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2022 (1) TMI 561 - HC - VAT and Sales TaxLevy of Assam VAT - Nature of activity - sale or service or both - denting and painting job on a vehicle - levy of VAT on paints by treating the nature of works as works contract - transfer of property in paints during the restoration and reconditioning work or not - HELD THAT:- If a new vehicle is considered, a vehicle is made of thousands of components, each having its unique character. Nonetheless, though a vehicle is a composition of numerous unique components, it is impermissible for the taxing authority to tax individual item of the vehicle. Similarly, in the composite work of denting and painting contract, the combination would be a composite contract of labour and service and as in the present case, the petitioner is liable for and is paying service tax as imposed on the work of denting and painting, being a service provided by a “authorised service station” which is covered by the provisions of Section 65(9) of the Finance Tax Act, 1994 (as amended). Therefore, it would not be permissible for the State Taxing Authority to impose VAT on paint separately. There is no dispute that an item taxable by the State under Article 366(29-A) is exempted from being levied with Service Tax and vice-versa. The petitioner, has referred to the provisions of Section 65(9) and Section 65(105)(zo) of the Finance Act, 1994, as amended, and it is submitted that service, repair, reconditioning or restoration of motor vehicle is treated as a taxable service under Finance Act, 1994 (as amended). The learned counsel for the petitioner has also referred to the Circular No. 699/15/2003-CX dated 05.03.2003 (Annexrure-9 of the writ petition), wherein it has been clarified that items such as paints used in painting body, etc., during the course of providing service form intrinsic part and parcel of service in so much as that these are not distinctly and separately identifiable from the services rendered and therefore value of such items, which form intrinsic part of service is included in the value of taxable service. The Court is of the considered opinion that the petitioner has been able to repel the opinion expressed in the impugned orders, thereby holding the use and/or application of paint in a vehicle workshop as a “sale” of paint and thus, taxable under the Assam Value Added Tax Act, 2003 - Application allowed.
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