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TMI Blog2021 (11) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of tax would be payable under Section 4, notwithstanding the rate of tax under the composition scheme at 4% during the relevant period on the total consideration for the works contract executed. However, this value of the goods which is subjected to the levy of tax under Section 4 has to be deducted from the total consideration of the works contract executed. Whether tax is leviable under Section 4, or under Section 15 (5) (a) of the Act with respect to the gross profit earned by the dealer in transferring the goods purchased inter-state or from outside the territory of India in the composition scheme? - HELD THAT:- A bare reading of Section 15 (5) (a) of the Act would indicate that the composition tax liability is on the total consideration for the works contracts executed at 4%, if applied to the inter-state purchases or the goods purchased from outside the territory of India and transferred in the execution of the works contract, the Revenue would suffer tax on the said sale which would have been collected if the said incidence of sale had taken place locally within the State - To remove this anomaly, a level play mechanism has been adopted to levy tax on the inter-sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s revision petition. The revision petition was admitted to consider the following questions of law: (1) Whether, in the facts and circumstances of the case, the Karnataka Appellate Tribunal is right in setting aside the levy of interest and penalty under Sections 36((1) and 72(2) of the KVAT Act, respectively? (2) Whether, in the facts and circumstances of the case, the Karnataka Appellate Tribunal is right in passing the impugned order dated 17.12.2015 and setting aside the orders of the First Appellate Authority and the Assessing Authority, insofar as they levied tax under Section 4 of the KVAT Act on the purchase value of goods bought from outside the State after adding a gross profit of 20% on the same? 5. Learned counsel for the Revenue argued that the assessee had opted to pay tax under the composition scheme for the tax periods in question. The assessee had also purchased goods outside the State of Karnataka and had used the same in the course of executing works contracts. No tax liability was discharged on the said inter-state purchases. During the audit proceedings, the same having been discovered, the assessing authority passed a re-assessment order inter ali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under sub-section (1) and if the property in such goods (whether as goods or ion some other form) is transferred in any works contract executed by him, the dealer shall be liable to pay tax on the value of such goods at the rate specified in Section 4, and such value shall be deducted from the total consideration of the works contracts executed on which an amount as notified is payable under subsection (1) by way of composition in lieu of the tax payable under the Act. Clause (e) was inserted by Act No.6 of 2007 with retrospective effect from 01.04.2006. The said provision reads thus: (e) a dealer executing works contracts and opting for composition of tax under subsection (1), shall be liable to pay tax, if any, under sub-section (2) of Section 3, in addition to tax by way of composition on the total consideration for the works contracts executed. 11. A harmonious reading of the aforesaid provisions would indicate that under Section 15 (1) of the Act, composition scheme would be opted by any dealer other than a dealer who purchases or obtains goods from outside the State or from outside the territory of India, subject to conditions and in such circumstances as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions and with no subtractions on the grounds of legislative intendment or otherwise.: 15. In the case of Commissioner of Income Tax, West Bengal-I, Calcutta .v. M/s Vegetables Products Limited [(1973) 88 ITR 192], the Hon ble Apex Court has held thus: ..If the language is plain, the fact that the consequence of giving effect to it may lead to some absurd result is not a factor to be taken into account in interpreting a provision. It is for the Legislature to step in and remove the absurdity. On the other hand, it two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. 16. In the present case, the assessing authority as well as the first appellate authority proceeded to construe Section 15 (5) (a) of the Act inasmuch as the value of such goods as the sale value of the transfer of property in goods in any works contract executed by the dealer to bring it within Section 4 of the Act. Thus, the dispute is in a narrow compass as to whether tax is leviable under Section 4, or under Section 15 (5) (a) of the Act with respect to the gross profit earned by the dealer in transferring the goods pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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