STATE OF KARNATAKA Vs. TRANSGLOBAL POWER LIMITED

JUDGEMENT

(1.) The Revenue has preferred these petitions against the order passed by the Karnataka Appellate Tribunal, which held when the contract executed by the assessee for KPTCL, was a divisible contract, separately for supply of materials and equipments by sale transaction and thereafter for execution of civil works and erection by labour. The assessee is a registered dealer under the provisions of Karnataka Value Added Tax Act, 2003 (for short hereinafter referred to as 'the Act'). During the years 2005-2006 to 2007-2008, the assessee was engaged in execution of the works awarded by M/s. Karnataka Power Transmission Corporation Limited (for short hereinafter referred to as 'KPTCL') for construction of power lines and erection of transmission towers for certain specified distances in the Districts of Hassan and Mysore. The Prescribed Authority classified the taxable turnovers and levied tax at 4% on certain items and subjected to levy of tax at 12.5% on some goods. As there was some mistakes in the reassessment orders, the same were rectified by the order dated 27-2-2009 passed by the Prescribed Authority. The Joint Commissioner of Commercial Taxes (Administration), VAT Division 1, Bangalore, the Revisional Authority exercising his powers under Section 63-A of the Act reviewed the reassessment orders. It was held when the Prescribed Authority while concluding the reassessment has wrongly classified the taxable turnover and subjected to tax at 4% which were incorporated in the execution of work contracts of composite nature. According to the Revisional Authority from 1-4-2006, the works contract executed by the assessee falls in the Entry 23 of Sixth Schedule to the Act and is liable to pay tax at 12.5%. Therefore, he revised the order, modified the rectification order and subjected the work contractor turnover activity and levied tax at 12.5%. Aggrieved by the said order, the assessee preferred an appeal before the Karnataka Appellate Tribunal. The Tribunal partly allowed the appeals; setting aside the common revisional order passed by the Revisional Authority and restored the reassessment orders and the rectification order passed by the Prescribed Authority subjecting to tax the works contract executed by the assessee at 4%. Aggrieved by the said order, the State has preferred these petitions.

(2.) Learned AGA appearing for the revenue assailing the impugned order contended the terms of contract disclose the work entrusted to the assessee is by way of "turnkey project". The terms of agreement expressly provide that this is a composite contract and therefore the Revisional Authority was justified in levying tax treating the transaction in question as a works contract under Entry 23 of Sixth Schedule and the Tribunal has erred in treating the case as of sale and levying tax at 4% under Entry 96 of the Third Schedule and therefore she submits a case for interference is made out.

(3.) Per contra, learned Counsel for the assessee supported the impugned order.