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TMI Blog2016 (10) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... g, testing and commissioning of PSC pipes, for water supply scheme on contract basis and it is a registered dealer under the Tamil Nadu General Sales Tax Act, 1959 (in short 'the TNGST Act') and assessee on the file of the second appellant. 3.2. According to the respondent/writ petitioner, the nature of work carried on by them falls under the category of 'Works Contract' and is paying taxes at the compounded rate as per Section 7-C of the TNGST Act at the rate of 2% as the work done by the petitioner is civil construction work and is paying the taxes on the total value of the contract as per the provisions of the TNGST Act. 3.3. The respondent/writ petitioner would further aver that as per the taxable turnover as defined under Section 2(p) of the TNGST Act and the turnover as defined under Section 2(r) of the TNGST Act, while determining the total and taxable turnover, for the purpose of levy of tax under Section 3 and other Charging Sections, the levy of tax at the compounded rate under Section 7-C of the TNGST Act, does not relate or refer to the taxable turnover, but refers to the value of the works contract or contracts. 3.4. It is further stated by the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of contracts entered into during the year formed the basis for levy of additional tax and it was introduced with retrospective effect from 01.04.1993. 3.7. The second appellant, as a consequence of the said amendment, sought to levy tax on the total value of the contract entered into during the year in the case of an assessee, who had opted for payment of tax under the compounded rate under Section 7-C of the Act and accordingly, issued a notice dated 18.01.2007 proposing to treat the total value of the contracts executed by the petitioner as the taxable turnover and levy not only additional tax, but also penalty at the rate of 150% of the additional tax so levied. 3.8. The petitioner made a challenge to the said amendment, contending among other things that a new and arbitrary definition of taxable turnover is brought in under the additional sales tax, which the legislature has no power to do and the mode of adoption is totally different stand under the Additional Sales Tax Act as the basis for levy would be without jurisdiction and ultra vires. 3.9. The petitioner would further contend that in the light of the judgment in South India Corporation Ltd. v. Commercial Tax Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys for setting aside the impugned order and allowing the writ appeal. 5. Per contra, the learned Counsel for the respondent/writ petitioner would contend that the question whether the additional sales tax could be claimed on the taxable turnover relating to works contract, came up for consideration in the judgment reported in 124 STC 654 (cited supra) and the Division Bench of this Court has held that the works contract not only involves transfer of goods, but also involves the rendering of several services, which cannot be subjected to tax under the Sales Tax Act and the consent given by the dealer under Section 7-C for the levy of percentage of total contract value towards the tax otherwise payable under Section 3-B cannot be stretched to include the payment of additional sales tax under any other enactment by treating the contract value as taxable turnover for the payment of tax under the Additional Sales Tax Act and in the absence of any determination of the value of the goods transferred under the works contract in cases where a dealer has exercised an option under Section 7-C, there is no determination of the taxable turnover as the dealer is not required to maintain books o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is relevant to extract paragraphs 17 to 19 of the said judgment hereunder: "17. Turnover, as defined in the Act, is the aggregate of value of sales effected or purchase effected by the dealer. The works contract not only involves the transfer of goods but also involves the rendering of several services which cannot be subjected to tax under the Sales Tax Act. The consent given by the dealer under section 7-C for the levy of percentage of total contract value towards the tax otherwise payable under section 3-B cannot be stretched to include the payment of additional sales tax under any other enactment by treating the contract value as taxable turnover for the payment of tax under the Additional Sales Tax Act. 18. In the absence of any determination of the value of the goods transferred under the works contract in cases where a dealer has exercised an option under section 7-C, there is no determination of the taxable turnover as the dealer is not required to maintain books of accounts and is not called upon to render any account in relation to the actual value of the goods transferred under the works contract. There is no scope of determining the actual value of the goods trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be read so as to harmonise with and clear up any ambiguity in the main section and it should not be so construed as to widen the ambit of the section and also to clarify the doubtful point in law and to serve as a proviso to main section. 15. In S.Sundaram v. V.R.Pattabhiraman reported in AIR 1985 SC 582, the following objects of an Explanation to a statutory provision have been culled out and it is relevant to extract the same as under: "(a) to explain the meaning and intendment of the Act itself; (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve; (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful; (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take away a stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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