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2015 (1) TMI 766 - KARNATAKA HIGH COURTRate of taxability of iron and steel used for execution of works contract - Section 29 of the KVAT Act, 2003 R/w Rule 29(1)(b) of the KVAT Rules 2005 properly considered or not - Whether the Karnataka Appellate Tribunal is justified in law in holding that the iron and steel used by the respondent for the execution of works contract being used in the form should be taxed at 4% and not 12.5% - Held that:- The works contract is for laying pipes and construction of water tanks in different villages, whence materials such as iron and steel, cement, PVC pipes and RCC pipes, were transferred in the same form, regard being had to Running Account bills prepared by the authorities of the Jilla Panchayath, a Department of State Government - the quantities of material and their value transferred in the same form in the execution of the works contract are certified by the authorities of the Jilla Panchayath as recorded in the RA Bills, out of which iron and steel transferred in the same form during the year 2005-06 was ₹ 67,38,377/-, with impost at 4% per annum - there is no calculation of the value of other goods transferred in the same form, namely, cement, PVC pipes, RCC pipes carrying tax at different rates, as prescribed in the Third Schedule to the KVAT Act, 2003 - assessee did not furnish the tax invoice, the debit note or credit note in relation to sale of the materials transferred in the execution of the works contract, in accordance with Section 29 or 30 of the KVAT Act, 2003. The authorities based upon the RA Bills submitted by the respondent/assessee arrived at ₹ 67,38,377/- as the value of the iron and steel, in respect of which the rate of tax is 4% - the State is not entitled to the illegal duty on 'works contract' for the AY 2005-06, calling forth the application of doctrine of unjust enrichment - the direction issued by the KAT relating to subjecting to tax at the rate of 12.5% on the remaining taxable turnover, relating to goods other than iron and steel cannot be upheld – thus, the portion of the order is set aside which is subjecting to tax at 12.5% on the remaining taxable turnover relating to goods other than iron and steel and direct imposition of tax at the rates prescribed in the Third Schedule over goods, such as cement, PVC pipes and RCC Pipes said to have been transferred in the same form in the execution of the works contract during the year 2005-2006, after making a valuation of the said articles, as against the remaining taxable turnover excluding ₹ 67,38,377/-, towards the purchase of iron and steel, at 4% - Decided partly in favour of revisionist revenue.
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