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The State of Karnataka Versus Soma Enterprises Limited,

Works contract - commodities of bitumen and jelly - duty chargeable at 4% or 12.5% - Held that: - the Tribunal in the impugned order has considered that the amendment has come into effect from 1st of April 2006. Therefore, for the respective period of 2005 -2006, the amendment did not exist on the statute book. Resonantly, the duty as was prevailing prior to 1.4.2006 for the respective items will be considered for the chargeability. The Tribunal has recorded that for the jelly as well as bitumen .....

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ract will have to be considered separately for the purpose of chargeability. Of course, the benefit is already gr anted for the Iron and Steel by the First Appellate Authority to the extent of 32.5% of the total amount of the purchase. For the cement, the Tribunal had found that it would be 12.5%, whereas, for jelly, it would be 4% and for bitumen, it would be 4%. The view taken by the Tribunal, more particularly, in the absence of any amendment in the statute book providing for separate chargea .....

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further held that period for modifying the re-assessment orders shall be from November 2005 to March 2006. 2. We have heard Mr. T.K. Vedamurthy, learned Additional Government Advocate appearing for petitioner. 3. The contentions raised on behalf of the petitioner was that, since various items for the works contract, viz., bitumen, sand and jelly, etc., were used for the execution of works contract. The amount of works contract would fall in the residuary category for tax at 12.5% since all such .....

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utilized in the works contract. It is the submission of the Government Advocate that the Tribunal has committed an error. Hence, this Court may consider the same i n these matters. 4. We may record that, various questions are raised in the petitions being questions of law, only the question which may arise for consideration is, as to whether the amendment made by item No.4/2006 will have the effect prospective or retrospective. 5. At this stage, we may usefully refer the decision of this Court i .....

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e rate applicable to sale of each class of goods under Section 3(1) of the Act. In view of the insertion of Section 4(1)(c) to the Sixth Schedule to the Act, the appellant made an application before the ACAR with regard to the rate of tax applicable on the execution of civil works contract upto 31.3.2006 and thereafter under Karnataka Value Added Tax. The ACAR by its order dated 2.8.2006 clarified the same. Subsequently, on further clarification sought for by the appellant, the ACAR by its order .....

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rovides 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 .....

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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 and 15 of the Central Act, 1956, at the rates specified in the corresponding entry in column (3) of the said Schedule can levy. The amendment is prospective in operation. The action has already been done prior to 31.3.2006 and the tax cannot be levied under Section 4(1)(c) of the Act. The appellant also relied upon the judgment made in .....

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, 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 m .....

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ugned order has considered that the amendment has come into effect from 1st of April 2006. Therefore, for the respective period of 2005 -2006, the amendment did not exist on the statute book. Resonantly, the duty as was prevailing prior to 1.4.2006 for the respective items will be considered for the chargeability. The Tribunal has recorded that for the jelly as well as bitumen which are the material being used, 4% is the duty provided as per the III Schedule vide item No.83 and 11/15 respectivel .....

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