LARSEN AND TOUBRO LIMITED Vs. STATE OF ORISSA

JUDGEMENT

(1.) THIS Writ Petition has been filed with a prayer to declare Section of the Orissa Value Added Tax Act, 2004 (for short, 'OVAT Act") as well asR.6(e) of the Orissa Value Added Tax Rules, 2005 (for short, 'OVAT Rules') unworkable for the reasons stated in the writ petition.

(2.) MR . V. Raman, learned Senior Advocate appearing on behalf of the Petitioner submits that while Section of OVAT Act provides for deduction towards labour, service charges and other like charges,R.6(e) of the OVAT Rules provides for deduction towards labour and service charges only from the gross turnover to arrive at the taxable turnover in respect of works contract. Both these provisions do not provide for other deductions prescribed by the Hon'ble Supreme Court in the case of Gannon Dunkerley and Company and Anr. v. State of Rajasthan and Ors. : (1993) 88 STC 204 (SC). The Hon'ble Supreme Court in the case of State of Jharkhand v. Voltas Ltd. : (2007) 7 VST 317 (SC) held that deduction of labour and other charges is inadequate and it is necessary for the State Legislature to make provision for each and every deduction prescribed by the Hon'ble Supreme Court in Gannon Dunkerley's case (supra). Failure of State Legislature to make provision for deductions set out in Gannon Dunkerley's case (supra) renders the provisions of Section as well asR.6(e) unworkable.

(3.) ON rival contentions raised by the parties, the only question that falls for consideration by this Court is as to whether Section read withR.6(e) should provide for various deductions as set out/prescribed by the Hon'ble Supreme Court in Gannon Dunkerley's case (supra) for the purpose of determining taxable turnover in case of a works contract.