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TMI Blog2015 (1) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... business of execution of civil works contract, construction of water tanks and laying of water pipes to provide water supply to villages and towns in Belgaum District under a works contract. (b) Respondent/assessee filed monthly returns for the period from April 2005 to March 2006 before the Assistant Commissioner of Commercial Taxes, LVO-400, Nippani, indicating the use of iron and steel in the execution of the works contract, carrying tax at the rate of 4%. (c) On receipt of the said returns, the Prescribed Authority (for short 'PA') issued a notice to the assessee to furnish the books of accounts for the period from April 2005 to March 2006, for verification, invoking Section 52 of the KVAT Act, 2003 in Form VAT 275. (d) Respondent, having responded to the said notice, furnished the necessary records to the PA, who thereafter initiated proceedings under Section 39 of the KVAT Act, 2003 for reassessment of tax and concluded the proceeding by levying tax at the rate of 12.5% on Rs. 85,56,585/- the value of works contract, while allowing a deduction of Rs. 10,69,568/- as VAT collected by order dated 20.08.2007. & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Clause (a)(ii) is in respect of declared goods as specified in Section 14 of the Central Sales Tax Act, 1956 [Central Act 74 of 1956] (for short 'CST Act, 1956'), i.e., entry No.30 in the Third Schedule to the KVAT Act, 2003, the rate of tax is 4% nevertheless, under Schedule 6 to the KVAT Act, 2003, works contract attracts an impost of 12.5%. 5. Learned Government Advocate points to sub-section 4 of Section 10 and Sub-section 4 of Section 29 of the KVAT Act, 2003, to submit that a registered dealer while executing civil works contracts is required to issue a tax invoice or bill of sale at such time and containing such particulars as may be prescribed and the respondent having not done so, 'PA' was justified in excluding the deduction and reassessing the taxable turnover. 6. Per contra, learned counsel for the respondent/assessee submits that under Section 4(1)(a)(ii) of the KVAT Act, 2003, the respondent is required to pay tax on the taxable turnover, at the rate of 4%, in respect of iron and steel, one of the goods specified in the Third Schedule. According to the learned counsel, the goods iron and steel transferred in the same form for the purpose of exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; (iii) x x x (b) X X X [(c) in respect of transfer of property in goods (whether as goods or in some form) involved in the execution of works contract specified in column (2) of the Sixth Schedule, subject to Sections 14 and 15 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), at the rates specified in the corresponding entries in column (3) of the said schedule.]" inserted by Act No.4 of 2010 w.e.f . 01.04.2010. clause (c) inserted by Act No.4 of 2006 w.e.f. 01.04.2006. (B) Section 10(4) runs thus: "10. Output tax, input tax and net tax (1) x x x (2) x x x (3) x x x (4) For the purpose of calculating the amount of net tax to be paid or refunded, no deduction for input tax shall be made unless a tax invoice, debit note or credit note, in relation to a sale, has been issued in accordance with Section 294[x x x] and is with the registered dealer taking the deduction at the time any return in respect of the sale is furnished, except such tax paid under subsection (2) of Section 3." The words and figures "or Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any of the above categories including composite contracts with one or more of the above categories [Thirteen and one half per cent] Sixth Schedule inserted by Act No.4 of 2006, w.e.f. 01.04.2006. Substituted for the words "Twelve and one half percent" by Act No.4 of 2010, w.e.f. 01.04.2010. 10. Respondent assessee having filed a return for the assessment year 2005-06, consisting of 12 monthly returns, declared a taxable turnover of Rs. 85,56,585/- and claimed deduction of Rs. 10,69,568/- towards VAT collected, whence 'PA' in the order of reassessment allowed the deduction. The Revising Authority in his order set aside the deduction, thus increasing the taxable turnover to Rs. 96,26,253/- and levied tax at the rate of 12.5% as applicable to works contract under item No.23 of the Sixth Schedule. 11. The works contract, entered into by the respondent and Jilla Panchayath is for laying pipes and construction of water tanks in different villages, whence materials such as iron and steel, cement, PVC pipes and RCC pipes, were transferred in the same form which is not in dispute, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Nevertheless, the authorities based upon the RA Bills submitted by the respondent/assessee arrived at Rs. 67,38,377/- as the value of the iron and steel, in respect of which the rate of tax is 4%. 17. It is therefore unnecessary to go into the question whether there was compliance with subsection (4) of Section 29 in relation to executing of civil works contract and issue of tax invoice or bill of sale, since that provision was inserted by Act 6 of 2007 w.e.f. 01.04.2007 and hence, inapplicable for the assessment year 2005-06. 18. As regards the other items of goods transferred in the same form in the execution of works contract during the year 2005-06, more appropriately over cement, PVC pipes and RCC pipes, there is no material before Court over quantities and their values. It was for the Prescribed Authority 'PA', the Revisional Authority 'RA' and the KAT to have applied their minds to the said facts and clamp the liability on the assessee to pay the correct tax under the KVAT Act, 2003. We must notice that the said authorities misdirected themselves to the provisions of the statute inserted w.e.f. 01.04.2007 though those provisions were not applicable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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