TMI Blog1992 (12) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ner from its manufacturing unit at Pune and some goods were received from other firms from outside the State of Haryana. Some goods were purchased within Haryana and then assembling and fabrication work was done at factory-sites at Meham and Bhuna. The petitioner-firm has asked the purchaser to provide for electric power supply, civil work, lodging accommodations, generating sets, workshop facilities, labour, water supply, tools, lathe machines and drilling, etc. It did some masonry work conducting boiler with chimney and the entire boiler work and conducted steam water and vacuum trials. For the assessment year 1990-91, the assessing authority, Rohtak, framed an assessment vide order, annexure P/9, determining the liability of the petitioner to the tune of rupees one crore approximately. Under the Haryana General Sales Tax Act, 1973 (hereinafter referred to as "the Act"), it is mandatory to deposit the amount of tax assessed before an appeal can be entertained except where the appellate authority for the reasons to be stated exempts the assessee from the deposit of advance tax having satisfied itself that the assessee is unable to pay the tax. The petitioner-firm filed an applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication, specify: Provided that a contractor exercising option under this sub-section shall not be entitled to make purchase of any goods without payment of tax on the authority of his registration certificate for use in the execution of the works contract nor shall he be entitled to make adjustment or claim of refund of tax paid at any preceding stage, or deduct turnover of purchase of such goods: Provided further that the option once exercised shall not be revoked till the expiry of three years from the end of the year in which such option is exercised nor a works contract under execution shall be split on such revocation. (3) A contractor exercising option under sub-section (2) shall, so long as the option remains in force, not be required to maintain accounts of his business under this Act or the Rules made thereunder except record of payment received or receivable in relation to the works contract executed or under execution." State of Haryana issued notification dated March 24, 1989, annexure P/5 in exercise of its powers under sub-section (2) of section 26 of the Act, which runs as under: "Notification No. S.O. 49/H.A./20/73/S.26/89 dated March 24, 1989. In ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commerce under section 14 of the Central Sales Tax Act except in accordance with the restrictions and conditions contained in section 15 of the Central Sales Tax Act." It was further held in this judgment as under "On behalf of the contractors, it has been urged that under a law imposing a tax on the transfer of property in goods involved in the execution of a works contract under entry 54 of the State List read with article 366(29-A)(b), the tax is imposed on the goods which are involved in the execution of a works contract and the measure for levying such a tax can only be the value of the goods so involved and the value of the works contract cannot be made the measure for levying the tax. The submission is further that the value of such goods would be the cost of acquisition of the goods by the contractor and, therefore, the measure for levy of tax can only be the cost at which the goods involved in the execution of a works contract were obtained by the contractor. On behalf of the States, it has been submitted that since the property in goods which are involved in the execution of a works contract passes only when the goods are incorporated in the works, the measure for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be determined by taking into account the value of the entire works contract and deducting therefrom the charges towards labour and services which would cover "(a) Labour charges for execution of the works; (b) amounts paid to a sub-contractor for labour and services (c) charges for planning, designing and architect's fees; (d) charges for obtaining on hire or otherwise machinery and tools used for the execution of the works contract; (e) cost of consumables such as water, electricity, fuel, etc., used in the execution of the works contract the property in which is not transferred in the course of execution of a works contract; and (f) cost of establishment of the contractor to the extent it is relatable to supply of labour and services; (g) other similar expenses relatable to supply of labour and services (h) profit earned by the contractor to the extent it is relatable to supply of labour and services. The amounts deductible under these heads will have to be determined in the light of the facts of a particular case on the basis of the material produced by the contractor." It was further made clear that apart from the deduction referred to above, it will be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax payable under this Act pay on the total value of the works contract being executed by him a sum at certain percentage to be prescribed under the notification which in this case has been prescribed at the rate of 2 per cent of the total value of the works contract being executed by him. Even if the contention of the petitioner is accepted then the petitionerfirm would be liable to pay tax on certain goods on which the State Legislature could impose the tax but on certain goods which are covered under sections 3, 4, 5, 14 and 15 of the Central Sales Tax Act, it was not liable to pay the tax as the State Legislature was not competent to enact laws relating to those goods. Under section 26(2) of the Act, the petitioner-firm was permitted to pay tax at a fixed rate on the total value of the works contract in lieu of the tax payable by it under the Act. The tax at the rate of 2 per cent on the total value of the works contract is in lieu of the tax payable by it under the Act and cannot be deemed to be a tax on the total turnover of the works contract. An option has been given to a contractor to be exercised by him to avoid certain procedural hassles in framing of the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Rajasthan Sales Tax Act are totally different from the provisions of section 26(2) of the Act. Under section 5(3) of the Rajasthan Sales Tax Act, the State Legislature had fixed the tax on the total turnover of the works contract whereas the Haryana Legislature has fixed 2 per cent on the total value of the contract in lieu of the tax payable under the Act which is only a mode of calculation. Sub-section (3) of section 26 of the Act provides that a contractor who opts to be taxed under sub-section (2) would not be required to maintain the accounts of business under the Act or the Rules made thereunder except the record of payments received or receivable in relation to the works contract executed or under execution. This provision explains that sub-section (2) of section 26 of the Act and the notification issued thereunder is to facilitate the task of framing of assessment by fixing the mode of calculation at the rate of 2 per cent of the total value of the contract as the tax in lieu of the tax payable under the Act as the assessee is not required to maintain the accounts of business under the Act or the Rules made thereunder. Sub-section (2) of section 26 of the Act doe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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