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2021 (11) TMI 430 - KARNATAKA HIGH COURTInterpretation of Statute - value of goods - section 15 (5) (a) of the Act - Levy of interest and penalty under Sections 36(1) and 72(2) of the KVAT Act - purchase value of goods bought from outside the State after adding a gross profit of 20% on the same - Section 4 of the KVAT Act - HELD THAT:- A harmonious reading of the various 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 may be prescribed. In other words, any dealer who had purchased or obtained goods from outside the State or from outside the territory of India was not entitled to opt for the composition scheme. Interpretation of “value of such goods.” - HELD THAT:- The language employed by the Legislature in Section 15[5][a] is plain and unambiguous. The expression “value of such goods” relates to purchases made on which liability 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-state purchases or the goods purchased from outside the territory of India at the regular rate of tax and to deduct the same from the total consideration of the works contract executed by the dealer to make the dealer eligible to opt for composition scheme, despite purchasing goods from outside the State or outside the territory of India. By any stretch of imagination, it cannot be held that the levy of tax under Section 4 would be on the sale value of the goods transferred in the works contract executed by the dealer. The entire approach of the Revenue is fallacious and runs contrary to the intendment of the Legislature - Appeal dismissed - decided against Revenue.
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