RUDRANEE CONSTRUCTION COMPANY, AURANGABAD, MAHARASHTRA Vs. ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES AND OTHERS

JUDGEMENT

(1.) THESE appeals are preferred against the order passed in revision under Section 22 -A(1) of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as 'the Act' for short), by the Additional Commissioner of Commercial Taxes, Zone -1, Bangalore, setting aside the order passed by the Appellate Authority as well as the original authority and holding that the goods in question ought to be taxed in terms of Entry 6 of Part 'P' of Second Schedule of the Act. The assessee entered into an agreement with the Urban Water Supply and Drainage Board, Shimoga, Bijapur, Dharwad, Mandya and Karnataka Water Supply and Drainage Board, Bangalore for providing and laying of pipes for the purpose of water supply and engaged in the activity of constructing intake well, jack well, pump house, overhead tanks in connection with water supply. The assessee has filed returns. In the deemed assessment orders, the Assessing authority has allowed exemptions on labour charges, Royalties on the materials supplied by the department. The Joint Commissioner of Commercial Taxes invoked his power under Section 21(2) of the Act and held the deemed assessment orders as erroneous and prejudicial to the interest of revenue and accordingly by order dated 4 -9 -2009 remanded the case for fresh disposal in accordance with law. After remand, the assessee -Company filed revised Form 4 for the relevant years. They have offered tax at 4% declaring the commodity of iron and steel pipes. On other taxable turnover pertaining to Cement and URD purchases, they have offered tax at 13%.

(2.) THE Assessing Authority did not accept the said returns, levied tax at 13% on the entire turnover. Aggrieved by the said order the assessee preferred the appeal before the Joint Commissioner of Commercial Taxes. The Appellate Authority partly allowed the appeal and directed the Assessing Authority to levy tax at 4% on value of iron and steel pipes used in the execution of the Works Contract. In terms of the said remand order, the Assessing Authority extended benefit of tax at the rate of 4%. It is thereafter, the Revisional Authority by virtue of the power conferred under Section 22 -A(1) of the Act initiated suo motu revisional proceedings. The assessee contested the matter. The Revisional Authority was of the view that the pipes, which are used in the Works Contract come under Entry 6 of Part 'P' of Second Schedule of the Act and not under Entry 2(xi) of Fourth Schedule of the Act. Since the company -asses see executed composite contract i.e., civil works along with laying of pipes, the works contract executed by the company, certainly falls under Entry 44 of Sixth Schedule of the Act. Therefore, the order passed by the Assessing Authority on 15 -12 -2010 for the period 2003 -04 and the order dated 23 -7 -2011 for the period 2004 -05 was set aside. It is also observed that First Appellate Authority without verifying the exact nature of the goods used in the works contract and without ascertaining the nature of the works contract, whether the works contract executed is a composite works contract or not, simply directing the Assessing Authority to levy tax on the iron and steel goods used in the works contract at 4% is not proper. This direction of the Appellate Authority is not only erroneous and prejudicial to the interest of the revenue and contrary to the facts available on record. Therefore, he set aside both the orders and remanded the matter back to the Assessing Authority for fresh disposal in accordance with law and as per the observations contained in the body of the order. Aggrieved by the said order this appeal is filed.