Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2012 (9) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (9) TMI 899 - HC - VAT and Sales TaxApplicability of the rate of tax on execution of civil works contract under the KVAT Act - Whether the Revisional Authority is justified in reviewing the order of the ACAR, which has only clarified the queries made by the appellant? Whether the finding of the revisional authority that the goods used in the works contract cannot be treated on par with the normal sale of goods for the purpose of arriving at the rate of tax for the period prior to 1-4-2006? Held that:- Neither Section 3 nor Section 4 of the Act seeks or intend to levy or prescribe different rate of tax for the goods involved in the normal sale and for the goods involved in the deemed sale. Both normal sale as well as the deemed sale should be treated as one and the same with respect to levy of tax on sale of goods. The Commissioner opined that the rate of tax is on the value of goods involved in the execution of works contract and not on separate value of each goods. Thus, even when there is no schedule of works contract under the Act prescribing the rate of tax on different type of contract, the tax liability exists upto 31-3-2006. It falls under Section 4(i)(b). Hence, levy of tax has to be under Section 4(i)(b). The finding of the ACAR is contrary to law. The tax has to be levied on the price of the goods and material used in the works contract as if there was a sale of goods and materials. The property in the goods used in the work contract will be deemed to have been passed over to the buyer as soon as the goods or material used are incorporated to the moveable property by principle of accretion to the moveable property. Hence, we are of the view that the order passed by the Commissioner is contrary to law. For the period prior to 1-4-2006, tax has to be levied as per Section 3(1) of the Act and for the period subsequent to 1-4-2006, tax has to be levied as per Section 4(1)(c) of the Act. Hence, the substantial questions of law are held in favour of the appellant.
|