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2018 (5) TMI 84 - HC - VAT and Sales TaxLevy of tax on works contract - interstate transaction - Validity of reassessment order - supply of elevator and other spare parts - installation, testing and commissioning of elevators - the returns filed by the petitioner for the tax periods in question rejected - tax levied along with consequential penalty and interest treating the transaction as works contract exigible to tax under the Karnataka Value Added Tax Act, 2003. Whether the reassessment order passed under Section 39[1] of the KVAT Act is without jurisdiction? - Held that: - it is now well settled that alternative remedy is no bar for entertaining the writ petition when the challenge is to the jurisdiction of the Authority passing the impugned order. Hence, relegating the petitioner to avail the alternative remedy available under the KVAT Act would not be justifiable. Whether the movement of goods occasioned from Thane, Maharashtra for executing the works contract in the State of Karnataka would be construed as local sale exigible to levy of tax under the KVAT Act? - Held that: - the nature of contract is relevant to determine the transaction whether is a sale simpliciter or works contract - It may be true that the main contract of supplying, installation and commissioning of lifts/elevators might have been split into two, viz., purchase order and work order placed by the customer/purchaser to avoid taxes payable to the State of Karnataka and both these orders are intrinsically interlinked with each other but movement of goods from Thane, Maharashtra to Karnataka pursuant to contract executed between the parties cannot be disputed. The case of the revenue that the works contract receipts received by the petitioner in relation to turnkey project undertaken is being brought to tax which is in purview of Section 4(1)(c) of the KVAT Act, 2003, cannot be countenanced as the divisibility of the contract would not empower the Authorities to subject the inter state transaction to tax under the State Tax Act on the ground that the petitioner has employed dubious methods to avoid payment of tax to the State - levying tax under the provisions of KVAT Act, 2003 on the transaction of the contract executed by the petitioner set aside. Petition allowed - decided in favor of petitioner.
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