TMI Blog2019 (12) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... n of such works contract commences. The Cognate Bench of this Court in the case of NAGARJUNA CONSTRUCTION COMPANY LIMITED AND ANOTHER VERSUS STATE OF KARNATAKA AND OTHERS [ 2010 (6) TMI 737 - KARNATAKA HIGH COURT] , has observed that the Explanation to Rule 3[a] to [g] of the KVAT Rules is contrary to Section 4[1][c] of the Act and Article 366[29A][b] of the Constitution of India and is hence unconstitutional - Accordingly levy of tax and penalty on advances received by the petitioner therein, was quashed. The matter is remitted to the respondent No.2 Authority to re-consider the same and conclude the re-assessment in an expedite manner after providing an opportunity of hearing to the petitioner - petition allowed by way of remand. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. State of Karnataka and Others, reported in 2010 [69] Kar.L.J. 97 [HC] as well as State of Karnataka V/s. Reddy Structures Private Limited, Bangalore, reported in 2014 [80] Kar. L.J. 152 [HC] [DB]. 4. Learned Additional Government Advocate appearing for the Revenue would submit that though the advance payment was received to the tune of ₹ 49,14,000/- during the tax periods in question, ₹ 22,00,000/- being utilized in the relevant year, no returns are filed during the subsequent tax periods. Hence, the action of the respondent-Authority to subject the advance payments received to tax during the tax periods in question is justifiable. 5. Having heard the learned counsel for the parties and perus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecution of any works contract. If none of these events have happened, there is no turnover. In consideration of entering into the works contract, if amounts are paid in advance as mobilization advance, that amount is paid to the contractor to take steps to execute the work. On the date the amount is paid, the contractor neither transfers title in the property nor delivers possession nor incorporates any goods in the work. Therefore the question of treating the advance amount paid as part of consideration for transfer of property in goods would not become turnover and therefore the explanation added to Rule 3 with the object of levying sales tax on advance receipt runs counter to the aforesaid statutory provisions as well as the constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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