NIZAMUDEEN Vs. DEPUTY COMMISSIONER, WORKS CONTRACT, COMMERCIAL TAXES

JUDGEMENT

(1.) The petitioner is a dealer registered with Commercial Taxes Department, Government of Kerala, under the Kerala Value Added Tax Act, hereinafter referred to as the "KVAT Act". He had undertaken certain works for the Kerala State Construction Corporation Ltd., under a sub -contract. The issue that arises for consideration in the writ petition is as regards the rate of tax, that is applicable for payment of tax by the petitioner, at compounded rates. The said issue arises in the context of the deduction made by the awarder of the contract at the time of making payments to the petitioner. It is the case of the petitioner that the awarder of the contract namely, the Kerala State Construction Corporation Ltd., had deducted tax at the rate of 7% while effecting payments to the petitioner. The learned counsel for the petitioner would submit that this deduction is erroneous as, under Section 8 of the KVAT Act, a concessional rate of 5% is contemplated for payment of tax on compounded basis, when the tax is payable in respect of works contract awarded by the Government of Kerala, Kerala Water Authority, or local authorities.

(2.) I have heard the learned counsel appearing for the petitioner as also the learned Government Pleader appearing for the respondents. On a consideration of the facts and circumstances of the case and the submissions made across the bar, I find that it is not in dispute that the contract in the instant case was undertaken by the petitioner for the Kerala State Construction Corporation Ltd., which is a wholly owned Government company. The said fact however, will not entitle the petitioner to claim the concessional rate of tax of 5%, that is envisaged in respect of compounded tax payable by a works contractor in respect of works contract awarded by the Government of Kerala, Kerala Water Authority, or local authority, inasmuch as the Kerala State Construction Corporation Ltd., cannot be equated with the Government of Kerala for the purposes of the concessional rate of tax. It is trite that an exemption provision in a fiscal statute has to be strictly construed against an assessee and when so construed, the concession envisaged in the instant case cannot be extended to Government Companies. Thus, I see no reason to interfere with Exts.P2 to P6 liability certificates issued in relation to the works undertaken by the petitioner. The writ petition in its challenge against the deduction of tax at 7% therefore fails and is accordingly, dismissed.