2009 (11) TMI 864

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....nd accordingly, exempted the same on a turnover of Rs. 15,90,40,822. However, the entire turnover claim in respect of works executed by the sub-contractor was held to attract section 6B of the Act and accordingly, levied tax at three per cent. The assessee filed an appeal against the said order before the Joint Commissioner of Appeals in KST Appeal No. 310/03-04 which came to be dismissed by order dated April 28, 2004 which related to disposal of the appeals filed by the assessee against the assessment order and also the rectification order. This order came to be assailed by the appellant herein before the Appellate Tribunal in S.T.A. No. 1930 of 2004. The Tribunal partly allowed the appeal and it is this order which is now assailed i....

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.... KST Rules, 1957 on the payments made to sub-contractors merely because the petitioner could not produce proof that the sub-contractors had declared the turnovers corre sponding to such payments in the monthly statements/annual returns filed by them, when the petitioner had furnished proof that the subcontractors were dealers registered under the KST Act, 1957 which was substantial compliance with the rule to entitle to the petitioner to the deduction claimed? (iii) Whether the Karnataka Appellate Tribunal was right in having held that the petitioner was liable to pay purchase tax under section 6 of the KST Act, 1957 on the purchases of sand and jelly in spite of the fact that the dealers who sold the sand and jelly to the petitioner had....

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....on 6B on examination of records. This exercise is required to be done by the Assessing Officer after calling upon the sub-contractor to produce the details as to their turnover and then give a finding on this issue. We find from the records that the authorities have erred in not carrying out this exercise, but on the other hand, have brought the amount paid by the contractor to the subcontractor within the total turnover of the contractor himself which is not permissible. Particularly, the authorities having accepted the admissibility of exemption from payment of tax under section 5B by the contractor to the extent of the amount of Rs. 15.90 crores. In view of above, we are of the opinion that the Tribunal was in error in holding that th....