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2006 (9) TMI 512 - HC - VAT and Sales Tax
Issues:
1. Deduction of tax under the Assam Value Added Tax Act, 2003 from the petitioners' bills for works executed for the Indian Oil Corporation Ltd. without complying with the provision of section 47(1)(b)(i) thereof. Analysis: The petitioners' grievance was against the deduction of tax under the Assam Value Added Tax Act, 2003 from their bills for works executed for the Indian Oil Corporation Ltd. without adhering to the provision of section 47(1)(b)(i) of the Act. The petitioners argued that as their works did not involve an element of sale under the Act, they were entitled to sales tax exemption under section 47(1)(b)(i). They cited a previous court decision to support their claim. The Standing Counsel, Finance Department, contended that the previous court decision applied to the current case as well. The court considered the vires of section 27 of the Assam General Sales Tax Act, 1993, in a previous case and held that the liability to pay tax at source was limited to the sale or supply of goods under the statute. The court interpreted the provision to cover the supply of goods in works contracts only if they were liable to tax. The court emphasized that section 47(1)(b)(i) of the Act allowed for the grant of a certificate of tax exemption for divisible works contracts involving transfer of property in goods or only labor and services, after due consideration and hearing of the contractor. Based on the judicial opinion in the previous case and the legislative provision of section 47(1)(b)(i) of the Act, the court concluded that the authorities of the Indian Oil Corporation Ltd. should have decided on the petitioners' application under the Act before deducting tax from their bills. The court directed the respondent to make a decision on the application, considering the previous court decision and the Act's provisions, and then compute and realize any tax due in accordance with the law. The petition was disposed of with this direction, and no costs were awarded.
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