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2014 (9) TMI 420 - HC - VAT and Sales TaxValuation - works contract - inclusion of value of free supplies - Exemption from tax - earth filling charges - State Government allegedly supplied gravel free of cost to the petitioner - Assessee contended that this portion of the turnover represents the charges for lifting and transporting of gravel to the worksite and that this amount is exempted from levy of sales tax under section 5F of the Andhra Pradesh General Sales Tax Act, 1957 - Held that:- there is no mention of the cost of supply of gravel in the said letter as it does not say that the gravel is being supplied free of cost to the petitioner. No other material is produced before us by the petitioner to prove that the gravel is supplied to it free of cost. Therefore, it is not possible to accept the contention of the petitioner that the gravel was supplied to it free of cost. Assuming that gravel is obtained free of cost by the petitioner from the Department of Jails, it is to be taken that the petitioner acquired the gravel at "zero" cost but the said gravel has to be transported to the place of execution of the contract from the quarry from which it is taken out. In doing so, the petitioner incurred transportation charges as he had to transport the gravel by hiring lorries. These amounts were also collected by the petitioner from the contractee, i.e., the A.P. State Police Housing Corporation. This element of transportation charges becomes part of the value of gravel when it is incorporated in the works as held in Seven Hills Constructions case [2014 (9) TMI 110 - ANDHRA PRADESH HIGH COURT]. The contention of the petitioner that the transportation expenses for transport of gravel come in the category of "other similar expenses relatable to supply of labour and services" in clause (g) of rule 6(2) of the Rules framed under the Act is also not valid because gravel supply charges or transportation charges are not similar to supply of "labour" or "services", although they may be similar to supply of "goods". Transportation charges are not deductible as they are not specifically mentioned in rule 6(2) of the Rules. - Decided against assessee.
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