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of <h1>Court clarifies tax rate for timber and plywood works contracts under Kerala Sales Tax Act</h1> The court determined that the tax rate for works contracts involving timber and plywood under the Kerala General Sales Tax Act, 1963 should be as provided ... - Issues:Interpretation of tax rate on timber and plywood in works contract under Kerala General Sales Tax Act, 1963.Analysis:The judgment revolves around the question of the appropriate tax rate applicable to the sale of timber and plywood involved in the execution of works contract under the Kerala General Sales Tax Act, 1963. The respondent, engaged in civil construction work, purchased timber and plywood falling under the Fifth Schedule to the Act, attracting tax at two points of sale. The dispute arose regarding the tax rate applicable on the resale of these items in the execution of works contract by the respondent. The court analyzed the relevant provisions, specifically section 5(1)(iv) of the Act, which outlines the levy of tax on works contract. It was noted that tax on goods is payable at the rate prescribed under specific schedules only when the transfer of goods in the execution of works contract takes place in the same form. The court highlighted that in civil construction work, timber and plywood are not sold in the form in which they are purchased but are appropriated for the work required, indicating no direct sale of these items.The court rejected the argument that tax on works contract should be based on the value of goods rather than intermediary products, emphasizing that this issue was not relevant to the determination of the tax rate applicable. The judgment clarified that the rate of tax for works contract involving the supply of timber, plywood, etc., is as provided under entries 18 and 19 of the Fourth Schedule to the Act, depending on the nature of the work. Consequently, the orders of the Tribunal and the first appellate authority were reversed, and the assessment was restored based on the appropriate tax rate for works contract involving timber and plywood.
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