High Court · 2007

In the High Court of Judicature at MadrasDated : 25.7.2007Coram :The Honourable Mr.Justice K.RAVIRAJA PANDIANandThe Honourable Mr.Justice P.P.S.JANARTHANA RAJAW.P.No.44160 of 2002The State of Tamilnadurep. By The Deputy Commissioner (CT)Vellore Division, Vellore.... Petitioner Vs. 1. M.Venkatesan, ContractorKaveripakkamVellore District.2. The RegistrarThe Tamil Nadu Taxation Special TribunalChennai 1.... RespondentsPrayer: Writ Petition filed under Article 226 of the Constitution of Indiapraying for the relief of issuance of writ of certiorari to call forthe records relating to the order of the second respondent, made inO.P.No.1525 of 2000 dated 20.12.2002 and quash the same. For Appellant :- Mr.Haja Nazirudeen Special Govt. Pleader (Taxes)For Respondents:- Mr.S.Ramanathan (R1)ORDER(Order of the Court was made by K.RAVIRAJA PANDIAN, J.) The Revenue has filed the present writ petition seeking forthe relief of issuance writ of certiorari to call for the records ofthe order dated 20.12.2002 made in O.P.No.1525 of 2000 by theSpecial Tribunal on the premise that the Special Tribunal totally wentwrong in interpreting Section 3B and other relevant sub-clauses ingranting the relief in favour of the assessee. The assessee sufferedassessment at the hands of the assessing officer on the followingcircumstances. https://hcservices.ecourts.gov.in/hcservices/

2. The assessee a works contractor has done works for thePublic Works Department of the State Government for the year 1997-98 byentering into a works agreement. As per the agreement, the value of thecontract work was Rs. 3,31,483/-. The assessing officer called upon therespondent assessee to produce the accounts maintained by him in order toframe the assessment for the assessment year 1997-98. As the assessee hasnot produced the books of accounts, the assessing officer framed theassessment by taking the total contract value of Rs.3,31,483/- and added20% to the value for no reason and thereby brought the total andtaxable turnover to Rs.3,98,780/- and confirmed the assessment on thesaid turnover thereby imposing a tax in a sum of Rs.43,758/- and inaddition to that the assessing officer also levied penalty in a sum ofRs. 65,634/- . The correctness of the said assessment order wascanvassed before the Special Tribunal by filing petition in O.P.No.1525of 2000. The Special Tribunal has allowed the O.P. by interpretingSection 3-B of the TNGST Act. In the interpretation of the SpecialTribunal as per section 3-B of the TNGST Act, if a person doing workscontract has not furnished any detailed accounts for claiming thebenefit, the assessment can be made against them by giving deductionfrom and out of the total contract value as per the percentage fixedin column 3 of the table attached to the above said section and thus theTribunal set aside the assessment. The correctness of the same iscanvassed before us by filing the present writ petition. 3. Learned Special Government Pleader submitted that sub-section(2) of Section 3B of the TNGST Act speaks about the total taxableturnover and further provides that from the total turnover the amountreferred to under clause (a), (b), (c), (e), (d) and (f) has to bededucted. Hence the order impugned in the writ petition goes contra to thesame. 4. We heard the arguments of the learned counsel on either sideand perused the materials on record and also the relevant statutoryprovisions.5. Section 3-B of the TNGST Act reads as follows:-Section 3-B Levy of tax on the transfer of goodsinvolved in works contract - (1) Notwithstandinganything contained in sub-sections (2-B), (3), (4), (7)and (8) of Section 3, or section 7-a but subject to theother provisions of this Act including the provisions ofsub-section (1) of Section 3, every dealer referred toin item (vi) of clause (g) of section (2) shall pay, foreach, year a tax on his taxable turnover of transfer ofproperty in goods involved in the execution of workscontract at the rates mentioned in sub-section (2), (2-A) or (2-C) of section 3, or as the case may be, insection 4. https://hcservices.ecourts.gov.in/hcservices/ Explanation:- Where any works contract involves morethan one item of work, the rate of tax shall bedetermined separately for each such item of work.(2) The taxable turnover of the dealer of transfer ofproperty involved in the execution of works contractshall on and fro the 26th day of June 1986, be arrived atafter deducting the following amounts from the totalturnover of that dealer :-(a) all amounts involved in respect of goods involved ithe execution of works contract in the course of exportof the goods out of the territory of India, or in thecourse of import of the goods into the territory ofIndia or in the course of Inter-state trade or commerce:(b) all amounts for which any goods, specified in theFirst Schedule or Second Schedule, are purchased fromregistered dealers liable to pay tax under this Act andused in the execution of works contract i the same formin which such goods were purchased.(c) all amounts relating to the sale of any goodsinvolved in the execution of works contract which arespecifically exempted from tax under any of theprovisions of this Act.(d)all amounts paid to the sub-contractors asconsideration for execution of works contract whetherwholly or partly.Provided that no such deduction shall be allowedunless the dealer claiming deduction, produces proofthat the sub-contractor is a registered dealer liable topay tax under this Act and that the turnover of suchamounts is included in the return filed by such sub-contractors; and(e)all amounts towards 'labour charges and other likecharges' not involving any transfer of property ingoods, actually incurred in connection with theexecution of works contract, or such amounts calculatedat the rate specified in column (3) of the Table below,if they are not ascertainable from the books of accountsmaintained and produced by a dealer before the assessingauthority.THE TABLESerial numberType of works contractLabour or othercharges as apercentage value ofthe works contract 1Electrical Contracts152All StructuralContracts15 https://hcservices.ecourts.gov.in/hcservices/ Serial numberType of works contractLabour or othercharges as apercentage value ofthe works contract 3Sanitary Contracts254Watch and/or clockrepair contracts505Dyeing contracts506All other contracts 30(f)all amounts (including the tax collected from thecustomer) refunded to the customer or adjusted towardsany amount payable by the customer, in respect ofunexecuted portion of works contract based on thecorrection on account of measurements or checkmeasurements, subject to the condition that (i)the turnover was included in the return and taxpaid, and(ii)the amount (including the tax collected from thecustomer) is so refunded or adjusted, within a period ofsix months from the due date for filing of the return inwhich the said amount was included and tax paid 5. It is clear from sub-section (2) that the taxable turnover of thedealer of transfer of property involved in the execution of workscontract shall on and from the 26th day of June 1986, be arrived at afterdeducting the amounts stated in clause (a),(b),(c), (d),(e) and from thetotal turnover of the dealer. The proviso attached to that sectionprovides that no such deduction shall be allowed unless the dealerclaiming deduction, produces proof that the sub-contractor is a registereddealer liable to pay tax under the Act and that the turnover of suchamounts is included in the return filed by such sub-contractors. Clause(e) provides that all amounts towards 'labour charges and other likecharges' not involving any transfer of property in goods, actuallyincurred in connection with the execution of works contract, or suchamounts calculated at the rate specified in column (3) of the Tabletherein, if they are not ascertainable from the books of accountsmaintained and produced by a dealer before the assessing authority. Thetabular column provides for 30% deduction. 6. In this case the assessee has not maintained any accounts andthe same has not been produced before the assessing officer. Hence as perthe statutory provisions referred to above, he is not entitled to claimany deduction over and above 30% which has been specified in clause (e)of sub-section 2 of Section 3B in respect of the situation in which noaccounts has been maintained by the dealer. In that view of the matter,if a dealer has not produced any accounts, he cannot claim deductionover and above 30% of the expenses. Even though he has incurred such https://hcservices.ecourts.gov.in/hcservices/ amount over and above 30%, if no account is produced or no account ismaintained to the regular course, the dealer is entitled to deduction atthe rate of 30% i.e. as per the schedule attached to the clause (e) .That is what the Tribunal concluded in its order , which is impugned inthe writ petition. We find no illegality or irregularity in theinterpretation made by the Tribunal about Section 3B of the TNGST Act.Hence the writ petition deserves to be dismissed and the same isdismissed as devoid of no merits. No costs.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.Krr/To1. The Deputy Commissioner (CT)Vellore Division, Vellore.2. The Registrar,The Tamil Nadu Taxation Special Tribunal,Chennai.1 CC To Mr.S.Ramanathan, Advocate, SR NO.46124.1 CC to the Spl. Government Pleader(Taxes), SR NO.46430.W.P. No.44160 of 2002MS(CO)RVL 27.08.2007