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TMI Blog2023 (10) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 6, and the contractor claiming deduction in respect of such amount furnishes certificates in such form as may be prescribed. The provisions of a taxing statute have to be read in the backdrop of Article 265 of the Constitution of India, which clearly mandates that there shall be no levy and collection of tax except by the authority of law. Read in the backdrop of the constitutional provision, therefore, Section 8 of the KVAT Act cannot be taken as authorising the levy of tax on any amount that does not bear nexus with the construction activity involved in a works contract in the instant case. Statutory levies and amounts paid by the petitioner as pure agent of the customer, who is legally obliged to bear the burden of those levies and expenses, cannot be included in the contractual receipts of the petitioner for computing the whole contract amount for the purposes of Section 8 of the KVAT Act. It is no doubt true that if there was a separate agreement for the sale of the incomplete structure, the consideration shown under such agreement would have been for the purchase of an item of immovable property and no KVAT would have been levied on the said consideration am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustomers and applied the rate of tax prescribed under Section 8 to the said reduced contract value. This was objected to by the Assessing Authority, who sought to levy the tax at the prescribed rates on the entire amount collected by the petitioner from his customers. The order of the Assessing Authority, although impugned by the petitioner before the First Appellate Authority and thereafter before the Tribunal, was upheld by both the Appellate authorities below save for minor modifications in favour of the petitioner. It is being aggrieved by the common order of the Appellate Tribunal for the assessment years 2008-09 and 2010-11 that the petitioner is now before us through these O.T. Revisions. 3. The questions of law raised in the O.T. Revisions are as follows: Questions of law raised in O.T. Revision No. 87/2018: 1) Whether under the facts and circumstances of the case, the Hon'ble Tribunal was correct in confirming the differential VAT demand for the AY 2008-09 without considering the ratio laid down by the Supreme Court in the case of M/s. Larsen Turbo Limited Anr v. State of Karnataka Anr with respect to contractors paying tax at compounded rates? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or payment of tax under Section 8(a) of the KVAT Act? 6) Whether under the facts and circumstances of the case, the Hon'ble Tribunal was correct in giving tax credit of only Rs. 22,70,735/- as against Rs. 36,08,465/- for AY 2010-11? 4. The common issue raised in both the O.T. Revisions is whether KVAT at compounded rate is payable on: (i). service tax amount collected by the builders from the customers. (ii). value of goods incorporated in the building till the date of entering into agreement or whether it is payable only on the value of the goods incorporated into the building after the date of entering into the construction agreement? (iii). land value mentioned in the sale agreement entered into between the builder and customer or as per the value mentioned in the registered sale deed. It may be mentioned in the outset that the petitioner chose not to press issue No. (iii) before us at the time of hearing of the O.T. Revisions, and hence, the questions of law raised in the O.T. Revisions on this issue are not answered. 5. The additional issue that arises for consideration in O.T. Revision No. 87/2018 pertaining to assessment year 2008-09 is - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Pleader Dr. Thushara James would contend that in the absence of any specific exclusion from the definition of whole contract amount , all receipts under the contract would come within the ambit of the phrase and this would include service tax amounts, one time building tax amounts as also maintenance fund and sinking fund amounts collected by the petitioner from his customers, although subsequently paid to different statutory authorities and the owners' association. The learned counsel for the petitioner Sri. Jose Jacob would however point out that reading the definition of whole contract amount solely in terms of the explanation would violate the scheme of taxation under the KVAT Act and bring to tax amounts that have no nexus with the subject sought to be taxed. In particular, he submits that amounts collected by the petitioner as a pure agent of the customer and paid over to the respective statutory authorities, such as authorities entrusted with the administration of service tax and building tax, and the owners' association in respect of maintenance charges and charges towards sinking fund, cannot, by any stretch of imagination, be included within the phrase who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng contracts. A perusal of the said document shows that the Form 20H certificates produced before the Tribunal comprised of the amounts paid by sub contractors over three years namely, 2008-09, 2009-10 and 2010-11, and it was under those circumstances that the Form 20H certificates contained figures in excess of what was claimed for the assessment year 2008-09 by the petitioner. The document produced before us clearly indicates that for the year 2008-09, the Form 20H certificates covered amounts of Rs. 11,44,52,778/- + Rs. 68,505/- and hence, it is clear that the petitioner ought to have been granted the benefit of deduction in respect of an amount of Rs. 11,45,21,283.00 in lieu of the amount of Rs. 11,00,88,027 that was granted to him by the authorities below. Since the Assessing Authority and the Appellate authorities did not have the benefit of the detailed statement produced as Annexure A11 before us, we deem it appropriate to remand this issue also to the Assessing Authority for verification of the details referred above and grant the deduction if the details are found to be correct and otherwise in order. 10. As regards the claim of the petitioner that he had paid a total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubt true that if there was a separate agreement for the sale of the incomplete structure, the consideration shown under such agreement would have been for the purchase of an item of immovable property and no KVAT would have been levied on the said consideration amount. In the instant case, however, we are faced with a situation where in the single agreement that was entered into between the petitioner and his customer, the consideration for the construction activities undertaken by the petitioner for the unfinished portion of the building, at the time of entering into the agreement with the customer, includes not only the amount towards construction of the unfinished portion but also an amount towards the completed portion of the building up to the date of the agreement. It becomes clear from the terms of the agreement, therefore, that it was not a case where there was a separate consideration flowing from the customer to the petitioner for an item of immovable property which was distinct and separate from the consideration paid for the works contract undertaken by the petitioner. A holistic reading of the agreement would indicate that the consideration payable for the works con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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