TaxTMI 
TaxTMI 
2013 (4) TMI 586
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....n questions of law and fact are involved between the same parties as such both the writ petitions were consolidated and heard together and are decided by a common judgment. In this judgment we are noticing the facts of Writ Tax No. 38 of 2006. 3. The petitioner was a partnership firm and engaged in the business of execution of works contract. During the Assessment Year 2001-02, the petitioner has executed the works contract of installation of diesel generating sets and supply of the spare parts to Bharat Sanchar Nigam Ltd. according to it's specifications. The petitioner filed it's trade tax return, which was assessed by the Assessing Officer, by the order dated 16.10.2004, in which the Assessing Officer has treated the work of the petitioner as 'works contract' and assessed the trade tax liability under Section 3-F of the Act, read with Rule 44-B of the Trade Tax Rules excluding the price of the generating sets and the spare parts used by the petitioner in execution of the work contract. The petitioner was not satisfied with some part of the assessment order, as such an appeal (i.e. Appeal No. 1334 of 2004) was filed from the aforesaid order, before the Joint Co....
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....was passed accepting the transaction as work contract and price of the generator sets escaped assessment. The generator sets were movable property and it's installation under the contract comes within the meaning of sale as defined under the Act. As the price of the generator sets escaped assessment, as such, proceedings for reassessment has been started under Section 21 of the Act. 5. We have considered the arguments of the counsel for the parties and examined the records. In order to appreciate the controversy involved in the writ petition, the relevant provisions of the Act are quoted below:- "2. (aa) ''business', in relation to business of buying or selling goods, includes-- (i) * * * (ii) the execution of any works contract or the transfer of the right to use any goods for any purpose (whether or not for a specified period); (iii) * * * but does not include any activity in the nature of mere service or profession which does not involve the purchase or sale of goods; * * * (c) ''dealer' means any person who carries on in Uttar Pradesh (whether regularly or otherwise) the business of buying, selling, supplying or distributing g....
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....as goods or in some other form) involved in the execution of a works contract. Under Section 2(i) of the Act "turnover" is defined to mean the total amount for which goods are supplied or distributed by way of sale by a dealer on his own account or on account of others for cash or deferred payment or for any other valuable consideration. Under Section 2(ii) of the Act the expression "turnover of purchases" is defined to mean the total amount of purchase price paid or payable by a dealer in respect of purchases of goods made by him after stipulated production. Under Section 2(m) of the Act the expression "works contract" is defined to include any agreement for carrying out building construction, manufacture, processing, fabrication, erection, installation, repair or commissioning of movable or immovable property for cash, deferred payment or in other valuable consideration. 7. The charging section in the Act is Section 3, which, insofar as it is relevant for our purposes, is quoted hereunder: "3. Liability to tax under the Act.--(1) Subject to the provisions of this Act, every dealer shall, for each assessment year, pay a tax at the rates provided by or under Section 3-A or Se....
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.... Rules. 9. Admittedly in the assessment order, the price of the generator sets has been deducted from total turnover of the petitioner although it ought to have been included under Section 3-F (1) (b) of the Act. Thus it is proved that it was the case of escaped assessment. 10. The counsel for the petitioner submitted that all the necessary facts had been disclosed by the petitioner and considered the Assessing Officer, in the assessment order. After considering the entire facts he had found that the business of the petitioner was as works contract and as such he had not levied trade tax on the price of the materials used by the petitioner in execution of the work contract, according to the provisions of Section 3-F of the Act. There was neither concealment of any fact on the part of the petitioner nor ignorance/negligence on the part of the Assessing Officer and there was no escapement of assessment as such reassessment proceeding was illegal. The reassessment proceedings is nothing but the change of the opinion of the Assessing Officer. The provision relating to reassessment is given under Section 21 of the Act which is quoted hereunder: - "21. Assessment of tax on the t....
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....tor sets has to be added in total turn over of the petitioner. 13. Much was argued that relied upon decision in the case of M/s. Kone Elevator (India) Ltd. (supra) is not applicable to the facts of the present case and the assessing authority had examined the question with regard to the work contract and rightly taxed the petitioner under section 3F of the Act. A bare perusal of the assessment order would show that the assessing authority has noticed only this much that the copies of certain documents such as contract and tender agreement etc. were produced which show that the work of supply, installation, commissioning, loading and unloading were included therein. But the assessing authority failed to take note of the fact that the supply of generators and commissioning expenses were shown at Rs. 10,82,101. While the petitioner has shown the purchase of generator for Rs. 5,89,93,249.96, which gives the commissioning expenses to 1.77% of the total amount of supply Rs. 6,11,01,227/-. The attention of the assessing authority escaped this aspect of the case which is vital and goes to the root of the matter. In the case of M/s. Kone Elevator (India) Ltd. (supra) the Apex Court has l....