SIDDHARATHA CONSTRUCTIONS KANPUR Vs. COMMISSIONER TRADE TAX

JUDGEMENT

(1.) Present revision under section 11 of U.P. Trade Tax Act (hereinafter referred to as the "Act") is directed against the orders of Tribunal dated 09.11.2006 relating to the assessment year 1993-94. Applicant is an Electrical Contractor. Admittedly, during the year under consideration, applicant had executed more than one contracts. Applicant claimed to have maintained books of account in the regular course of business and was duly audited by the Chartered Accountant. On the basis of books of account, applicant had furnished details of U. P. purchased tax paid goods, goods imported from outside the State of U. P., goods supplied in the course of inter-State sales by transfer of documents and the amount received from various parties for the execution of works contract etc. Applicant had not admitted any liability of tax under the U. P. Trade Tax Act. The Assessing Authority made a best judgment assessment on the ground that the applicant had not maintained proper books of account giving proper details. It has also been observed that the separate details of individual contracts have not been furnished. The Assessing Authority accordingly, proceeded to determine the turnover by best judgment assessment and in this process taken the total amount received towards the works contract and deducted the labour charges and purchases made within the State of U. P. there from and the balance amount had been treated as a value of the goods used in the execution of works contract. Being aggrieved by the said order, applicant filed appeal before the Deputy Commissioner (Appeals), Trade Tax, Kanpur. The Deputy Commissioner (Appeals), Trade Tax, Kanpur allowed the appeal in part and estimated the taxable turnover at Rs.1,65,54,924/-. Being aggrieved by the order of the Deputy Commissioner (Appeals), Trade Tax, Kanpur, applicant as well as Commissioner of Trade Tax, Kanpur filed appeals before the Tribunal. The Tribunal by the impugned order, set aside the order passed by the First Appellate Authority and remanded the matter back to the First Appellate Authority for passing assessment orders afresh. Heard learned Counsel for the parties. Applicant submitted that the remand of the case to the First Appellate Authority is not justified. He submitted that the applicant had maintained proper books of account duly audited by the Chartered Accountant, which reflects the purchases, expenses, and other details, which were necessary for making the assessment, therefore, assessment should be made in accordance to the turnover disclosed as per the books of account. He submitted that the deduction towards the labour charges was not proper. He further submitted that the goods, which were purchased from outside the State of U. P. and used in the execution of works contract, were not liable to tax in view of Section 3-F (2) (a) (i) of the Act. Learned Standing Counsel submitted that the applicant had not maintained the proper books of account. He submitted that the applicant had executed more than one contracts and details of individual contract have not been maintained, therefore, it was not known that which goods were used in the execution of which works contract. He submitted that the sale value of the goods used in the execution of works contract are also not available in the books of account, therefore, in order to determine the turnover of the goods used in the execution of works contract, best judgment assessment has to be made. He submitted that the applicant was not able to substantiate that the goods imported from outside the State of U. P. were in pursuance of the particular contract, inasmuch as, details in this respect, had not been maintained. According to him, matter requires reconsideration.

(2.) Having heard learned Counsel for the parties and have perused the order of the Tribunal and the authorities below.

(3.) In my opinion, matter has not been properly examined by the Assessing Authority as well as by the Appellate Authority and the turnover had not been determined in accordance to Section 3-F of the Act. Under Section 3-F of the Act, goods used in the execution of works contract, are liable to be taxed. The gross value of the goods, are subject to deduction as contemplated under Section 3-F of the Act. To claim the deduction, Contractor has to adduce necessary evidences. In the present case, proper procedure has not been adopted for determination of the turnover of the goods involved in the execution of works contract in accordance to Section 3-F of the Act. The Assessing Authority had not properly examined the claim of deduction. In these circumstances, it would be appropriate that the matter may go back to the Assessing Officer to examine the matter afresh. It will be open to the applicant to adduce necessary evidences to substantiate the claim of deduction under Section 3-F of the Act. In the result, revision is allowed. Order of the Tribunal dated 09.11.2006 is modified to the extent that instead of remanding back the case to the First Appellate Authority, the matter is remanded back to the Assessing Authority to pass assessment order afresh in the light of observations made above.