news round up - Taxmann

More documents

Recommendations

Info

174 Goods & Services Tax Cases - Reports [Vol. 1 On appeal : HELD As per section 3(1), every sale of goods in the State by registered dealer or any other dealer is leviable to tax in accordance with the provisions of the Act. The works contract having defined under section 2(37) is also leviable to tax where there is transfer of property involved. [Para 8] Section 4 is the charging section insofar as transfer of property of goods is involved in the execution of the works contract. [Para 9] The assessee had elected for composition in terms of the provision under section 15, read with Notification No. FD 54 CSL 5(7), dated 23-3-2005 and paid tax at the rate of 4 per cent. [Para 10] In respect of the sub-contract entrusted by the assessee, the said sub-contractors executed the part of the contract and the goods involved in that part of the work executed by them, were transferred to the customer directly and, thus, there was no sale between contractor and the sub-contractor. It was the claim of the assessee that the sub-contractors were also registered under the Act and the Rules made thereunder and they would also be liable to tax and were in fact paying the tax. If this contention of the assessee was to be accepted then as rightly contended by the assessee, it would amount to double taxation. [Para 11] A contract for work, i.e., works contract involves transfer of property and also element of service or work rendered and, thus, called as composite contract. The contract in question was a works contract for construction. The taxable event in a works contract is transfer of property in goods and the said transfer of property in such goods takes place when the goods are incorporated in the work. The value of the goods which constitutes the measure in the levy of tax is the value of the goods at the time of incorporation of the goods in the work. Thus, the said contractor to whom the work has been entrusted to is required to maintain an account and issue tax invoice as required under section 2(32). The tax charged in the tax invoice issued by the sub-contractor has to be accounted in his returns. Thus, it indicates there is ‘deemed sale’ by the dealer executing the work, i.e., sub-contractor. In effect, it is the sub-contractor who effects transfer of property in goods as no goods vest in the contractor so as to be subject matter of a retransfer. Hence, by virtue of article 366(29A)(b) of the Constitution, once the work is assigned by the contractor, the only transfer of property in goods is by the sub-contractor who claims to have paid tax under the Act on the goods involved in the execution of the works. Once the work is assigned by the contractor to its sub-contractor, the contractor ceases to execute the work because the property passes by accretion and there is no property in goods left with the contractor which is capable of retransfer either as goods or in any other form. Thus, the transfer of property is from sub-contractor to the contracting party that is contractee, GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 50 A B C D E F G
2010] Skyline Constructions & Housing (P.) Ltd. v. AC&AR (Kar.) 175 A B C D E F G namely, the recipient. Hence, the work executed by the sub-contractor results in single transaction and not in multiple transactions. [Para 13] Hence, it would be erroneous to hold that the payments made by the contractor to the sub-contractor would require to be brought within the total turnover of the assessee or contractor and if such an interpretation was to be given, it would lead to double taxation and, hence, it was to be concluded that :— (i) The consideration for execution of works contract executed referred to consideration received by the principal contractor and did not include the consideration received and paid to sub-contractor. (ii) Under section 15 of the Act, for the period <strong>up</strong> to 1-3-2006, the principal contractor was entitled to deduction of payment made by sub-contractors only if they were registered dealers and the said sub-contractors had accounted for it and paid tax thereon. [Para 14] Hence, for the aforesaid reasons, it was for the Assessing Officer to examine the claim of the assessee by seeking it to produce such particulars as may be required to ascertain as to whether the work involved in the subcontract had resulted in tax yielding so as to find out whether it had come within the scope of clause (c) of sub-section (1) of section 4 and it was for this precise reason that it was opined that the same being a fact finding exercise, the Assessing Officer was to be directed to call for such particulars either from the contractors or sub-contractors to find out whether the work entrusted to sub-contractors had come within the turnover of the sub-contractors examining the issue and giving a finding thereon. In the event the assessee or the sub-contractors as the case may be were unable to demonstrate that the works contract entrusted to the sub-contractors had not been levied with the tax, it would be open to the authorities to add the same to the turnover of the contractor and not otherwise since it would amount to double taxation. [Para 15] CASE REFERRED TO State of Andhra Pradesh v. Larsen & Toubro Ltd. [2008] 9 SCC 191 (SC) (para 5). V. Srinivasa Raghavan for the Appellant. Smt. Geetha Menon for the Respondent. JUDGMENT Aravind Kumar, J. - The appellant is a registered dealer under the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as ‘the KVAT’) and is engaged in the execution of the works contract for construction of the residential apartments. The appellant is said to be paying tax at 4 per cent in terms of Notification No. FD 54 CSL 2005(7), dated 23-3-2005 and in the course of the execution of the works contract the appellant claims to employ sub-contractors who are also said to be registered under KVAT and pay taxes as per the provisions of the Act and the Rules made thereunder. The appellant sought for an advance ruling GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 51
Page 2 and 3: NEWS ROUND UP BILL FOR GST ROLLOUT
Page 4 and 5: COntents STATUTES ❑ Comments of t
Page 6 and 7: Contents iii However, in gate pass
Page 8 and 9: Contents v [Section 15A of the U.P.
Page 10 and 11: UTTAR PRADESH SALES TAX ACT, 1948 -
Page 12 and 13: 130 Goods & Services Tax - Statutes
Page 24 and 25: 114 GOODS & SERVICES TAX - MAGAZINE
Page 52 and 53: 176 Goods & Services Tax Cases - Re
Page 100 and 101:
224 Goods & Services Tax Cases - Re
Page 102 and 103:
Page 104 and 105:
Page 106 and 107:
Page 108 and 109:
Page 110 and 111:
Page 112 and 113:
Page 114 and 115:
Page 116 and 117:
Page 118 and 119:
Page 120 and 121:
Page 122 and 123:
Page 124 and 125:
Page 126 and 127:
Page 128 and 129:
Page 130 and 131:
Page 132 and 133:
Page 134 and 135:
Page 136:
show all

news round up - Taxmann

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?