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2015 (10) TMI 224 - HC - VAT and Sales TaxUnderaluation - Determination of taxable turnover - prescribed authority classified the taxable turnovers and levied tax at four per cent. on certain items and subjected to levy of tax at 12.5 per cent on some goods - Whether the contract executed by the assessee for M/s. KPTCL is a divisible contract or indivisible contract notwithstanding the fact, it is treated as a composite contract - Held that:- For convenience of operation and for payment of sales tax on supply portion, it is treated as a contract for supply. Therefore, the intention of the parties is a manifest coupled with the said clause. The other terms and the conduct of the parties disclose in terms of the bid, the assessee supplied the materials as per specifications and paid tax thereon and transferred title in the goods to M/s. KPTCL. Thus, KPTCL became the owner of the said materials. They in turn, handed over the materials for safe custody to the assessee to enable him to perform the said contract, i.e., erection work. As the KPTCL had entered into four contracts, unless these four contracts are performed in unison, the object of given contract would have been frustrated. All the four contracts are given to the same assessee. Therefore, they wanted to ensure that the erection work which is purely a labour work was also to be treated as an integral part of this composite contract on the single source responsibility basis and the contractor was bound to perform the total contract in its entirety and non-performance of any portion of the contract was to be treated as a breach of the entire contract. In respect of the contract for sale of material taxes have been paid in accordance with law. No tax is payable in respect of contract for supply of labour. In civil works, it is a works contract and tax is levied under Schedule VI, entry 23. In those circumstances, we find that the finding recorded by the Tribunal that it is a divisible contract and the order passed by the revisional authority was erroneous is proper. The Tribunal was justified in setting aside the order of revisional authority and restoring the order passed by the prescribed authority. - Decided against Revenue.
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