SEVEN HILLS CONSTRUCTIONS Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THIS is an appeal filed against the orders of DC(CT), Eluru in his order Ref. No. A4/923/94, dated 11.3.1996 revising the Assessment orders of Commercial Tax Officer, Tanuku in his Asst. No. 10805/88 -89, dated 23.2.1993. The disputed turnover is Rs. 61,41,586/ -. The appellant M/s. Seven Hills Constructions, Penumantra were finally assessed for the year 1988 -89 under the APGST Act by the CTO, Tanuku. On scrutiny of the assessment file, the Dy. Commissioner (CT), Eluru noticed that an erroneous exemption was granted by the assessing authority on a turnover of R. 1,91,61,266/ -, without mentioning the details. The revisional authority in his order noticed that as per the particulars filed by the appellants at the time of assessment, a turnover of Rs. 1,12,32,606/ - was incurred by them towards labour charges, wages, transport, vehicle maintenance and other miscellaneous charges. The remaining turnover of Rs. 98,53,174/ - invariably relates to the value of the goods, which have been used in the course of execution of works contract and to meet the ends of material justice, the revisional authority has allowed exemption on a turnover of Rs. 17,87,070/ -, which was determined by the assessing authority relating to secondary transactions and on the remaining turnover of Rs. 80,66,100/ -, he levied tax. Aggrieved by the orders of revision, the counsel for the appellant contested that the revisional order passed is contrary to Rules prescribed under the Works Contract. According to them, out of a gross turnover of Rs. 2,10,85,780/ - a turnover of 19,24,514/ - alone is liable to tax and the remaining turnover represents labour charges. The total material purchased by them is only for Rs. 39,77,638/ - and the remaining amount relates to labour charges, service charges, transport charges, travelling charges, maintenance charges and other expenses incurred by the appellant and the profit margin retained by them. The revisional authority failed to notice that no transfer of property took place in respect of element of profit retained by the dealers and other maintenance expenditure. They have further stated that the revisional authority while finding support of the judgment of Hon'ble Supreme Court of India in the case of M/s. Gannon Dunkerley & Co., & Others Vs. The State of Rajasthan (SLP No. 3365/68/92) failed to notice that the Hon'ble Supreme Court has mentioned in the page 3 of the order itself which clearly shows that the goods involved in the execution of works contracts can be arrived at by the deductions, expenses, incurred by the contractor for providing labour and other services from the value of the contract. The Revisional Authority could not appreciate properly the spirit in the above judgment. The assessing authority in his order dated 23 -2 -1993 has rightly completed the assessment following the Rule 6(2)(iii) of the APGST Rules. Hence, the revision by the Dy. Commissioner is not according to law and prayed before this Tribunal to set -aside the order of revision and restore the order of the assessing authority.

(2.) THE Appellant further submitted that number of writ petitions were filed before the Hon'ble A.P. High Court challenging the virus of charging Sections and Rules. However, the Writ Petitions were partly allowed by the High Court, and relied upon the decision of A.P. High Court in : 105 STC p. 227 (M/s. Media Communication's case) wherein the Hon'ble High Court at para. 42 at page 255 has observed as under:

(3.) IN view of the above, the revisional orders passed is not as per the norms and the rule position, which is mandatory and in view of this, we are inclined to set -aside the revisional orders while restoring the assessment orders passed by the CTO, Tanuku. Held accordingly.