A M ABDUL MAJEED Vs. STATE OF KERALA

JUDGEMENT

(1.) Petitioner is a P.W.D. Contractor and a registered dealer under the Kerala General Sales Tax Act, 1963. Assessment year in question relates to 1998-1999. Final assessment was completed on estimate basis fixing the turnover at Rs. 2 lakhs as per order dated 27.2.2004. Sales Tax was assessed at the rate of 8% on the above turnover along with surcharge at 10%. Assessee filed appeal against the said order before the Appellate Assistant Commissioner, Commercial Taxes, Kannur. Appeal was disposed of by order dated 20.07.2004 along with appeal for the year 1999-2000. Assessment was modified with a direction to the assessing authority to verify the statements issued by the awarder after granting credit for the tax recovered and paid by the awarder. Appellate Assistant Commissioner passed a common order in S.T. A. Nos. 398/04 and 398A/04 on 20.7.2004 directing the assessing authority to modify the assessment for both the years. Assessing authority then passed a fresh assessment order on 14.9.2004 accepting the taxable turnover of Rs. 24,67,530/-. However, instead of levying tax at 2% on the entire turnover assessing authority bifurcated the turnover in a sum of Rs. 15,89,436/- attributable to construction of drain and culvert at Payyoli road and at Kizhur road and levied tax at 5% thereon under Section 7(7A) of the Act. In respect of the balance amount of Rs. 8,78,099/- tax was levied at 2% under Section 7(7) and raised a demand of Rs. 54,920/-. Aggrieved by the same assessee filed appeal S.T.A. No 808/04 before the Appellate Assistant Commissioner which was rejected. Matter was taken up in appeal before the Sales tax Appellate Tribunal. Tribunal sustained the levy of tax at 5% in respect of the contract payments received for construction of drain and culvert amounting to Rs. 15,89,436/-. Aggrieved by the same this revision has been preferred.

(2.) Sri T.M. Sreedharan, counsel appearing for the petitioner submitted that the levy of tax at 5% in respect of the contract payments received for construction of drain and culvert by invoking Section 7(7A) of the Act cannot be justified. Counsel submitted ' that the construction of culvert and drain is only a civil work and hence the Appellate Tribunal was not justified in holding that the same will not come within the provisions of Section 7(7) of the Act. Counsel submitted that the point raised is covered by the decision of this Court in Philipose v. State of Kerala 10 KTR 150. Counsel submitted that construction of drains, culverts etc. will form part of construction work of road. Reference was also made to the meaning of the expression "road" in various Dictionaries which states that road is a specially prepared way between places for the use of pedestrians, riders, vehicles etc. Counsel submitted in order to construct a road between two places it is highly necessary to construct drain on either side of the road and also construction of culverts if such construction is warranted for the use of the road. In any view of the matter, counsel submitted if the assessee's work will not fall under Section 7(7) the assessee should have been given option to go for regular assessment under Section 5(1) rather than demanding tax at the compounded rate under Section 7(7A) especially when the assessee has not opted for compounded rate under Section 7(7A).

(3.) Sri Raju Joseph, learned Special Government Pleader for Taxes on the other hand contended that the petitioner is not justified in taking into account item which is not mentioned in Sub-section(7) of Section 7 of the Act. Section 7(7) takes in civil works of construction of bridges, roads etc. Later vide Act 23 of 1999 railway tracks, walls, including sea walls were also included. If the legislature wanted to include drains and culverts-the same could have been included in Section 7(7). Counsel submitted what is shown in Section 7(7) is specific and the assessee cannot insist inclusion of any of the items not mentioned in the Section. Counsel further submitted that after having opted for payment of tax at compounded rate under Section 7 and 7(7A) assessee cannot revert back to Section 5(1) assessment.