TMI Blog2012 (9) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... f tax on different type of contract, the tax liability exists upto 31-3-2006. It falls under Section 4(i)(b). Hence, levy of tax has to be under Section 4(i)(b). The finding of the ACAR is contrary to law. The tax has to be levied on the price of the goods and material used in the works contract as if there was a sale of goods and materials. The property in the goods used in the work contract will be deemed to have been passed over to the buyer as soon as the goods or material used are incorporated to the moveable property by principle of accretion to the moveable property. Hence, we are of the view that the order passed by the Commissioner is contrary to law. For the period prior to 1-4-2006, tax has to be levied as per Section 3(1) of the Act and for the period subsequent to 1-4-2006, tax has to be levied as per Section 4(1)(c) of the Act. Hence, the substantial questions of law are held in favour of the appellant. - STA No. 72 of 2010 - - - Dated:- 28-9-2012 - SREEDHAR RAO K. AND MANOHAR B., JJ. For the Appellant : B.G. Chidananda Urs, and B.S. Prasad For the Respondents : Smt. S. Sujatha, Additional Government Advocate, The judgment of the court was delive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n August 25, 2010. The appellant has filed detail objections to the said notice. The Commissioner for Commercial Taxes after considering the objections filed by the appellant by its order dated October 12, 2010 set aside the order passed by the ACAR in exercise of its suo motu revisional power and held that the goods used in the works contract cannot be treated on par with the normal sale of goods for the purpose of arriving at the rate for the period prior to April 1, 2006. Further, the iron and steel or any other declared goods used for executing the works contract would be liable to be taxed as per the State law. The appellant, being aggrieved by the order dated October 12, 2010 passed by the Commissioner for Commercial Taxes has preferred this appeal. 5. Sri B.G. Chidananda Urs, the advocate appearing for the appellant, contended that the order passed by the Commissioner under section 64(2) of the Act is contrary to law. The order of the Commissioner has the effect of taking away the powers of the ACAR setting aside the order and not deciding the issue that has been raised before the ACAR. He further contended that section 3(1) of the KVAT Act provides for the State to levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract, tax on value of the goods incorporated into the works, when not specified in any of the schedules to the Act, has to be construed as a levy on unscheduled goods and therefore subjected to tax under Section 4(1)(b) of the Act, at the rate of 12.5%. Further, the ACAR has not examined whether the goods purchased were converted into the goods before incorporation into the works is to be examined. This aspect of the matter has also not been considered by the ACAR. Hence, the order passed by the ACAR cannot be sustainable and sought for dismissal of the appeal. 7. The substantial questions of law that arise for consideration in this appeal are: i) Whether the Revisional Authority is justified in reviewing the order of the ACAR, which has only clarified the queries made by the appellant? ii) The finding of the revisional authority that the goods used in the works contract cannot be treated on par with the normal sale of goods for the purpose of arriving at the rate of tax for the period prior to 1-4-2006? 8. Section 3(1) of the Act provides for levy of tax on every sale of goods in the State by a registered dealer or a dealer liable to be registered,in accordance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the ACAR. 10. Section 3(1) of the Act provides for levy of tax on every sale of goods. Section 4 prescribes the rate of tax. Neither Section 3 nor Section 4 of the Act seeks or intend to levy or prescribe different rate of tax for the goods involved in the normal sale and for the goods involved in the deemed sale. Both normal sale as well as the deemed sale should be treated as one and the same with respect to levy of tax on sale of goods. The Commissioner opined that the rate of tax is on the value of goods involved in the execution of works contract and not on separate value of each goods. Thus, even when there is no schedule of works contract under the Act prescribing the rate of tax on different type of contract, the tax liability exists upto 31-3-2006. It falls under Section 4(i)(b). Hence, levy of tax has to be under Section 4(i)(b). The finding of the ACAR is contrary to law. On the other hand, the appellant contended that only from the amendment of the Act w.e.f. 1-4-2006 in respect of transfer of property in goods whether as goods or in some other form involved in the execution of works contract, specified in column 2 of the Sixth Schedule subject to Sections 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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