TaxTMI 
TaxTMI 
2004 (8) TMI 673
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....ted April 10, 2001. The petitioner is a registered dealer, registered under the provisions of the Karnataka Sales Tax Act, 1957 ("the Act", for short). For the assessment year 1996-97, the petitioner was awarded a contract for construction of a bridge over the Ghataprabha river. For the relevant assessment year, the petitioner claimed a concessional rate of tax on the iron and steel used by the contractor for the purpose of construction of the bridge. The assessing authority has allowed the claim of the petitioner while computing the taxable turnover and the tax liability of the petitioner. The revisional authority being of the view that the order passed by the assessing authority for the assessment year 1996-1997 is improper, illegal....
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....onsidered order dated August 30, 2002, has rejected the appeal and has confirmed the order made by the revisional authority dated April 10, 2001. Aggrieved by the said order, the petitioner is before this court. Sri. Rabinathan, learned counsel for the petitioner would contend that for the purpose of charging provisions, namely, section 5B of the Act, the turnover in the declared commodities, namely, iron and steel require to be excluded and that therefore the revisional authority and the Appellate Tribunal were not justified in reversing the findings of the assessing authority for the assessment year 1996-97 in so far as it pertains to the turnover of iron and steel. The learned counsel would submit that the order passed by the Tribunal....
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....the Forty-sixth Amendment whereby the works contract which was entire and indivisible has been altered into a contract which is divisible into one for sale of goods and other for supply of labour and services, the value of the goods involved in the execution of a works contract on which tax is leviable must exclude the charges which appertain to the contract for supply of labour and services. This would mean that labour charges for execution of works [item No. (i)], amounts paid to a subcontractor for labour and services [item No. (ii)], charges for planning, designing and architect's fees [item No. (iii)], charges for obtaining on hire or otherwise machinery and tools used in the execution of a works contract [item No. (iv)], and the c....
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....d services. The cost of establishment of the contractor which is relatable to supply of labour and services cannot be included in the value of the goods involved in the execution of a contract and the cost of establishment which is relatable to supply of material involved in the execution of the works contract only can be included in the value of the goods. Similar apportionment will have to be made in respect of item No. (viii) relating to profits. The profits which are relatable to the supply of materials can be included in the value of the goods and the profits which are relatable to supply of labour and services will have to be excluded. This means that in respect of charges mentioned in items Nos. (vii) and (viii), the cost of establis....
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....e material produced by the contractor." Section 5B of the Act is the charging provision. It says that notwithstanding anything contained in sub-section (1) or sub-section (3) or subsection (3C) of section 5, but subject to sub-section (4), (5) or (6) of section 5 of the Act, a dealer is liable to tax on his taxable turnover of transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract for each year at the rates mentioned at column (3) of the Sixth Schedule. Entry No. 6 of the Sixth Schedule provides for civil works like construc tion of buildings, bridges, roads, etc. The rate of tax for the relevant assessment year is 8 per cent. It is not in dispute nor it can be disputed by....