Works contract turnover below statutory threshold after excluding earth work and labour charges; tax levy unsustainable.

Works contract turnover was not taxable where hill-side cutting and earth work formed a substantial part of the consideration and had to be excluded from taxable turnover. After deducting labour charges, the remaining turnover was only Rs. 1,11,930/-, which stayed below the statutory threshold for liability under the Uttarakhand Value Added Tax Act, 2005. On those facts, the tax levy on that turnover could not be sustained because the aggregate taxable turnover did not cross the prescribed limit, and no separate income from other sources was found for the relevant assessment year.

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Issues: Whether the turnover of the assessee from the works contract, after exclusion of earth work and deduction of labour charges, crossed the taxable quantum so as to attract liability to tax under the Uttarakhand Value Added Tax Act, 2005.

Analysis: The assessee received consideration under a works contract, but a substantial part represented hill-side cutting and earth work and was not includible in taxable turnover. After excluding that amount and applying the prescribed deduction for labour charges, the remaining turnover was Rs. 1,11,930/-. Under Section 3(7) of the Uttarakhand Value Added Tax Act, 2005, liability in the case of execution of works contract arises only where the aggregate turnover crosses the statutory threshold. On the facts found, the taxable turnover remained far below that limit, and no separate income from other sources was found for the relevant assessment year.

Conclusion: The assessee was not liable to pay tax on the turnover in question, and the levy of tax on Rs. 1,11,930/- could not be sustained.

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