M/S.GAMMON INDIA LIMITED Vs. NTPC LIMITED

JUDGEMENT

(1.) NO value added tax is recoverable in respect of labour charges in terms of Bihar Value Added Tax Act. Section 41 of the said Act imposes an obligation upon the purchaser to recover advance value added tax from the consideration payable in respect of transfer of property in goods, but not on account of labour charges charged by a contractor. Rule 29 of the Bihar Value Added Tax Rules, 2005 makes it abundantly clear that while making such deduction of advance tax no deduction shall be made on account of payment pertaining to labour charges for execution of works contract.

(2.) THE writ petitioner has entered into a works contract with the respondent no.1. NTPC Ltd. It has raised bills for the work done by it. The bills are composite in nature. They do not indicate separately the value of consideration payable to the writ petitioner by the respondent no.1 in respect of transfer of property in goods made by the petitioner in favour of respondent no.1 in execution of the said works contract and consideration payable on account of labour charges for execution of the works contract. As a result, though not entitle to, the respondent no.1 started recovery of advance value added tax from the payments made in respect of some of such bills not only for the consideration payable in respect of transfer of property in goods but also for labour charges for execution of the works contract. The present writ petition is to restrain the respondent no.1 from doing so. The learned counsel for respondent no. 1 has submitted that no sooner bills will be re -submitted segregating the amounts payable by the respondent no.1 to the petitioner on account of consideration in respect of transfer of property in goods vested in it in execution of the works contract and payment due by it on account of labour charges for execution of the works contract, it shall recover advance value added tax only in respect of consideration for transfer of the property in goods and will not charge advance value added tax on the amount payable on account of labour charges.

(3.) ACCORDINGLY , this writ petition is disposed of by directing the petitioner to re -submit bills indicating separately the consideration payable in respect of transfer of property in goods vested in the respondent no.1 in execution of the subject works contract and also to indicate separately payments due to them by the respondent no.1 pertaining to labour charges for execution of the works contract and also ail other charges indicated in Rule 29 of the said Rules. The respondent no. 1 thereupon shall make payment to the extent it is liable to pay the petitioner in respect of such bills and while doing so shall deduct advance value added tax to the extent the same is deductable only on account of valuable consideration payable in respect of transfer of property in goods which vested in the respondent no.1 on execution of the subject works contract.