9911796707
TMI Blog2012 (9) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... s, hardware, the goods falling under III Schedule, the declared goods under section 15 of the Central Sales Tax Act and other non-scheduled goods within and outside the State as well as from the unregistered dealers. 2. The appellant made an application under section 60 of the KVAT Act before the Authority for Clarifications and Advance Rulings ("the ACAR", for short) seeking for clarification in respect of: (a) Applicability of the rate of tax on execution of civil works contract under the Act; and (b) Whether input-tax credit can be availed of out of output tax paid by the contractor. 3. The ACAR after examining the matter in detail, by its order dated August 2, 2006 came to the conclusion that there is no specific entry providing rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering 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 Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er works contract in the same form, except that the same was fashioned to suit the requirement, before the same was merged into the works did not lose their nature or form and therefore could not be subjected to tax as the goods have already suffered tax as declared goods under the Central Sales Tax Act and sought for setting aside the same. 6. On the other hand, Smt.S. Sujatha, learned Additional Government Advocate argued in support of the order passed by the Revisional Authority and contended that the finding of the ACAR is contrary to law and prejudicial to the interest of the revenue. She further contended that as per the definition of 'goods', it includes all materials, commodities and articles involved in the execution of works cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 with the provisions of the Act. Section 4 of the Act deals with the rate of tax on every sale of the goods, which reads as under: 4. Liability to tax and rates thereof 1) Every dealer who is or is required to be registered as specified in Sections 22 and 24, shall be liable to pay tax, on his taxable turnover, a) in respect of goods mentioned in.- i) Second Schedule, at the rate of one per cent, ii) Third Schedule, at the rate of four percent (in respect of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant, the ACAR by its order dated 07-12-2006 further clarified that if the iron and steel is used in the same form in the course of execution of the works contract, it is liable to tax at 4% as per Section 4(1)(c) of the Act. However, the Commissioner feels that clarification made by the ACAR is prejudicial to the interest of the revenue, insofar as clarification regarding the rate of tax on works contract prior to 31-3-2006. Accordingly issued notice and reviewed the order passed 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 1-4-2006 insertion of clause (c) to Section 4, the rate of tax was not prescribed in respect of transfer of the property in goods, (whether as goods or in any other form) involved in the execution of works contract. Hence, the tax has to be levied as per Section 3(1) of the Act. The sale under the works contract is a deemed sale of transfer of the goods alone and it is not different from the normal sale. Hence, 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 princi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
