Strict construction of tax concessions denies 5% compounded rate for works contracts awarded by a Government company.

A works contractor executing work for a wholly owned Government company was held not entitled to the 5% concessional compounded tax rate under Section 8 of the Kerala Value Added Tax Act because the concession was confined to works contracts awarded by the Government of Kerala, Kerala Water Authority, or local authorities. A Government company was not treated as equivalent to the Government of Kerala for this purpose, and exemption or concession provisions in fiscal statutes were strictly construed against the assessee. The 5% benefit was therefore denied, and the 7% deduction was upheld.

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Issues: Whether the petitioner, a works contractor executing work for a wholly owned Government company, was entitled to the concessional compounded tax rate of 5% under Section 8 of the Kerala Value Added Tax Act for works contract awarded by the Government of Kerala, Kerala Water Authority, or local authorities.

Analysis: The claimed concession was confined to works contracts awarded by the Government of Kerala, Kerala Water Authority, or local authorities. A Government company was held not to be equivalent to the Government of Kerala for the purpose of extending the concession. Since exemption and concession provisions in fiscal statutes are to be strictly construed against the assessee, the benefit could not be enlarged to cover Government companies.

Conclusion: The petitioner was not entitled to the 5% concessional compounded rate, and the deduction at 7% was upheld against the petitioner.

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