STATE OF KERALA Vs. INDEC INTERIORS

JUDGEMENT

(1.) The question raised is whether turnover of works contract involving sale of plywood is entitled to be assessed at 2% or at 12% under Entry 12 of 5th Schedule to the KGST Act.

(2.) We have heard Government Pleader appearing for the petitioner and counsel appearing for respondent / assessees.

(3.) Admittedly the respondent / assessees are engaged in interior decoration work involving various goods purchased by them. Plywood is one such item purchased by them by paying tax at 10%. Under the 5th Schedule plywood is an item taxable at 2% at the last sale point. After determining the taxable turnover on works contract the Assessing Officer assessed the entire turnover at 12% under item 12 of the 4th Schedule to the KGST Act which is sought to be justified by the Government Pleader in the revisions filed by the State. On going through the orders of the Tribunal and that of the First Appellate Authority we do not think the claim of the respondents could have been allowed without reference to each and every contract, the nature of work executed and as to whether plywood was supplied in the same form or supplied after conversion into furniture or any other form. The taxable turnover determined in all the cases is much more than the purchase turnover of plywood. Therefore, respondents cannot claim tax at 2% on the entire turnover which does not represent works contract with the use of plywood alone. Interior decoration work involves use of various kinds of materials taxable at different rates. For so much of the items which are purchased within the State and used in the same form, respondents are entitled to exemption or lower rate of tax under 5th Schedule. However, unless accounts are produced showing purchase, use and closing stock held, it would not be possible for the officer to bifurcate the taxable turnover attributable to plywood and other materials. Neither the Tribunal nor the First Appellate Authority considered the claim with reference to the purchase turnover, closing stock and the use of items in the work. In fact no single contract is seen considered by any authority. In the circumstances we feel the only course open to us is to set aside the orders passed by the Appellate Authorities and that of the assessment with a direction to the Assessing Officer to revise the assessment on production of documents and to redo the assessment on respondent producing work orders, purchase bills and other accounts for revising the assessments. All issues are left open for the parties to raise before the officer with records. Sales Tax Revisions are disposed of cancelling assessments modified by Appellate Authorities including Tribunal.