Judgment · High Court · 2012

We have heard learned counsel for the parties. Question for consideration is whether Section 69 of the Act and Rule 10 of the R ules can be struck down on an apprehension that the same can be interpreted as b eing in conflict with Section 11 and include turnover which cannot be taxable tu rnover as per law laid down by Hon’ble Supreme Court. We are of the view that answer has to be in the negative. The impugned provision s cannot be read as being inconsistent with the charging provisions under Sectio n 7 of the Act read with Section 11 thereof or beyond the concept of ’deemed sal e’ in a works contract as laid down in various judgments including in Gannon Dun kerley & Co. Vs. State of Rajasthan or State of Andhra Pradesh & Ors. vs. Larsen & Tourbo Ltd. & Ors. referred to above. There is nothing to suggest such interp retation from the plain language of the said provisions. The said provisions are : (i) Section 7 of the Assam Value Added Tax Act, 2003:- (cid:28)7. Incidence of tax- (1) Subject to other provisions of this Act, every dealer who has been liabl e immediately before the appointed day to pay tax under the Assam General Sales Tax Act, 1993 (Assam Act XII of 1993) shall, with effect from the appointed day for the purpose of this section, be liable to pay tax in accordance with the pro visions of this Act. (2) Subject to other provisions of this Act, every dealer to whom sub-sectio n (1) does not apply, and whose turnover of sales or purchases calculated from t he commencement of any year after the appointed day first exceeds the taxable qu antum within such year, shall, with effect from the date immediately following t he day on which his turnover exceeds the taxable quantum, be liable to pay tax i n accordance with the provisions of this Act. (3) A dealer registered under the Central Sales Tax Act, 1956 (Central Act 7 4 of 1956) who is not liable to pay tax under sub-section (1) or sub-section (2) , shall nevertheless be liable to pay tax on his sale, made inside the State, of any goods in respect of which he has furnished a declaration under sub-section (4) of section 8 of the said Act, or on the sale of any goods in the manufacture of which such goods have been used and every such dealer who is liable to pay t ax shall be deemed to be a registered dealer. (4) Every dealer who has become liable to pay tax under this Act shall conti nue to be so liable until the expiry of three years during which his gross turno ver has failed to exceed the taxable quantum and on the expiry of this period hi s liability to pay tax under this Act shall cease. (5) Every dealer who has ceased to be liable to pay tax under sub-section (4 ) shall be again liable to pay tax with effect from the first day of April of th e year during which his gross turnover again exceeds the taxable quantum. (6) For the purposes of this Act, \taxable quantum\ means in relation to any dealer who,- (a) is an importer or a manufacturer or a casual dealer or a contractor or a lessor or a non-resident dealer or an agent of a non-resident dealer or ’[is li able to pay tax at the point of purchase or] has more than one place of business in the State-NIL; (b) 2 [2,00,000/-]: is engaged in any business other than those specified in clause (a)-Rs. [PROVIDED that the Government may, by notification in the Official Gazette, vary the limit of the taxable quantum, from time to time.] (7) For the purpose of calculating gross turnover to determine the liability to pay tax under this Act,- (a) except as otherwise expressly provided, the turnover of all the sales or the purchases, as the case may be, effected by a dealer shall be taken into acc ount whether such sales or purchases are taxable under this Act or not; and (b) s own account and also on behalf of principals whether disclosed or not. the turnover shall include all sales or purchases made by a dealer on hi (8) Where, by any order passed under this Act, it is found that any person r egistered as a dealer not to have been so registered, then, notwithstanding anyt hing contained in this Act, such person shall be liable to pay tax for the perio d commencing with the date of his registration and ending with the date of such order, as if he were a dealer. (cid:29) (ii) Section 11 of the Assam Value Added Tax Act, 2003:- Taxable turnover- For the purpose of this Act, \taxable turnover\ in rel (cid:28)11. ation to a dealer liable to pay tax on sale of goods means that part of the deal er’s gross turnover during the prescribed period, which remains after deducting therefrom,- I the turnover of sales of goods specified to be exempt from tax in the Fi (a) rst Schedule; (b) e Prescribed Authority to have taken place,- the turnover of sales of goods which are shown to the satisfaction of th (i) e; or (iii) territory of India. in the course of inter-State trade or commence; or (ii) outside the Stat in the course of import of goods into or export of the goods out of the Explanation: Sections 3, 4 and 5 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) shall apply for determining whether or not a particular sale or pur chase has taken place in the manner indicated in sub-clause (i), sub-clause (ii) or sub-clause (iii); (c) the charges towards labour, services and other like charges, subject to such conditions as may be prescribed, in case of turnover of sales in relation t o works contract, in addition to the deductions available under clause (b): Provided that where the contractor does not maintain proper accounts or the amou nt actually incurred towards charges for labour and other services and profit re lating to supply of labour and services are not ascertainable from the accounts maintained by him, the amount of such charges for labour and services and such p rofit may, for the purposes of deductions, be determined on the basis of such pe rcentage of the value of the works contract as specified in the Sixth Schedule; (d) ed. (cid:29) the turnover of such other sales or such other amount, as maybe prescrib (iii) Section 69 of the Assam Value Added Tax Act, 2003:- (cid:28)69. Liability of contractor and sub-contractor to tax- (1) Where a dealer carr ies on the business of property in goods involved in the execution of a works co ntract (hereinafter referred to as a contractor) through another such dealer (he reinafter referred to as a sub-contractor) directly or otherwise, and the sub-co ntractor executes such works contract and each or either of them is liable to pa y tax under this Act, then notwithstanding anything contained in this Act, the c ontractor and the sub-contractor shall be jointly and severally liable to pay ta x in respect of transfer of property in goods whether as goods or in some other form involved in the execution of such works contract. (2) If the contractor proves in the prescribed manner that the tax has been paid by the sub-contractor on the taxable turnover of the goods involved in the execution of the works contract, executed by such sub-contractor, the contractor shall not be liable to pay tax again on the taxable turnover of such goods. If the sub-contractor proves in the prescribed manner that the tax has b (3) een paid by the contractor on the taxable turnover of goods involved in the exec ution of the works contract, executed by such contractor, the sub-contractor not be liable to pay tax again on the taxable turnover of such goods. (iv) Rule 10 of the Assam Value Added Tax Rules, 2005: (cid:28)10. Determination of sale price in respect of sale by transfer of property in g oods involved in the execution of works contract - For the purpose of clause (c) of Section 11, the value of the goods at the time of the transfer of property i n the goods (whether as goods or in some other form) involved in the execution o f a works contract may be determined by effecting the following deductions from the value of the entire contract, in so far as the amounts relating to the deduc tions pertain to the said works contract:- (a) (c) (d) labour charges for execution of the works; [****] charges for planning, designing and architect’s fees; charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract; (e) cost of consumables such as water, electricity, fuel, etc. used in the e xecution of the works contract, the property in which is not transferred in the course of execution of the works contract; (f) cost of establishment of the contractor to the extent it is relatable to the supply of labour and services; other similar expenses relatable to the supply of labour and services; a profit earned by the contractor to the extent it is relatable to the sup (g) (h) ply of labour and services. (cid:29) It is patent that the provisions of Section 69 as well as Rule 10 are machinery provisions in aid of the charging provision under Section 7 read with Section 11 of the Act. As already observed, the said provisions cannot be read in conflict with the charging provisions of Section 7 read with Section 11 and the law laid down by the Hon’ble Supreme Court for computing the value of deemed sale in a w orks contract under Article 366(29A). The apprehension raised at this stage that the assessing authority may go beyond the scope of law in interpreting the taxa ble turnover is hypothetical and without any legal basis. On that apprehension, the statutory provisions cannot be struck down. If any assessment order is erron eous, the aggrieved party can resort to available remedies as per law. This writ petition is disposed of accordingly.