TMI Blog2007 (5) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... r: Markandey Katju, J.] - Leave granted. 2. This appeal by special leave has been filed against the impugned judgment order 22-6-2006 of the Jharkhand High Court in Writ Petitions Nos. 482,467,493 and 466of 2005. 3. Heard learned counsel for parties and perused the record. 4. The respondent, a company registered under the Indian Companies Act, 1913 is engaged inter alia in the execution of works contracts of designing, supplying, installation, fabrication, testing and commissioning of air- conditioning plants. The assessing authority acknowledged that the contracts in question were works contracts and the material supplied in the execution of the works contracts only are liable to be taxed. However, the Sales Tax Authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt specified the principles as to what could be taxed in a works contract. In paragraph 47 of the judgment it has been observed that the value of the goods involved in the execution of a works contract will have to be determined after taking into account the value of the entire works contract and deducting therefrom the charges towards labour and services which would cover - (a) Labour charges for execution of the works; (b) Amount paid to a sub-contractor for labour and services; (c) Charges for planning, designing and architect's fees; (d) Charges for obtaining on hire or otherwise machinery and tools used for the execution of the works contract; (e) Cost of consumables such as water, electricity, fuel, etc. used in the executio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case of works contract on account of labour charges. - [if the dealer fails to produce any account or the accounts produced are unreliable] deduction under sub-clause (i) of clause (a) of sub-section (1) of section 21 on account of labour charges in the case of works contract from gross turnover" shall be equal to the following percentages." 11. The aforesaid provisions have been adopted by the State of Jharkhand vide notification dated 15-12-2000 and thus are applicable in the State of Jharkhand. 12. Interpretation of the amended Section 21(1) and the newly substituted Rule 13A fell for consideration of a Division Bench of the Patna High Court in the case of Larsen Toubro Ltd. v. State of Bihar, 134 STC 354. The Patna High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to any other charges has not been provided prescribed by the State." 13. We fully agree with the view taken by the Patna High Court in the aforesaid decision. It is not merely the labour charges which are deductible from the value of the works contract, but all other charges/amounts also, except the value of the goods sold in execution of the works contract. This is because only the value of the goods sold can be taxed as sales tax. It may be mentioned that the respondent had initially only claimed deduction of labour charges, but that was in view of the understanding of the law at that time. The matter became clear only after the decision of this Court in Gannon Dunkerley Co. v. State of Rajasthan (supra). 14. It may further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same in January, 1999. Memo No. 204 dated 6th August, 2003, as referred to by the counsel for the State is the second time communication, which was only a reminder. Thus, the appellate order having been communicated to the assessing authority vide Memo No. 2177 dated 5th November, 1998 for the purposes of limitation the period will start from 5th November, 1998 and will be complete on 5th November, 2000 i.e. two years from the date of communication of such order to the assessing authority. We accordingly hold that the assessment order made after remand on 27th November, 2004 and the consequential demand of notice raised in pursuance of such order of re-assessment, all dated 29th November, 2004 are time-barred under Section 24 of the Bihar F ..... X X X X Extracts X X X X X X X X Extracts X X X X
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