TaxTMI 
TaxTMI 
2009 (6) TMI 953
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....ader appearing for the respondents. The charging section under the Kerala Value Added Tax Act, hereinafter called "the Act" for works contract is section 6(1)(e) and (f), respectively. While clause (e) provides that if the transfer of goods involved in the execution of works contract is in the form of goods as such then the rate of tax applicable will be the rate applicable to such goods as provided under clause (a) or (d). On the other hand, if the transfer of goods involved in the execution of works contract is not in the form of goods but in some other form the rate of tax applicable will be at 12.5 per cent. Referring to the above provisions, the Commissioner in the impugned clarification issued under section 94 of the Act held that it....
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....e will be subject to the schedule rate of tax. In other words, works contractors registered under the CST Act are also entitled to the benefit of compounding except on the value of the goods brought from outside the State on which they pay tax at the rate applicable to such goods in the Schedule. The question now to be considered is whether the appellant's claim for payment of tax at the compounded rate on the entire contract amount under section 8(a)(i) or (ii) is permissible or not. We find that even after the substitution of clause (ii) by a new provision by the Finance Bill, 2009, the second proviso to section 8(a)(ii) still bars a works contractor from claiming compounding if goods in the course of execution of works contract are ....
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.... as sale of goods. As already stated works order for installation of kitchen cabinet varies from customer to customer and it is for the assessing officer to examine whether the contract is one for supply of standard items on which tax is payable at the scheduled rate or whether work is a divisible work, one for supply of specified items at agreed rate and the balance for execution of work like site fabrication, and installation of kitchen top, partitions, etc. Clause (ii) introduced in the Finance Bill, 2009 contemplates divisible nature of contract where certain items of goods are brought from outside either by way of inter-State purchase or stock transfer and used in the work which will attract tax at the scheduled rate on the purchase va....