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TMI Blog2011 (9) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... s prescribed by the honourable Supreme Court in the case of Gannon Dunkerley and Co. v. State of Rajasthan (1993] 88 STC 204 (SC). The honourable Supreme Court in the case of State of Jharkhand v. Voltas Ltd. [2007] 7 VST 317 (SC) held that deduction of labour and other charges is inadequate and it is necessary for the State Legislature its make provision for each and every deduction prescribed by the honourable Supreme Court in Gannon Dunkerley's case [1993] 88 STC 204 (SC). Failure of State Legislature to make provision for deductions set out in Gannon Dunkerley's case [1993] 88 STC 204 (SC) renders the provisions of section 11(2)(c) as well as rule 6(e) unworkable. Per contra, Mr. Kar, learned standing counsel for the Revenue submits that it is nobody's case that no rule is provided under the OVAT Rules prescribing deductions from the gross turnover to arrive at the taxable turnover. Rule 6(e) provides such deduction with certain restrictions; Therefore, it cannot be said that the OVAT Rules is completely silent about the deductions from the gross turnover in relation to works contract to determine taxable turnover. It is further submitted that under article 141 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting therefrom:- (a) and (b) ... (c) in case of turnover of sales in relation to works contract, the charges towards labour, services and other like charges subject to such conditions and restrictions as may be prescribed:- Provided that where the amount charged towards labour, services and other like charges in such contract are not ascertainable from the terms and conditions of the contract or the books of account maintained for the purpose, the amount of such charges shall be calculated at the prescribed rate;" (underlined for emphasis) R. 6. Determination of taxable turnover:- (a) to (d) ... (e) in case of works contract, the expenditure incurred towards labour and service, subject to the condition that evidence in support of such expenses are produced to the satisfaction of the Commissioner:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fuel, etc., used in the execution of the works contract the property which is not transferred in the course of execution of a works contract; (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 is further held by the honourable Supreme Court in Gannon Dunkerley's case [1993] 88 STC 204 (SC) that in cases where the contractor does not maintain proper accounts or the accounts maintained by him are not found worthy of credence it would be permissible for the State Legislature to prescribe a formula for determining the charges for labour and services by fixing a particular percentage of the value of the works contract and to allow deduction of the amount thus determined from the value of the works contract for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that such deductions are not provided in rule 6(e) of the OVAT Rules. Law is well-settled that in the field of taxation, law must be certain, clear and unambiguous. In the matter of taxation, either the statute or the Rules framed under the statute must cover the entire field. The honourable Supreme Court in the case of Govind Saran Ganga Saran v. Commissioner of Sales Tax [1985] 60 STC 1 (SC), held as under:- " ...The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed, and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any Uncertainty or vagueness in the legislative scheme defining any of those components of the levy will be fatal to its validity." Thus, if the measure of tax is not provided either under the Act or under the Rules, the levy itself ..... X X X X Extracts X X X X X X X X Extracts X X X X
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