TMI Blog2009 (3) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside. Appeal allowed. - Civil Misc. Writ Petition (Tax) No. 71 of 2008 - - - Dated:- 31-3-2009 - Amitava Lala And Rajes Kumar,JJ. JUDGMENT The petitioners herein are civil and electrical contractors. During the relevant assessment years, 2005-2006, they have executed the works contract of civil and electrical nature. The petitioners are liable to tax on the value of the goods involved in the execution of works contract under section 3-F of the U.P. Trade Tax Act (hereinafter referred to as the Act ). The State Government in exercise of powers under section 7-D of the Act has issued compounding scheme in respect of civil and electrical contracts for the assessment years, 2005-2006. Under such scheme in respect of civil contract, the tax was payable at the rate of one percent on the total receipt after allowing deduction of the value of the goods supplied by the contractee and at the rate of two percent in the case of electrical contract. By Act no. 9 of 2005 w.e.f. 1.5.2005, Section 3-H of the Act has been introduced levying State Development Tax at the rate not exceeding one percent of the taxable turnover as the State Government may by notification specify on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Commissioner, Sales Tax and others reported in 2006 U.P.T.C., 538, the Full Bench of tis Court has held that once the assessee accepts to pay the composition amount under the scheme of Section 7-D of the Act it is not open to the assessee to withdraw and seek for the regular assessment. Sri Kunwar Saxena, Advocate submitted that Section 3-H (2) of the Act says that the facility of composition of tax in relation to compoundable goods under section 7-D of the Act shall also be available in respect of State Development Tax. He submitted that any change in the scheme enhancing or reducing the composition amount can only be made by the State Government and not by the assessing authority or by the Commissioner. He submitted that in case of compounding scheme relating to brick kiln for the assessment year, 2005-2006, State Development Tax is not chargeable. Sri S.D.Singh, Advocate states that like Section 3 of the Act, Section 3-H of the Act is a charging section contemplating levy of State Development Tax not exceeding one percent of the taxable turnover in case if the turnover of the dealer exceeds Rs. 50 lacs, in addition to the tax payable under any other provisions of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act has been introduced w.e.f. 1.5.2005 by Act no.9 of 2005 creating liability of State Development Tax in addition to the tax liability under other provisions of the Act. He submitted that subsequent part of Section 3-H of the Act states that State Development Tax shall be realised in addition to the tax payable under any other provisions of this Act. Emphasizing on the word under any other provisions of the Act , he submitted that in effect, Section 3-H of the Act has an overriding effect over section 7-D of the Act and in addition to the composition amount, one percent in respect of State Development Tax is payable. He submitted that Section 3-H (2) of the Act is an enabling provision by which the power is with the State Government to provide facility of the composition tax in respect of State Development Tax. Having such power, in case of brick kiln, Biscuit, the facility of the compounding scheme was also provided in respect of the State Development Tax under the compounding scheme and it has been provided that the State Development Tax shall not be chargeable over and above the composition amount. While, in the case of civil and electrical contracts under the compoundi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , admittedly the State Government has not modified the composition amount by any order for modification. Having heard the learned counsel for the parties, We have given our anxious consideration to the rival submissions. It will be useful to refer relevant provisions of U.P. Trade Tax Act which requires consideration. Section 2 (bb). 'Trade Tax' means a tax payable under this Act on sales or purchases of goods, as the case may be; 2 (n) 'Tax' includes an additional tax and the composition money accepted under Section 7-D and the State Development Tax; Section 3. Liability to tax under the Act. -- (1) Subject to the provisions of this Act, every dealer shall, for each assessment year, pay a tax at the rates provided by or under Section 3-A, Sectio 3-D or Section 3-H on his turnover of sales or purchases or both, as the case may be, which shall be determined in such manner as may be prescribed. (2) No dealer shall, except as otherwise provided in Section 18, be liable to tax under sub-section (1) if, during the assessment year, the aggregate of his turnover of --- (a) purchases of goods notified under Section 3-D; (b) purchases liable to tax u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchaser, to own the liability of tax or composition money, as the case may be, payable by the purchaser in the event of re-sale of such goods or sale of any other commodity manufactured from such goods and if such dealer owns such liability, he shall be liable in place of the purchaser, to pay the tax or composition money in respect of the turnover of such re-sale of such goods or sale of such commodity. (7) Subject to such conditions as may be prescribed, the State Government may permit any Power Project Industrial Unit, engaged in generation, transmission and distribution having the aggregate capital investment of Rs.1000 Crore or more to own the trade tax liabilities of a dealer of such sales as are made to that unit : Provided that such permission may also be granted in the case of a sub-dealer whose sales culminate in the purchases by such unit. (8) The State Government may, by notification, remit the amount of tax to the extent necessary to ensure that effective rates of trade tax on all purchases for and sales by a Power Project Industrial Unit, do not exceed the respective rates applicable as on the date of commencement of State Energy Policy subject to the conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng contained in Section 3-A, or (1) Section 3-AAA or Section 3-D but subject to the provisions of Sections 14 and 15 of the Central Sales Tax Act, 1956, every dealer shall, for each assessment year, pay a tax on the net turnover of- (a) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment of other valuable consideration; or (b) transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract, at such rate not exceeding twenty percentum as the State Government may, by notification, declare and different rates may be declared for different goods or different classes of dealers. (2) For the purposes of determining the net turnover referred to in sub-section (1), the following amounts shall be deducted from the total amount received or receivable by a dealer in respect of a- (a) transfer referred to in clause (a) of sub-section (1) whether such transfer was agreed to during that assessment year or earlier- (i) the amount representing the sales value of the goods covered by sections 3,4 and 5 of the Central Sales Tax Act, 1956; (ii) the amount rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained by him are not found by the assessing authority to be worthy of credence and the amount actually incurred towards charges for labour and other services and profit relating to supply of labour and services are not ascertainable, such charges for labour and other services and such profit may, for the purposes of deductions under clause (b) of sub-section (2), be determined on the basis of such percentage of the value of the works contract as may be prescribed and different percentages may be prescribed for different types of works contract. Section 3-H of the Act prior to 1.5.2005. Section 3-H. Turnover Tax-(1) There shall be levied a turnover tax at the rate of one percent on the dealers of whose aggregate turnover as referred to in sub-section (2) of Section (3) exceeds fifty lakh rupees, in addition to the tax payable under this Act. Such tax shall be levied and collected notwithstanding any rebate, concession or exemption provided under this Act. (2) In the case of composition of tax liability under Section 7-D, the turnover tax leviable under sub-section (1) shall be calculated separately and be charged in addition to the amount payable as composition money. (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such period as may be agreed upon: Provided that any change in the rate of tax, which may come into force after the date of such agreement shall have the effect of making a proportionate change in the lump sum or the rate agreed upon in relation to that part of the period of assessment during which the changed rate remains in force. Explanation.- For the purposes of this section the assessing authority includes an officer not below the rank of Trade Tax Officer posted at a check-post. Now let us consider the relevant decisions on the subject. In the case of M/S Sainik Motors, Jodhpur and others Versus State of Rajasthan reported in AIR 1961 Supreme Court, 1480, the Apex Court has considered the compounding scheme under Rajasthan Passengers and Goods Taxation Act. While dealing with the matter, the Apex Court held as follows: The next contention is that the Act allows an option to pay a lump sum in lieu of the tax, but Rules 8 and 8-A and the notification make the payment of the lump sum compulsory. There is no doubt that ex facie the two proviso to S. 4 employ language which is permissive, while the two Rules and the notification employ language which is imperativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nte clause as observed by the Supreme Court in the case of State of Bihar V. Bihar M.S.K.K. Mahasanga and others, 2004 A.I.R. SCW 7151 is generally appended to a section with a view to give the enacting part of the Section in case of conflict, an overriding effect over the provision in the same or other Act mentioned in the obstante clause. It is equivalent to saving that in respect of the provisions or Act mentioned in the non-obstante clause, the provision following it will have its full operation or the provisions embraces in the non-obstante clause will not be an impediment in the operation of the enactment or the provisions in which non-obstante clause occurs. A dealer who has opted to pay the tax in lump sum under Section 7-D of the Act and the said option has been accepted by the department, the demand for that period is not relatable to the actual turnover but to the sum agreed upon. In other words, the department as well as the dealer both know the amount payable and receivable by each other. The determination of the lump sum in lieu of tax, displaces the requirement of regular assessment proceedings. The qualification of tax liability is by agreement as per terms of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The department in its turn receives a fixed amount of tax without undertaking the assessment work and, thus, saves a lot of time. It also facilitates the speedy recovery of tax. Like section 7-D of the Act the similar provisions are also available under the Kerala General Sales Tax Act, Central Excise Act, U. P. Sugarcane Purchase Tax Act etc. Apex Court and the High Court had occasions to consider the scope of such provisions. In the case of State of Kerala and another Vs. Builders Association of India and others, reported in (1997) 2 SCC, 183, the Apex Court while considering the constitutional validity of Sections 7(7) and 7(7-A) and 5(1)(iv) of the Kerala General Sales Tax Act, 1963, which provided for payment of tax in lump sum in place of actual amount of tax, has held that the alternate method of taxation provided by sub-section (7) or (7-A) of Section 7 is optional. It is wholly at the choice or pleasure of the contractor and the contractor who has opted to the said alternate method of taxation, cannot complain. It has further held that having voluntarily and within the full knowledge of the features of the alternate method of taxation, opted to be governed by it, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee has himself asked for a lump sum method of assessment and this was agreed to by the Department, then the assessee cannot go back and claim that he should be assessed by the normal mode as the assessee cannot blow hot and cold at the same time. The decision of this Court has been approved by the Apex Court in the case of Commissioner, Central Excise Vs. M/s Venus Castings (P) Ltd.,(supra). The same view was taken by the Apex Court in the case of Union of India Vs. Supreme Steels and General Mills, reported in 2001 (133) ELT, 513 (SC). In the aforesaid case, it has been held by the Apex Court that it was absolutely optional for the manufacturer to opt for payment of excise duty in accordance with sub-rule (3) of Rule 96ZO on the basis of total finished capacity installed as provided thereunder and the manufacturer cannot opt twice during one financial year first choosing to pay in accordance with sub-rule (3) of Rule 96ZO and thereafter to switch over to actual production basis under Section 3A(4) of the Central Excise Act, 1944 in case it is less than the duty payable under sub-rule (3) of Rule 96ZO. The said sub-rule is quite clear that the option under it is availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a). In the case of Bharathi Knitting Co. Vs. DHL Worldwide Express Courier, reported in (1996) 4 SCC, 704, the Apex Court has held that when a person signs a document which contains certain contractual terms, normally parties are bound by such contract and it is for the party to establish exception in a suit. When a party to the contract disputes the binding nature of the signed documents, it is for him to prove the terms in the contract or circumstances in which he came to sign the document, need to be established and in appropriate case where there is an acute dispute of facts, necessarily the Tribunal has to refer the parties to original Civil Court established under the Code of Civil Procedure or the State law, to have the claim decided between the parties but when there is a specific term in the contract, the parties are bound by the term in the contract. In the case of Commissioner of Trade Tax, U.P. Lucknow Versus Qayum Khan Thekedar, Aliganj, Banda reported in 2007 NTN (Vol.33) 53, this Court has considered the provisions of Section 7-D of the Act with reference to Section 10-B of the Act. The question for consideration was whether, that once the assessee and the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax payable under this Act one percent State Development Tax shall be realized. There is nothing in the section leaving any scope to hold that it has overriding effect over Section 7-D of the Act. As stated above, State Development tax falls within the purview in lieu of tax payable under section 7-D of the Act, therefore, once in a scheme composition amount is fixed the same shall include State Development Tax and unless in the scheme itself anything to the contrary is stated. In the compounding scheme it is not stated that the composition amount would not include the State Development Tax, therefore, we are of the considered opinion that apart from the composition amount mentioned in the compounding scheme in respect thereof, assessing authority and the petitioners agreed, the State Development Tax cannot be charged over and above the compounding scheme. It is true that Section 3-H (2) of the Act is an enabling provision and empowers to provide facility of compounding in respect of State Development Tax also. Therefore, while introducing the compounding scheme, it will be open to the State Government to specify that the composition amount includes the State Development Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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