TaxTMI 
TaxTMI 
2008 (6) TMI 563
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.... the Act and the Rules cannot be gone into by the authority under the Act. The relevant portion of the order of the Supreme Court is reproduced hereinbelow: "In our view the question of vires of provisions of the Act and Rules cannot be gone into by the authority under the Act and on this account the High Court could not have dismissed the writ petition on the ground of alternate remedy. Accordingly, this appeal is accepted, impugned order is set aside and the case is remitted to the High Court for a fresh decision in accordance with law. In case, the High Court comes to the conclusion at the preliminary stage that the point regarding vires of rule 13A is already concluded by a judgment of this court, then, the High Court shall be at liberty to pass the order accordingly." Besides challenging the reassessment order dated May 5, 2006 for period, 1999-2000, the petitioner also challenged the vires of rule 13A of the Bihar Sales Tax Rules, 1983 as amended by notification dated February 1, 2000 and also section 21(1)(a)(i) of the Bihar Finance Act, 1981 on the ground, inter alia, that such provisions are unworkable and ultra vires in view of the law laid down by the Supreme Court....
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....(1)(a) and 19(2) of the Bihar Finance Act raising a demand of Rs. 3,42,52,151. In exercise of power conferred under section 48 of the Bihar Finance Act 1981, the Bihar Sales Tax Rules, 1983 was framed which was notified vide Notification No. S.O. 1 dated January 2, 1984. Rule 13 of the said Rules lays down the provisions with regard to claims for payment of tax at special rate. According to this provisions, a dealer who claims that any amount of his turnover should be assessed to tax at the rate provided in section 13 shall substantiate such claim before the authority prescribed in rule 18 by producing the purchase order, if any, and duplicate copies of the cash memoranda or bills prescribed in sub-rule (3) of rule 15 and true declaration in writing in form IX obtained from the prescribed authority or IXA or IXB, as the case may be, by the purchaser that the goods which are the subject of sale are specified in the certificate of the purchaser. A new rule 13A was framed under section 21(a)(i) of the Act and was inserted by Notification No. S.O. 1142 dated October 8, 1986. Rule 13A as inserted in 1986, is quoted hereinbelow: "13A. Deduction in case of works contract on accou....
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.... etc. 30 (b) Stone masonry in dams and other such works 35 (3) Construction of canal structures, bridges up to 15 metres length, all types of buildings and lining of canals. 30 (4) (a) Construction of pucca roads (excluding earthwork) 15 (b) Construction of pucca roads (including earthwork in formation of new roads) 25 (5) River training and flood protection work involving boulder and brick pitching (excluding earthwork). 40 (6) In the case of electrical contracts. 20 (7) In the case of structural contracts. 30 (8) In the case of sanitary contracts. 331/3 (9) In the case or retreading contracts. 50 (10) In the case of textile dyeing and printing works contracts. 50 (11) In the case of photography and printing contracts. 30 (12) In the case of sculptural contract or contracts relating to arts. 70 (13) In the case of refrigeration, air-conditioning or other machinery, rolling shutters, cranes, installation contracts. 15 (14) ....
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....s Tax Rules, 1983 provides that if the dealer fails to produce any account or the account produced are unreliable deduction under sub-clause (i) of clause (a) of sub-section (1) of section 21 on account of labour in case of works contract from gross turnover shall be equal to the percentage prescribed in rule 13A in respect of different types of works contract. Rule 13A simply provides an alternative mode of assessment. It does not prescribe that in what manner and to what extent the labour charges would be deducted from the gross turnover to reach to a taxable turnover. 23.. Rule 13A unfortunately does not talk of 'any other charges'. Rule 13A unfortunately does not take into consideration that under the Rules the deduction in relation to any other charges in the manner and to the extent was also to be prescribed. Rule 13A cannot be said to be an absolute follow-up legislation to sub-clause (i) of clause (a) of section 21(1). When the law provides that something is to be prescribed in the Rules then that thing must be prescribed in the Rules to make the provisions workable and constitutionally valid. In the matter of Gannon Dunkerley & Co. [1993] 88 STC 204, the Supreme....
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....rescribed in the Rules to make the provisions workable and constitutionally valid. In the matter of Gannon Dunkerley & Co. [1993] 88 STC 204 the Supreme Court observed that as sub-section (3) of section 5 and subrule (2) of rule 29 of the Rajasthan Sales Tax Act and the Rules were not providing for particular deductions the same were invalid. In the present matter the constitutional provision of law says that particular deductions would be provided but unfortunately nothing is provided in relation to the other charges either in section 21 itself or in the Rules framed in exercise of the powers conferred by section 58 of the Bihar Finance Act. ... 31.. In our considered opinion sub-clause (i) of clause (a) of section 21(1) read with rule 13A of the Rules did not make sub-clause (1) fully workable because the manner and extent of deduction relating to any other charges has not been provided/prescribed by the State.' 22.. Learned counsel for the State submitted that the Patna High Court's decision rendered in the case of Larsen & Toubro Ltd. v. State of Bihar [2004] 134 STC 354 is not binding on this court. Though the submission is attractive, but we are of the view t....
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....te.' We fully agree with the view taken by the Patna High Court in the aforesaid decision. It is not merely the labour charges which are deductible from the value of the works contract, but all other charges/ amounts also, except the value of the goods sold in execution of the works contract. This is because only the value of the goods sold can be taxed as sales tax. It may be mentioned that the respondent had initially only claimed deduction of labour charges, but that was in view of the understanding of the law at that time. The matter became clear only after the decision of this court in Gannon Dunkerley & Co. v. State of Rajasthan [1993] 88 STC 204; [1993] 1 SCC 364. It may further be mentioned that the observations made by the Division Bench of the High Court about the rate of tax were unnecessary, and they are therefore set aside." Consequent thereupon rule 13A was again amended vide Notification No. SO 2000 dated March 24, 2006. The amendments made therein reads as under: "1. In the said rule 13A, the existing provision shall be numbered as sub-rule (2) and before this, a new sub-rule shall be inserted called as sub-rule (1). Sub-rule (1). The amount of la....
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....f Jharkhand v. Voltas Ltd. [2007] 7 VST 317 (SC)) by the Supreme Court. The vires of rule 13A as amended in 2000 was therefore concluded by the aforesaid judgment. After the aforementioned judgment, rule 13A was amended by making it workable vide notification dated March 24, 2006. From perusal of the impugned reassessment order, it appears that the authorities proceeded to determine the liability of the petitioner by applying rule 13A. Knowing fully well that the impugned reassessment order was passed by referring amended rule 13A of 2006, curiously enough the petitioner has not challenged the vires of new rule 13A as not workable. In counter-affidavit, the specific case of the respondents is that in the year 1999-2000, the petitioner-company filed its returns showing its gross turnover of Rs. 37,93,29,948, taxable turnover of Rs. 6,35,00,778 and admitted tax of Rs. 48,83,808. During the course of hearing of the said period, the petitioner-company filed a revised returns much after the expiry of the prescribed date of filing the revised returns for 1999-2000, i.e., July 31, 2001 in which it revised downwards its gross turnover to Rs. 34,99,43,827 and its taxable turnov....
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....r of M/s. Nissho Iwai Corporation, the petitioner had the following turnover: Material value: Rs. 9,70,98,581.44 (taxable turnover) Labour content: Rs. 10,79,95,252.33 (tax-free) Total: Rs. 20,50,94,106.77 Further case of the respondents is that after adding the aforesaid two total figures, the bill value (gross turnover) comes to Rs. 39,20,33,093 and material value (taxable turnover) comes to Rs. 13,24,02,729, whereas the petitioner in its returns had shown gross turnover of Rs. 34,99,43,827 and taxable turnover of Rs. 4,79,45,547,57, thus, suppressing the gross turnover of Rs. 4,20,89,266 and taxable turnover of Rs. 8,44,57,181.43 in its revised returns and on the basis of these revised returns, its assessment was originally completed. On this ground, the assessment proceeding was reopened and a proceeding under section 19 of the Act was initiated in accordance with law and Rules. The petitioner was afforded sufficient opportunities of hearing and to produce books of account, but the petitioner having failed to do so, the respondents determined the turnover strictly in accordance with the Rules and the Act and taxable turnover was assessed on the basis of sou....