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2014 (11) TMI 967 - HC - VAT and Sales TaxExemption in respect of receipts from labour contract - revenue denied the benefit of exemption to the person opting for compounded rate as per section 8(a)(i) of Kerala Value Added Tax - charging section 6 and concessional rate of tax payable under section 8(a)(i) - Held that:- one has to carefully analyse and understand the words used at section 6 and also at section 8(a) (i) of the Act. Section 8(a) (i) only refers to tax payable on the whole contract amount without referring to turnover. Once he chooses to seek benefit under section 8 to pay concessional rate of tax, it has to be on the whole contract amount which would mean value of entire contract done by him in respect of a particular contract or with respect to the work done in a year, without any bifurcation claiming exemption. But, in an instance where during an assessment year the assessee does only labour contract for one person and composite work for another person, there is no obligation to pay compounded tax for the said labour work, but in respect of the composite work, the compounded tax has to be paid. The liability to pay compounded tax arises only if there is a liability to pay tax. If it is a composite contract involving a labour contract and supply of materials, the assessee will become liable to pay tax. If the labour contract is pure and simple there is no liability to pay tax and consequently there is no liability to pay compounded tax as well. Under these circumstances, we are of the view that the assessing officer has to verify the contract in question especially the contract with Indian Oil Corporation and verify whether it amounts to works contract or a pure and simple labour contract. - Decided partly in favor of assessee.
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