TMI Blog2006 (6) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... f limitation. Case numbers of these three writ petitions and their respective assessment years are as follows: Case No. Assessment year W. P. (T) No. 358 of 2005 1990-91 W. P. (T) No. 542 of 2005 1991-92 W. P. (T) No. 533 of 2005 1992-93 The petitioner, a company registered under the Indian Companies Act, 1913, is engaged in execution of works contract, relating to commissioning of air-conditioning plants in various organisations. It also sells its air-conditioning machines. According to the petitioner, all the works contracts relating to commissioning of air-conditioning plants have almost similar terms and conditions and such plants are commonly known as air-conditioning system or facility. It undertakes air conditioning contracts where the contracts cover the design, supply, installation, testing and commissioning of the entire airconditioning plants and such plants are extended a guarantee for the performance of satisfactory functioning. The air-conditioning plant is supposed to deliver certain desired comfort to its users, which depends on temperature, relative humidity and cleanliness. Such plant includes all machineries, accessories and parts, which are required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales tax is exigible on the transfer of such materials. According to the respondents, the petitioner has supplied air-conditioning plants to Bokaro Steel Ltd. Air-conditioner/air-conditioning plant/ accessories, etc., are notified goods as per entry No. 116 of the Government's Notification No. 14545 dated December 26, 1977. The assessment is to be done over such goods at the rate of 16 per cent and, as such, the assessing authority has rightly made the assessment and has rejected the plea of the petitioner to assess at the rate of eight per cent. Further, according to the respondents, the provision of section 12 of the Bihar Finance Act is not applicable in these cases, as the said provision relates to the goods, which are not notified. Air-conditioning plant/accessories, being notified goods vide entry No. 116 of Notification No. 14545 dated December, 26 1977 and the rate of tax being 16 per cent, the petitioner is liable to pay the same. It was submitted that the petitioner has preferred some of the writ petitions without availing the alternative remedy. It was also submitted on behalf of the State that the status of movability and immovability of the goods is a pure qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of goods involved in a works contract in the same way in which sales tax was leviable on the price of goods and materials supplied in a building contract, which had been entered into in two distinct, separate and divisible parts. Prior to the aforesaid judgment of the Supreme Court, in the case of Jamshedpur Contractors' Association v. State of Bihar reported in [1989] 75 STC 132 (Patna), Ranchi Bench of the Patna High Court declared rule 13A, as it then stood, as ultra vires, since rule 13A, as it then stood, provided for deduction of the labour charges at a fixed percentage of the works contract, irrespective of the fact whether the contractor had incurred high expenditure on account of labour charges. For the same analogy, Ranchi Bench of the Patna High Court in the case of C. I. O. Tyres Ltd. v. State of Bihar reported in [1990] 1 PLJR 397, had declared section 21(1)(a)(i), as it then stood, as ultra vires. In the case of Gannon Dunkerly Co. v. State of Rajasthan reported in [1993] 88 STC 204, the Supreme Court after detailed discussion summed up the manner and the method in which the value of the materials involved in the execution of the works contract is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and to the extent prescribed. Rule 13A was also amended subsequently vide Notification dated February 1, 2000, which reads as follows: Rule 13A. Deduction in case of works contract on account of labour charge. If the dealer fails to produce any account or the accounts produced are unreliable deduction under sub-clause (i) of clause (a) of sub-section (1) of section 21 on account of labour charges in the case of works contract from gross turnover shall be equal to the following percentages. . . The aforesaid provision has been bodily adopted by the State of Jharkhand vide Notification dated December 15, 2000 and, thus, is applicable in the State of Jharkhand. Amended section 21(1) and newly substituted rule 13A recently fell for consideration before a division Bench of the Patna High Court in the case of Larsen Toubro Ltd. v. State of Bihar reported in [2004] 134 STC 354. Having noticed the newly substituted rule 13A, the Patna High Court held that the said rule does not prescribe in what manner and to what extent labour charges could be deducted from the gross turnover to reach a taxable turnover and made the following observations: 23. Rule 13A unfortunate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e pronounced valid merely because it is administered in a manner, which might not be in conflict with the constitutional requirement. This principle was relied by the Patna High Court in the case of Larsen Toubro Ltd. v. State of Bihar [2004] 134 STC 354, while declaring section 21(1)(a)(i) read with rule 13A as not workable, in absence of the manner and extent of deduction, relating to any other charges. Same provision having been made applicable in the case of the petitioner by the State of Jharkhand, the respondents cannot escape the findings of the Patna High Court with regard to the same provision on the ground that the judgment is not binding on this court. The assessment orders in the case of Larsen Toubro Ltd. [2004] 134 STC 354 (Patna), having been set aside by the Patna High Court, we have no other option but to grant similar relief to the petitioner in view of the findings aforesaid. The next issue will be as to what should be the rate of tax and at which material portion of the works contract it is to be taxed. In case of works contract, the value of the materials involved in execution of the works is to be taxed only at the rate applicable to different mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lass wool 8% radic 5. Cooling power 8% radic 6. Pumps 8% radic 7. Refrigerant gases 12% 236 radic 8. Exhaust fans, air circulators, electrical heaters 16% 119 radic 9. Lubricants 9% 68 radic 10. Aluminium sheets 8% radic 11. Thermometer 8% 220 radic 12. Electrical switchboard 8% 230 radic 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch order to the assessing authority). However, the assessment was not concluded and fresh assessment on remand was made on November 27, 2004, i.e., after more than six years of communication of the said order. The respondents have not disputed the aforesaid fact in their counteraffidavit but according to the counsel for the State, the order of appellate court was communicated to the assessing authority for the first time along with the records vide Memo No. 204 dated August 6, 2003, which was received on August 7, 2003. The court directed the respondents to produce the original file to find out the date of communication. From the records, it appears that the appellate order passed on August 31, 1998 was communicated to the assessing authority vide Memo No. 2177 dated November 5, 1998. The petitioner obtained the certified copy of the same in January, 1999. Memo No. 204 dated August 6, 2003, as referred to by the counsel for the State, is the second time communication, which can be held to be a reminder. Thus, the appellate order having been communicated to the assessing authority vide Memo No. 2177 dated November 5, 1998, for the purposes of limitation, the period will start fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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