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2018 (3) TMI 162 - SC - VAT and Sales TaxRate of tax - uniform rate of tax or different rate of tax on purchase of goods for use in the works contract - rate applicable prior to 1 April 2006 when Section 4(1)(c) was introduced by an amendment into the KVAT Act 2003 - Held that: - There can be no manner of doubt that even prior to 1 April 2006 works contracts were exigible to the levy of tax. The charging section, Section 3, mandates that “the tax shall be levied on every sale of goods”. The expression ‘sale’ in Section 2(29) means ‘every transfer of the property in goods’ including ‘a transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract’. Section 4 prescribes the rate of tax. - The expression ‘other goods’ in Section 4(1)(b) evidently means those goods which are not governed by Section 4(1)(a) - where goods are specifically covered by clauses (i), (ii), or (iii) of Section 4(1)(a), recourse to the residual provisions of Section 4(1)(b) would not be available. To allow a residual provision to consume the specific would be to invert the intent of the legislature. The state wants us to do just that. In Gannon Dunkerly & Co [1992 (11) TMI 254 - SUPREME COURT OF INDIA], this Court held that it is permissible for the State legislatures to prescribe a uniform rate of tax for all goods involved in the execution of works contracts, even though different rates of tax are prescribed for the sale of such goods. The exigibility to tax is not (as it cannot be) dependent on the state prescribing a uniform rate of tax for goods involved in works contracts. That the KVAT Act 2003 did not provide a uniform rate of tax prior to 01.04.2006 on goods involved in the execution of works contract also becomes apparent when we read the amendment which introduced Section 4(1)(c) by Act 4 of 2006. As a result of the amendment, the legislature provided that the rate of tax in respect of the transfer of property in goods involved in the execution of a works contract would be as provided in the Sixth Schedule. The Sixth Schedule elucidates works contracts of various descriptions and elucidates the associated rates of tax for each distinct category. By way of abundant caution, that issues of a factual nature, will fall for adjudication in the course of assessment proceedings. It was open to state legislatures to provide uniform rates of tax on goods involved in the execution of works contracts. Many state legislatures did so. The Karnataka legislature did so with effect from 1.4.2006, not earlier. We are unable to accept the submission of the State that upto 31 March 2006. Section 4(1)(b) envisaged a uniform rate for the transfer of goods involved in the execution of a works contract. Appeal dismissed - decided against appellant.
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