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2009 (11) TMI 864 - KARNATAKA HIGH COURTWhether in spite of the statutory provisions under the KST Act and Rules, 1957 and judicial pronouncements that there is only one ‘sale’ and ‘turnover’ involved in the works contract executed by a subcontractor directly to the employer/contractee, the Karnataka Appellate Tribunal was right in having held that in respect of the payments made by the petitioner to the sub-contractors, besides the sub-contractors, the petitioner is also liable to pay turnover tax at three per cent prescribed under section 6B of the Karnataka Sales Tax Act, 1957? Whether the Karnataka Appellate Tribunal was right in having held that the petitioner is not eligible for deduction under rule 6(4)(n)(iii) of the KST Rules, 1957 on the payments made to sub-contractors merely because the petitioner could not produce proof that the sub-contractors had declared the turnovers corre sponding to such payments in the monthly statements/annual returns filed by them, when the petitioner had furnished proof that the subcontractors were dealers registered under the KST Act, 1957 which was substantial compliance with the rule to entitle to the petitioner to the deduction claimed? Whether the Karnataka Appellate Tribunal was right in having held that the petitioner was liable to pay purchase tax under section 6 of the KST Act, 1957 on the purchases of sand and jelly in spite of the fact that the dealers who sold the sand and jelly to the petitioner had attained total turnovers exceeding ₹ 2,00,000 in the year and therefore were liable to registration and payment of tax? Held that:- The Tribunal was in error in holding that the payments made by the petitioner to the sub-contractors would come within the purview of turnover and liable to pay turnover tax of three per cent under section 6B of the Act. Accordingly, we answer the question of law framed hereinabove one and two in favour of the revision petitioner and against the Revenue on the facts of this case only. Insofar as question No. 3 which is formulated hereinabove, the authorities have considered the submissions and also the material placed by the revision petitioner and have come to a conclusion that the petitioner is liable to pay purchase tax and we do not see any grounds to deviate from the said view taken by the authorities. Accordingly, we confirm the said view and answer question No. 3 in favour of the Revenue and against the assessee. Appeal allowed in part.
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