GOUNDER AND COMPANY Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THE short question which has fallen for consideration in this batch of writ petitions is as to whether, under the provisions of section 17 (6) of the Karnataka Sales Tax Act, 1957 (in short "the Act") as it stood prior to April 1, 1996, the dealers were liable to pay tax at the rates set out in the table thereto on the total turnover relating to the transfer of property in goods (whether as goods or in some other form) involved in the execution of works contracts or they were liable to pay the same on the entire consideration of the said works contract.

(2.) THE petitioners herein are all civil contractors and they had undertaken to execute works contract during the assessment years in question. They had also opted to pay taxes in terms of section 17 (6) of the Act instead of under section 5-B of the Act. In all these cases, the assessing officers have levied tax at the rate of 2 per cent on the entire value of the works undertaken by the petitioners instead of restricting the same to the value of the goods involved in the execution of such contract. Section 17 (6) of the Act to the extent it is relevant for the present purpose and as it stood prior to April 1, 1996 reads thus :

(3.) IN my opinion, keeping in view the law laid down by the Supreme Court, it is not open for the Revenue to contend that the expression "total turnover" relating to transfer of property as appearing in section 17 (6) of the Act should be read as "total turnover" relating to the value of the works contract. Such an interpretation cannot be given by applying any known and established rule of construction of statutes. Accordingly, it is held that the petitioners are liable to pay tax at the rate of 2 per cent on the total turnover relating to transfer of property in goods (whether as goods or any other form) involved in execution of the works contract undertaken by them and not on the entire value of such contract.