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2007 (8) TMI 656 - GAUHATI HIGH COURTWhether the State has the power to levy taxes on declared goods at a rate higher than three per cent, when there is deemed sale of such goods in the course of execution of works contract? Whether the goods, which are declared to be goods of special importance in inter-State trade or commerce and known as declared goods are, even if used in the execution of works contract, subject to the restrictions or limitations imposed on the legislative power of the State by section 15 of the Act of 1956, so far as, at least, the rate of tax is concerned? Held that:- While the State, under the Scheme of the Assam VAT Act, 2003, is competent to levy sales tax on transfer of property in goods involved in the execution of works contract at 12.5 per cent, such transfer of property in goods involved in the execution of works contract will not exceed three per cent if the goods involved in the execution of works contract are declared goods. Thus, the impugned order, dated April 10, 2007 which holds that the tax is imposable at 12.5 per cent on both declared as well as undeclared goods is wholly without jurisdiction and not supported even by the scheme of the Act under consideration. In the result and for the reasons discussed above, these two writ petitions succeed. The impugned order, dated April 10, 2007, is hereby set aside and quashed and it is held that the Assam VAT Act, 2003, does not permit the respondents/authorities concerned to impose tax at 12.5 per cent on transfer of such goods, which have been declared as goods of special importance under section 14 of the Act of 1956, and that on such declared goods, rate of tax cannot exceed three per cent (as amended); whereas transfer of property in goods, which are not declared goods involved in the execution of works contract, would be subject to usual rate of tax of 12.5 per cent.
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