against the well settled principle of law and is unsustainable. Once the Assessing Authority has assessed the value of work contract and passed assessment order and taxed the assessee @ 2%, since the value of goods imported from outside the State, was less than 5% of the total amount of contract money, the respondent no.2 did not have any material to believe that whole or any part of turnover of dealer has escaped assessment to tax or has been under assessed or assessed to tax at a lower rate than at which it was assessable. 22. In view of the above, we are of the firm opinion that the order impugned dated 15.3.2019 for assessment year 2010-11 and consequential notice dated 19.3.2019 for re-assessment are unsustainable and are hereby quashed and the writ petition stands allowed . - - TaxTMI - TMITax - CST, VAT & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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