Works contract turnover and CST-declared inter-State purchases must be excluded from VAT assessment; fresh reassessment directed.

Goods purchased in the course of inter-State trade and supported by CST declarations were required to be excluded from taxable turnover under the Tripura Value Added Tax Act, 2004, and the same protection applied to items excluded under works contract principles governing transfer of property in goods. The assessment was inconsistent with the binding legal position because those excluded transactions were not properly removed from the tax base. The assessment order and demand notice were therefore quashed, and the matter was remitted for fresh assessment after excluding the transactions protected under the Central Sales Tax regime and the works contract rules.

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Issues: Whether goods purchased in the course of inter-State trade and commerce and used in execution of a works contract could be brought to tax under the Tripura Value Added Tax Act, 2004, and whether the assessment order and consequential demand were liable to be quashed with a fresh assessment directed.

Analysis: The dispute turned on the scope of levy under the Tripura Value Added Tax Act, 2004 in relation to transfer of property in goods involved in execution of works contracts. The Court accepted that transactions covered by CST declarations were required to be excluded from the taxable turnover under the State VAT law, and that the stand of the revenue was inconsistent with the governing principles laid down in the earlier binding decisions. The Court held that the assessment had not been made in conformity with those principles and that fresh assessment was necessary after deleting the transactions protected under the Central Sales Tax regime and the items required to be excluded under the works contract principles.

Conclusion: The assessment order and the demand notice were quashed, and the matter was remitted to the Assessing Authority for fresh assessment in accordance with the binding legal position.

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