ABDULRAHIMAN Vs. STATE OF KERALA

JUDGEMENT

(1.) The question referred by the Division Bench for our decision is whether petitioners are entitled to payment of tax at compounded rate under S.7(7) of the KGST Act on the construction of culverts in the case of two petitioners (ST Rev. Nos. 244 & 360/2006) and boat jetty in the case of the other petitioner (ST Rev. No. 354/2004). Another Division Bench in the decision in Abdul Majeed v. State of Kerala, 2006 KHC 704 : 2006 (3) KLT 548 : 2006 (2) KLJ 200 held that culvert is not a civil work entitling the contractor for payment of tax at compounded rate under S.7(7) of the KGST Act. However, the Division Bench which referred the matter to us felt that a culvert is nothing but a mini bridge, which work is a civil work under the definition clause prior to the introduction of Explanation to S.7(7) by Finance Act, 2004. We have heard counsel appearing for the petitioners and Special Government Pleader appearing for the respondent.

(2.) S.7(7) as it stood prior to the amendment by Finance Act, 2004, provided for payment of tax at compounded rate for civil works of construction of buildings, bridges, roads etc. and culvert was not specifically covered in the provision. However, S.7(7) was amended by Finance Act, 2004 introducing an Explanation to it. The Section as amended is extracted hereunder with the Explanation:

(3.) The question to be considered is whether construction of culvert and construction of boat jetty are works of civil nature entitling the contractors for payment of tax at compounded rate under S.7(7) of the KGST Act. So far as boat jetty is concerned, Division Bench of this Court in State of Kerala v. Radhesyam Khandenwall, 2009 KHC 277 : 2009 (2) KLT SN 55 (C. No. 60) : 2009 (1) KLJ 765 held that boat jetty is a civil work as it answers the description of 'building' under S.7(7) entitling the contractor for payment of tax at compounded rate. We are in agreement with the view expressed by the Division Bench and we hold that petitioner in ST Rev. No. 354/2004 is eligible for payment of tax at compounded rate on construction of boat jetty.