TaxTMI 
TaxTMI 
2014 (7) TMI 278
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.... & Co. v. State of Rajasthan [1993] 88 STC 204 (SC); [1993] 1 SCC 364. To appreciate the rival contentions of the parties, first it would be appropriate to set out the various constitutional and statutory provisions which are relevant for decision of this case. Article 269 of the Constitution of India deals with taxes levied and collected by the Union but assigned to the States and reads as follows: "269. Taxes levied and collected by the Union but assigned to the States.(1) Taxes on the sales or purchase of goods and taxes on the consignment of goods shall be levied and collected by the Government of India but shall be assigned and shall be deemed to have been assigned to the States on or after the 1st day of April, 1996 in the matter provided in clause (2). Explanation.-For the purposes of this clause,- (a) the expression 'taxes on the sale or purchase of goods' shall mean taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce; (b) the expression 'taxes on the consignment of goods' shall mean taxes on the consignment of goods (whether the consignment is to t....
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....chedule (the Union List) are as follows: "92. Taxes on the sale or purchase of newspapers and on advertisements published therein. 92A. Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of interState trade or commerce. 92B. Taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-State trade or commerce." These entries empower the Union Government to levy tax on the sale or purchase of newspapers, advertisements, goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce. Entry 54 of List II of the Seventh Schedule (the State List) reads as follows: "54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I." This entry empowers the State Government to levy tax on the sale or purchase of goods other than newspapers, but is subject to the provisions of entry 92A of List I. Article 286 imposes restrictions on the powers of the State in relation of imposition of tax on the s....
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....ommerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture, whether or not, such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure or concern; and (ii) any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern; 2. (g) 'sale', with its grammatical variations and cognate expressions, means any transfer of property in goods by one person to another for cash or deferred payment or for any other valuable consideration and includes,- (i) a transfer otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (ii) a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (iii) a delivery of goods on hire-purchase or any system of payment by instalments; (iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other....
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.... (b) is effected by a transfer of documents of title to the goods during their movement from one State to another. Explanation 1.-Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee. Explanation 2.-Where the movement of goods commences and terminates in the same State, it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State. 4. When is a sale or purchase of goods said to take place outside a State.(1) Subject to the provisions contained in section 3, when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States. (2) A sale or purchase of goods shall be deemed to take place inside a State, if the goods are within the State- (a) in the case of specific or ascertained goods, at the time the c....
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....n a tax is levied under law in respect of sale inside the State in respect of such declared goods and then the goods are sold in the course of interState trade and commerce and tax is paid under the CST Act, then the State shall be liable to reimburse the tax to the person making such sale in the course of inter-State trade or commerce. The relevant provisions of the Tripura Value Added Tax (TVAT) Act, 2004: Section 2(4), 2(25), 2(26), 2(35), 2(36) and 2(38) read as follows: "2. (4) "Business' includes: (a) any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture whether or not such trade, commerce or manufacture, adventure or concern is carried on with a motive to making gain or profit and whether or not any profit accrues from such trade, commerce, manufacture, adventure or concern; and (b) any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern. 2. (25) 'Sale' with all its grammatical variations and cognate expressions means every transfer of the property in goods (other than by way of a mortgage, hypothecation, charge or pledge) ....
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....udes,- (a) anything done by the seller with or in respect of the goods at the time of or before delivery thereof, and (b) containers or other materials for the packing such goods. 2. (35) 'Turnover' means the aggregate amount for which goods are either purchased or bought or sold or supplied or distributed by a dealer, either directly or through another whether on own account or on account of other, whether for cash or for deferred payment, or other valuable consideration. Explanation.-(1) The turnover in respect of delivery of goods on hire purchase or on any system of payment by instalments shall be the market price of the goods so delivered. (2) The turnover in respect of the transfer of the right to use any goods shall be the aggregate amount received or receivable by the dealer as consideration for such transfer. (3) Subject to such conditions and restrictions, if any, as may be prescribed in this behalf,- (a) the amount for which goods are sold shall include any sum charged for anything done by the dealer in respect of the goods sold at the time of, or before, the delivery thereof; (b) any cash discount on the price allowed in respect of any sa....
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....ll include the value of such goods purchased, manufactured, processed, or procured otherwise by the dealer, and the cost of freight or delivery as may be incurred by such dealer for carrying such goods to the place where these are used in execution of such works contract, but shall not include such portion of the aforesaid amounts as may be prescribed. (2) Tax on transfer of the right to use any goods-Notwithstanding anything contained elsewhere in this Act, any transfer of the right to use any goods for any purpose (whether or not for a specified period) shall be taxable at the rate as specified in the Schedule. (3) Deduction of tax at the time of payment.-Every person responsible for paying any sum to any person on account of works contract and right to use any goods for any purpose, shall at the time of credit of such sum to account of the person or at the time of payment thereof in cash or by issue of a cheque or draft or any other mode, deduct such amount towards sales tax (not being more than the total tax payable by the dealer) as may be prescribed." Section 5 deals with levy of tax on sale and reads as follows: "5. Levy of tax on sale.-(1) The tax payable by a d....
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.... taxable sales other than such sales as may be prescribed subject to the following conditions: (a) Input tax credit on capital goods except those mentioned in negative list in Schedule IV shall be adjusted against tax payable by a dealer over a period not exceeding three years: Provided that in case of closure of business before the period specified above, no further input tax credit shall be allowed and input tax credit carried forward, if any, shall be forfeited. (b) In respect of exporting dealers, input tax credit may be spread over a period less than 3 years as may be prescribed. (c) Input tax credit is to be given only after commencement of sale of taxable goods 'and purchase of taxable goods as mentioned in Schedule VIII'. (d) In respect of inputs used in taxable goods sent on stock/ consignment transfer, tax paid in excess of four per cent or the prevailing rate of CST on such inputs is to be credited. (e) Tax paid in excess of four per cent on petroleum products used as fuel (other than petrol, aviation turbine fuel and diesel) and other fuels when used as fuel in production of taxable goods or captive power is to be entitled for input credit. How....
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....3] 1 SCC 364. The apex court held that the value of the goods involved in the execution of the works contract has to be determined by taking into account the value of the entire works contract and deducting therefrom the charges of labour and services and other such expenses. Further, the apex court held that apart from the aforesaid deductions for labour and services, the State could not impose tax on the goods regarding which the Parliament alone was competent to impose the tax. The relevant portion of the judgment of the apex court reads as follows (page 235 in 88 STC): "47. . . . The value of the goods involved in the execution of a works contract will, therefore, have to be determined by taking into account the value of the entire works contract and deducting therefrom the charges towards labour and services which would cover: (a) labour charges for execution of the works; (b) amount paid to a sub-contractor for labour and services; (c) charges for planning, designing and architect's fees; (d) charges for obtaining on hire or otherwise machinery and tools used for the execution of the works contract; (e) cost of consumables such as water, electricity, fue....
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.... to define the expression 'sale' in a way as to bring within the ambit of the taxing power a sale in the course of inter-State trade or commerce, or a sale outside the State or a sale in the course of import and export. (4) The tax on transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract falling within the ambit of article 366(29A)(b) is leviable on the goods involved in the execution of a works contract and the value of the goods which are involved in the execution of works contract would constitute the measure for imposition of the tax. (5) In order to determine the value of the goods which are involved in the execution of a works contract for the purpose of levying the tax referred to in article 366(29A)(b), it is permissible to take the value of the works contract as the basis and the value of the goods involved in the execution of the works contract can be arrived at by deducting expenses incurred by the contractor for providing labour and other services from the value of the works contract. (6) The charges for labour and services which are required to be deducted from the value of the works contra....
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....by the apex court from time to time. Since the constitutional validity of the various provisions of the TVAT Act has been challenged mainly on the interpretation given to various sections of the TVAT Act and according to the State, the provisions of the Act are not only in consonance with the constitutional mandate and statutory restrictions laid down by the CST Act, it may at this stage be necessary to refer to certain decisions as to how the taxing statutes should be interpreted. Interpretation of statutes It is well-settled law that whenever the constitutional validity of an Act is challenged, the court should start with a presumption that the Act is constitutional. In this behalf, reference may be made to the following decisions of the Supreme Court which deal with this aspect of the matter and also with the issue as to how a taxing or economic statute should be interpreted. In R.K. Garg v. Union of India [1982] 133 ITR 239 (SC); [1981] 4 SCC 675, the apex court held as follows (pages 254-256 in 133 ITR): "7. Now while considering the Constitutional validity of a statute said to be violative of article 14, it is necessary to bear in mind certain well establish....
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....ber of times the judges have been overruled by events-selflimitation can be seen to be the path to judicial wisdom and institutional prestige and stability.' The court must always remember that 'legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry' that exact wisdom and nice adoption of remedy are not always possible and that 'judgment is largely a prophecy based on meagre and uninterpreted experience'. Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and, therefore, it cannot provide for all possible situations or anticipate all possible abuses. There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. The courts cannot, as pointed out by the United States Supreme Court in Secretary of Agriculture v. Central Reig Refining Company 94 Lawyers Ed....
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....can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place. It is by looking at the definition as a whole in the setting of the entire Act and by reference to what preceded the enactment and the reasons for it that the court construed the expression 'prize chit' in Srinivasa's case [1981] 51 Comp Cas 464 (SC); [1980] 4 SCC 507, and we find no reason to depart from the court's construction." These observations have been approved by the apex court in Iridium India Telecom Ltd. v. Motorola INC. [2005] 2 SCC 145. Reference may also be made to the judgment of the apex court in State of Bihar v. Bihar Distillery Ltd. [1997] 2 SCC 453, wherein the apex court observed as follows: "17. . . . The approach of the court, while examining the challenge to the constitutionality of an enactment, is to start with the presumption of constitutionality. The court should try to sustain its validity to the extent possible. It should strike down the enactment only when it is not possible to sustain it. The court should not approach the enactment with a view to pick holes or to search for defects of drafting, much les....
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....bsolutely sure that there can be no manner of doubt that it violates a provision of the Constitution. If two views are possible, one making the statute constitutional and the other making it unconstitutional, the former view must always be preferred. Also, the court must make every effort to uphold the constitutional validity of a statute, even if that requires giving a strained construction or narrowing down its scope vide Rt. Rev. Magr. Mark Netto v. Govt. of Kerala AIR 1979 SC 83 (para 6). Also, it is none of the concern of the court whether the legislation in its opinion is wise or unwise. ... 51. In our opinion the Legislature must be given freedom to do experimentations in exercising its powers, provided of course it does not clearly and flagrantly violate its constitutional limits. ... 68. The court must, therefore, make every effort to uphold the constitutional validity of a statute, even if that requires giving the statutory provision a strained meaning, or narrower or wider meaning, than what appears on the face of it. It is only when all efforts to do so fail should the court declare a statute to be unconstitutional." The law is, therefore, well-settled th....
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....of special importance in terms of sections 14 and 15 of the CST Act have not been exempted from tax and, therefore, the legislation is constitutionally invalid. Further, it is submitted that section 4 does not provide what deductions and in what manner are permissible, and, therefore, the "turnover" as defined includes goods which are otherwise not taxable by the State Legislature. It is further contended that there is no method at the stage of deducting taxes at source for determining the taxable turnover. According to the petitioners, the scheme of the TVAT Act is such that section 4 starts with a non obstante clause. It is this section which is applicable in the case of works contract and since it starts with a non obstante clause, the State cannot rely upon the other provisions of the Act such as section 41 and read them in section 4. We shall deal with the specific challenge to each provision separately, but firstly we shall deal with the overall scheme of the Act. The contention of the petitioners is that section 4 alone deals with works contract and a reading of section 4 shows that it does not in any manner exclude those sales which take place outside Tripura or in the c....
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....utional provision and the law laid down by the apex court had enacted section 41 in this manner. Therefore, according to him, all such transactions relating to inter-State trade or commerce or import or export of goods or transaction taking place outside the State of Tripura are not covered by the definitions of "sale", "sale price", "turnover", etc., etc. He further submits that "dealer" has been defined under section 2(8) of the TVAT Act and includes a person engaged in business of transfer of property in goods involved in the execution of works contract. Therefore, a person engaged in a works contract is a "dealer". He, therefore, submits that section 3 is applicable in respect of such dealer also. According to him, section 4 is specifically applicable only to works contract and, therefore, the "non obstante" clause has been used in the beginning. His submission is that section 5 is applicable to all dealers including those dealers who are engaged in works contract. It is submitted that section 5(2)(a) and (b) relate to deductions in respect of sale of goods exempted from tax in Schedule III and sale of goods covered by sections 3, 4 and 5 of the CST Act. He, therefore, submi....
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.... It is thus obvious to us that section 41 has overriding effect. No doubt, section 4 also starts with a non obstante clause. Section 4 only deals with taxes on deemed sales and it has been urged on behalf of the petitioners that since this is a specific section dealing with deemed sales, the non obstante clause in section 4(1) will prevail over the non obstante clause in section 41. We are unable to accept such argument. As already held by us above, the effort of the court should not be at nitpicking, but there should be a conscious effort to uphold the validity of the Act. In our considered view, the non obstante clause in section 4 is relatable to other sections of the Act and is used in contradistinction to normal sales. The purpose of section 4(1) is to make execution of works contract, deemed sales in spite of other provisions in the Act. On the other hand, section 41 clearly lays down that no value added tax can be imposed under the TVAT Act in respect of certain sales or purchase which are beyond the legislative competence of the State. This provision will apply to all sales whether normal or deemed. When the two provisions are read together and harmonized, it is more tha....
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....over of transfer of property in goods relating to works contract. One of the main contentions raised on behalf of the petitioners is that section 4 is a complete code in itself dealing with works contracts. It is contended that since it starts with a non obstante clause, works contract are covered only under section 4 and not under any other sections. It is submitted that since section 4 is a complete code, the provisions of section 5(1) and 5(2)(a) and (b) cannot apply to works contract. We are unable to accept this contention. Section 4(1) only provides that notwithstanding anything contained elsewhere in the Act, transfer of property in goods involved in the execution of works contract shall be deemed to be sale of goods and liable to tax. At this stage, we are not concerned with the proviso because that is only for the purpose of accounting. The Explanation to section 4(1) defines property in goods and provides that it shall be the aggregate of the goods received or receivable by the dealer for valuable consideration. This does not, in our opinion, define "turnover", but only defines what is property in goods. The transfer of any right to use any goods has also been made ....
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....transaction, then the dealer shall be entitled to get the amount of tax paid under the State law reimbursed. It has been urged on behalf of the petitioners that in Gannon Dunkerley & Co. v. State of Rajasthan [1993] 88 STC 204 (SC); [1993] 1 SCC 364, it has been clearly laid down that the State is not entitled to levy tax on the exempted goods including those mentioned in sections 14 and 15 of the CST Act. Reference in this behalf has been made to para 48 of the judgment in Gannon Dunkerley's case [1993] 88 STC 204 (SC); [1993] 1 SCC 364 which reads as follows (page 235 in 88 STC): "48. We may, however, make it clear that apart from the deductions referred to above, it will be necessary to exclude from the value of the works contract the value of the goods which are not taxable in view of sections 3, 4 and 5 of the Central Sales Tax Act and goods covered by sections 14 and 15 of the Central Sales Tax Act as well as goods which are exempt from tax under the sales tax legislation of the State. The value of goods involved in the execution of a works contract will have to be determined after making these deductions and exclusions from the value of the works contract." It i....
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....erState trade or commerce under section 14 of the Central Sales Tax Act except in accordance with the restrictions and conditions contained in section 15 of the Central Sales Tax Act." In para 51 of the Gannon Dunkerley's case [1993] 88 STC 204 (SC); [1993] 1 SCC 364 while giving its conclusions, the apex court in conclusion no. (2) only gave the following directions (page 237 in 88 STC): "51. (1) . . . (2) The provisions of sections 3, 4 and 5 and sections 14 and 15 of the Central Sales Tax Act, 1956, are applicable to a transfer of property in goods involved in the execution of a works contract covered by article 366(29A)(b)." It is thus obvious that the apex court held that the State had the power to levy sales tax on goods declared to be of special importance in interState trade or commerce under section 14 of the CST Act if the tax levied does not exceed the limit laid down in section 15 of the CST Act. Para 48 of the judgment has to be read in the context of para 41 and in the context of the observation made by the Constitution Bench in Builders Association's case [1989] 73 STC 370 (SC); [1989] 2 SCC 645. It is well-settled law that judgments are not to be....
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....services and other charges and, therefore, the same is violative of article 366(29A) of the Constitution of India and liable to be struck down. As far as sale price is concerned, the definition of "sale" itself provides that in respect of transfer of property in goods involved in execution of a works contract, the value of the sale price shall be calculated by deducting from the amount of valuable consideration paid or payable, the amount representing labour and other charges incurred and profit occurred not in connection with transfer of property in goods for execution of such works contract. Thus, the definition itself excludes labour and other charges. Section 5(2)(c) which is specifically applicable to works contract specially provides that charges towards labour, services and other like charges shall be deducted from the gross turnover while calculating the taxable turnover. Tax is to be imposed on the taxable turnover. No tax is leviable on the sale price, but only on the taxable turnover and the same is in consonance with the judgment in Gannon Dunkerley's case [1993] 88 STC 204 (SC); [1993] 1 SCC 364. Here it would be pertinent to mention that in paragraphs 45 and 47....
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....h can be statutorily passed on does not form part of the sale consideration. Reference has been made by the petitioners to the judgment of the apex court in Anand Swarup Mahesh Kumar v. Commissioner of Sales Tax [1980] 46 STC 477 (SC); [1980] 4 SCC 451. We are not at all impressed with this argument because the judgment referred to is in relation to market fees and not in relation to sales tax. We are also of the view that these are the matters which do not go into the constitutionality of the legislation and if there is some item which is not amenable to tax, it is for the dealer to satisfy the assessing authority that no tax is payable on the sale. While deciding the constitutionality of the provisions, we cannot don the role of the assessing officer and whether a certain article is to be included or not to be included in the sale price, taxable turnover is to be decided by the assessing officer. It has been urged by Sri Nandrajog that section 2(26)(a) of the TVAT Act which defines "sale price" in respect of transfer of property in goods in works contract only provides for deduction of the amount representing labour and other charges incurred and profit occurred not in connect....
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....l validity, we have to only see whether the provisions are in consonance with the Constitution. The judgment in Gannon Dunkerley's case [1993] 88 STC 204 (SC); [1993] 1 SCC 364 laid down the guidelines which should be followed. The Act is in consonance with the guidelines and it is too much to expect that each and every exclusion has to be mentioned in the Act. We may make it clear that the assessing officer while deciding what are the expenses falling under the head of labour, services and other charges which have to be excluded will have to follow the law laid down by the apex court in Gannon Dunkerley's case [1993] 88 STC 204 (SC); [1993] 1 SCC 364. The judgment of the Orissa High Court in Larsen & Toubro Limited v. State of Orissa [2012] 48 VST 435 (Orissa) is distinguishable inasmuch as the Orissa Act provided that amount charged towards labour, services and other like charges, if not ascertainable from the terms and conditions of the contract or the books of account maintained, would be calculated at the prescribed rate and while determining the taxable turnover, it was provided that the expenses would be determined at the rate specified in the appendix. The Orissa....
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....ed cannot exceed the taxable turnover. He submits that it is for the dealer to submit the documents to the person who is making payment as to which deductions are to be made. The person making the payment should accept the deductions as claimed by the dealer at their face value and thereafter make the deductions. Whenever tax is deducted at source, some sort of calculation has to be done by the person liable to deduct the tax. In case, the dealer places material before the person making the payment claiming deductions, then the person making the payment should give the dealer benefit of such deductions and would not be liable to any penalty, criminal or otherwise, if later the deduction claimed by the dealer is found to be false. The dealer would, however, in such a case be liable to both civil and criminal liability under law. Therefore, it cannot be said that there is no procedure or method prescribed and the contention is rejected. It is also contended on behalf of the petitioners that no guideline has been laid down as to how this tax is to be deducted and, therefore, the provision is illegal. On the other hand, Dr. Saraf, learned counsel for the State, contends that t....
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....ver and above the total tax payable. Therefore, the upper limit of deduction was clearly indicated. Whether freight is covered in the cost of goods: It has been urged on behalf of the petitioners that unlike the Central Act, the TVAT Act does not exclude the cost of freight and delivery and, therefore, it is against the judgment of the apex court in Gannon Dunkerley's case [1993] 88 STC 204 (SC); [1993] 1 SCC 364. By including the cost of freight and delivery, the State is imposing taxes on that value which it is not entitled to do so. In this behalf, reference may be made to the following portion of the judgment in Gannon Dunkerley's case [1993] 88 STC 204 (SC); [1993] 1 SCC 364 (pages 232 and 233 in 88 STC): "45. . . . We are, however, unable to agree with the contention urged on behalf of the contractors that the value of such goods for levying the tax can be assessed only on the basis of the cost of acquisition of the goods by the contractor. Since the taxable event is the transfer of property in goods involved in the execution of a works contract and the said transfer of property in such goods takes place when the goods are incorporated in the works, the value....
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....ed or brought and includes all sales including those which are not taxable by the State. As held by us above, section 41 will have to be read into every definition and, therefore, this contention is without merit. Even otherwise, the tax is being levied on the taxable turnover and in case of works contract, the "taxable turnover" is defined in section 5(2) and section 5(2)(c) specifically excludes the charges towards labour, services and other like charges. The definition of "turnover" in section 2(35) does not provide for the manner of determination of the transfer of property in goods involved in the execution of a works contract. However, section 4(1) lays down that transfer of property in goods involved in a works contract shall be a deemed sale and liable to tax at the rate specified in the Schedule. The proviso to section 4 lays down the manner of determining the turnover in respect of transfer of property in goods involved in execution of a works contract. It is contended on behalf of the State that since section 2(35) does not specifically provide for the manner of determination of turnover in respect of transfer of property in goods involved in a works contract, the provis....
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....d when the Act lays down that the charges can be deducted in the manner and to the extent prescribed, the Rules should have made specific provision for this. Reliance has also been placed on the judgment of the apex court in State of Jharkhand v. Voltas Ltd., East Singhbhum [2007] 7 VST 317 (SC); [2007] 9 RC 358; [2007] 9 SCC 266, wherein the judgment of the Patna High Court with regard to the interpretation to rule 13A was upheld. As far as the decision of the Patna High Court in Larsen & Toubro's case [2004] 134 STC 354 (Patna), is concerned, there is a clear distinction between the TVAT Act and the Bihar Finance Act. Section 21 of the Bihar Finance Act provided for deduction of labour and other charges in the manner and to the extent to be prescribed. Rule 13A was framed to give effect to section 21 and this also did not provide the manner and extent, and therefore, the Patna High Court and later, the apex court held the provision to be invalid. In Devi Dass Gopal Krishnan v. State of Punjab [1967] 20 STC 430 (SC); AIR 1967 SC 1895, the apex court held that the legislative power cannot be effaced in favour of another agency either in whole or in part beyond the permiss....
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....he petitioners that whereas section 7 of the TVAT Act lays down that the value added tax payable by a dealer shall be levied on its taxable turnover at such rate which is specified in Schedules II(a), II(b), II(c), VI, VII and VIII, no such provision is made in respect of transfer of property in connection with a works contract. At this juncture, it would be pertinent to mention that Schedule II(a) is the list of goods taxable at five per cent, Schedule II(b) is the list of goods taxable at 13.5 per cent, Schedule II(c) is the list of goods taxable at two per cent, Schedule II(d) is the list of goods kept outside VAT, Schedule III deals with exempted goods, Schedule IV deals with negative list of items of capital goods for input-tax credit, Schedule V deals with tax invoices, credit notes and debit notes, Schedule VI is the list of goods taxable at five per cent, Schedule VII is the list of IT products taxable at five per cent and Schedule VIII is the list of other goods taxable at five per cent. All the Schedules which levy tax have been included in section 7. Section 7 also applies to all dealers including dealers engaged in works contract. Therefore, the rate of tax has to be on....
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....rescribed' and not 'in the manner prescribed' or '. . . in the prescribed manner'. The expression used leaves some lever or play in the working of the provision. We would like to lay emphasis on the use of the word 'as' which is significant. The manner is dependent upon 'as' may be prescribed, if it is not prescribed, there is no manner available such as to be followed. The meaning of the word 'as' has been indicated in 'Concise Oxford English Dictionary, 10th Edition, 2002' amongst others to mean as follows: 'Used in comparisons to refer to the extent or degree of something; used to indicate by comparison the way that something happens; during the time of being' In Words and Phrases, Permanent Edition, 1969, Fourth Edition, in general amongst others, at page 514, its meaning has been indicated as follows: '"As" means "to the extent", "in the manner" and "when"; and may be employed to indicate a combination of time with extent or manner. Moore v. Dc Mun App 40 A2d 68, 70.' It is further indicated to mean importing a contingency and at page 520, it is indicated as follows: 'When, importing ....
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....ely by absence of rules, the State would not be divested of its powers to notify in the Official Gazette any area declaring it to be an air pollution control area. In case, however, the rules have been framed prescribing the manner, undoubtedly, the declaration must be in accordance with such rules. ... 20. We feel that so far as the point relating to the meaning of the word 'may7 used under section 19 of the Act is concerned, it is not relevant for resolving the controversy we are concerned with. Once the manner is prescribed under the rules undoubtedly, the declaration of the area has to be only in accordance with the manner prescribed but absence of rules will not render the Act inoperative. The power vested under section 19 of the Act, would still be exercisable as provided under the provision, i.e., by declaring an area as air pollution control area by publication of notification in the Official Gazette. Non-framing of rules does not curtail the power of the State Government to declare any area as air pollution control area by means of a notification published in the Official Gazette. The part of the provision 'in such manner as may be prescribed' would sprin....
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....law which is in force in the relevant assessment year. It is well-settled that law to be applied for assessment is the one which is extant in the assessment year unless there is an amendment which is made retrospective either expressly or by necessary implication. . ." It is contended that the rule overrides the Act. As far as the contention that rule 7A is invalid is concerned, the same has to be rejected because in Gannon Dunkerley's case [1993] 88 STC 204 (SC); [1993] 1 SCC 364, the apex court in para 49 held as follows (pages 235 and 236 in 88 STC): "49. . . . We find merit in this submission. In cases where the contractor does not maintain proper accounts or the accounts maintained by him are not found worthy of credence it would, in our view, be permissible for the State Legislature to prescribe a formula for determining the charges for labour and services by fixing a particular percentage of the value of the works contract and to allow deduction of the amount thus determined from the value of the works contract for the purpose of determining the value of the goods involved in the execution of the works contract. . ." Therefore, if a contractor does not mainta....
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....wever, in case of small contractors who are not statutorily required to maintain accounts, the assessing officer may have to be more liberal. Therefore, we are clearly of the view that in all cases prior to August 1, 2012, the assessment cannot be made on the basis of rule 7A, but shall have to be made on the basis of best judgment assessment by the assessing officer keeping in view the well established principles of making best assessment. Whether all permissible deductions must be spelt out in the Act and the Rules: Mr. Somik Deb, learned counsel for some of the petitioners, has further contended that the Act and the Rules must incorporate and clearly spell out all the deductions which are the contractors entitled to in accordance with the judgment of the apex court in Gannon Dunkerley's case [1993] 88 STC 204 (SC); [1993] 1 SCC 364. We are not at all impressed with this argument. We fail to understand how the constitutional validity of a legislation can be challenged on this basis. In Gannon Dunkerley's case [1993] 88 STC 204 (SC); [1993] 1 SCC 364, the apex court held that for the imposition of tax on the transfer of property in goods involved in a works contract ....
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.... C.M. Application on March 22, 2013 inasmuch as he suppressed the fact that he had earlier filed other writ petitions in respect of the same or similar case. In the present writ petition, the petitioner has challenged memorandum dated June 25/30, 2005 authorizing collection of VAT at four per cent from the gross sale of a dealer engaged in works contract. The petitioner has also challenged the Notification dated September 21, 2011 whereby the rate was enhanced to six per cent. He has also challenged the notification dated November 16, 2011 levying enhanced rate of deduction at six per cent on pending contracts. The petitioner has lastly challenged the notification dated August 1, 2012 levying enhanced rate of VAT at eight per cent. The grounds of challenge have already been set out above. The petitioner has also challenged the orders of assessment and notices of demand and obtained a stay order on March 22, 2013. According to the State, the writ petitioner suppressed the fact that he had filed W.P. (C). No. 452 of 2011 wherein he had pleaded that since he is a dealer registered under the TVAT Act, he was not a service provider. In that writ petition, it was also pleaded that since ....
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....this matter in details and after discussing the entire law on the subject, the apex court held as follows: "36. The party not approaching the court with clean hands would be liable to be non-suited and such party, who has also succeeded in polluting the stream of justice by making patently false statements, cannot claim relief, especially under article 136 of the Constitution. While approaching the court, a litigant must state correct facts and come with clean hands. Where such statement of facts is based on some information, the source of such information must also be disclosed. Totally misconceived petition amounts to abuse of the process of the court and such a litigant is not required to be dealt with lightly, as a petition containing misleading and inaccurate statement, if filed, to achieve an ulterior purpose amounts to abuse of process of the court. A litigant is bound to make 'full and true disclosure of facts'. (Refer: Tilokchand Motichand v. H.B. Munshi [1969] 1 SCC 110, A. Shanmugam v. Ariya Kshatriya Rajakula Vamsathu Madalaya Nandhavana Paripalanai Sangam [2012] 6 SCC 430, Chandra Shashi v. Anil Kumar Verma [1995] 1 SCC 421, Abhyudya Sanstha v. Union of Indi....