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TMI Blog2014 (4) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 26-02-2009 passed by the Joint Commissioner of Commercial Taxes (Appeals)-I (for short 'the First Appellate Authority') for the assessment years 2005- 06 and 2006-07. 2. The appellant is a Private Limited Company and a dealer registered under the provisions of KVAT Act engaged in the execution of works contract of 'Road marking' by using hot melt Thermoplastic road marking materials and glass beads. The appellant filed monthly returns in Form No.11 for the period from 01-04-2005 to 31-03-2006, 01-04-2006 to 31-03-2007 declaring total turnover and actual out put tax payable. The appellant has claimed deduction towards labour and like charges at 30% of the actual contract receipt. 3. The ACCT (Audit) visited the business premises of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction towards labour and other like charges as per Rule 3(2)(m) under entry 14 of the KVAT Act and also levied interest and penalty. 6. The appellant being aggrieved by the order dated 21-08-2007 preferred an appeal before the First Appellate Authority challenging the same on various grounds contending that the expenditure incurred towards the labour and like charges in execution of work contract is ascertainable from the books of account and it falls under Entry 5 of the table. Hence, it is not open to the Assessing Officer to resort to Entry 14 of the said table. The First Appellate Authority by its order dated 26-02-2009 allowed the appeal and set aside the reassessment order and also levy if penalty and interest. The First Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Table. In fact, the appellant had incurred expenditure of more than 30%, but in view of the provisions of the Act they had claimed flat deduction of 30%. Further, the nature of work carried on by the appellant is marking of the road by using hot melt thermoplastic. The process involves melting the thermoplastic compounds at temperature exceeding 200 degrees centigrade in a boiler and laying the same on the road using the Screeding machine. The machinery and tools used for execution of the work contract are deductible expenses and sought for allowing the appeal. 9. On the other hand, Sri.Vedamurthy, the Advocate appearing for the Respondent argued in support of the order passed by the Revisional Authority and contended that the First App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Appellate Authority which is erroneous and prejudicial to the interest of the Revenue. It is always open to the higher authorities to re-examine the matter and correct the error. The Revisional Authority after considering the entire matter, set aside the order passed by the First Appellate Authority and restored the order passed by the Assessing Authority. There is no infirmity in the said order and sought for dismissal of the appeals. 10. These appeals were admitted to consider the following substantial questions of law: 1. In view of the fact that the First Appellate Authority has framed a speaking order dated 26.02.2009 (Annexure-E) and after recording findings of fact therein that the actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reeder which involves laying at high temperature, thermoplastic ribbon of specified thickness, continuous and uniform in shape having clear sharp edges, on the roads, as distinguished from painting and other civil work. He has submitted the returns for few months of the assessment years 2005- 06 and 2006-07 claiming deduction towards the labour charges and like expenses to an extent of 30% on the said work contract. During the audit of accounts of the appellant-Company it was noticed that, the appellant has not maintained books of account and bills and vouchers pertaining to the labour charges. In the absence of books of account, the expenditure incurred has to be ascertained as per the table specified in Rule 3(2)(m) of the KVAT Act. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable, then the provision of Rule 3(2)(m) has to be invoked. Rule 3(2)(1) of the KVAT Rules is not applicable to the facts of the present case. In the instant case, during the time of auditing the accounts of the appellant-Company, the Assessing Officer clearly noticed that the appellant has failed to maintain books of account and also to produce the bills and vouchers pertaining to the labour charges in execution of the work contract. In the proposition notice, the specific allegation has been made that the appellant has not produced bills and voucher with regard to the work contract carried on by him either before the First Appellate Authority or before the Revisional Authority. The First Appellate Authority without looking into the bills ..... X X X X Extracts X X X X X X X X Extracts X X X X
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