TMI Blog2019 (2) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... also brought in a validation clause. The State having not done so, the prescription in the Rules for exclusion would not enable a proceeding for failure of deduction of tax at source; which obligation is no longer there by reason of the declaration by a Constitutional Court - decided in favor of assessee. Whether the introduction of sub-section (7C) in Section 7 by KGST (Amendment) Ordinance, 2003 dated 24.04.2003 with retrospective effect from 05.08.2002 obliged the assessee to make deductions with respect to works contract from the contractor? - Held that:- With respect to sub-section (7C) of Section 7, as it was brought in with retrospective effect from 05.08.2002; we would not answer the question raised since the issue has been remanded to the Assessing Officer as to whether the contractor of the assessee had applied for compounding or not - We, hence, refuse to answer the question. Whether the further amendment to sub-section (7C) of Section 7 with effect from 01.04.2004 obliged the assessee to make such deductions, excluding the portion of inter-State transfer of goods, on payment to the contractor? - Held that:- As to the amendment brought in which gave rise to questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding the view of the earlier Division Bench. Hence, on the question of forfeiture, respectfully following the declaration of the Full Bench, we answer the question against the assesses and in favour of the Revenue. To that extent, the order of the Tribunal is set aside and connected cases the order of the Fast Track Team under Section 17D of the KGST Act restored. 2. There are two other common issues arising in all the revisions and the questions of law arising from the order of the Tribunal are re-framed as follows: (i) Ought not the Tribunal have found that the KGST Rules, 1963, specifically Rule 22A, stood amended with effect from 01.04.2000 enabling the deduction of tax to be made in a works contract excluding that portion relating to inter-State transfer of goods? (ii) Whether the introduction of sub-section (7C) in Section 7 by KGST (Amendment) Ordinance, 2003 dated 24.04.2003 with retrospective effect from 05.08.2002 obliged the assessee to make deductions with respect to works contract from the contractor? (iii) Whether the further amendment to sub-section (7C) of Section 7 with effect from 01.04.2004 obliged the assessee to make such deductions, excluding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties are directed to dispose of the revision petitions filed by the petitioner as per the law declared . The thrust of the argument of Sri.Mohammed Rafiq is on the words used so long as it enables the State to collect tax inclusive of turnover covered by inter-State sales . The argument seems to be that the declaration of the provision as ultra vires is only so long as inter-State transactions are also included in the provision. At the outset, we have to notice that this Court having held the provision to be ultra vires, it no longer has existence in the statute. The connected cases provision could have been amended to exclude inter-state transfer component available in the works contract, to direct deduction on that component taxable within the State. This obviously was not done. 5. The contention then raised is on the ground that Rule 22A as it existed in the assessment year under the consideration of the Division Bench in Siemens Ltd . had a proviso which read so: Provided that no amount shall be deducted under sub-section (7B) of section 7 if there is no transfer of goods involved in the execution of the works contract . By S.R.O.NO.298/2000, with e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 7, as it was brought in with retrospective effect from 05.08.2002; we would not answer the question raised since the issue has been remanded to the Assessing Officer as to whether the contractor of the assessee had applied for compounding or not. We, hence, refuse to answer question No.(ii) framed by us above. 8. As to the amendment brought in which gave rise to question No.(iii), we have to notice that again the amended sub-section (7C) did not have an obligation for deduction of tax at source. In such circumstances, we answer question No.(iii) framed by us against the Revenue and in favour of the assessee. 9. The last question is with respect to the actual addition and further additions for probable omission and connected cases suppression made on the basis of the penalty imposed on the assessee. The assessee had taken up a specific contention that the goods detained were capital goods, not exigible to tax. However, the fact remains that the penalty orders were never challenged and the same have attained finality. It is also the submission of the learned Government Pleader that no evidence was adduced by the assessee to substantiate their contention. We, however ..... X X X X Extracts X X X X X X X X Extracts X X X X
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