TaxTMI 
TaxTMI 
2016 (4) TMI 610
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....ucting the amount already paid. Petitioner has also challenged constitutional validity of the first proviso to Rule 3(2) (i-1) of the Karnataka Value Added Tax Rules, 2005 (for short, 'the KVAT Rules'). A declaration is sought to the effect that consideration paid by the main contractor to the sub-contractors formed part of the subcontractors turnover liable to tax in the hands of subWP. contractors and does not form part of the contractors turnover and therefore, levy of tax contrary to the above principle was beyond the powers conferred under Section 3(1) of the KVAT Act. 2. Petitioner is a company incorporated under the provisions of the Companies Act, 1956. It is a dealer registered under the KVAT Act. Petitioner is engaged in execution of infrastructure projects involving work contracts which are got executed through sub-contractors. 3. The Deputy Commissioner of Commercial Taxes (Audit & Recovery), Ballari - respondent No.4 herein carried out verification of books of accounts and issued proposition notice to pass reassessment order with regard to various issues including disallowance of deduction regarding payments made to two sub-contractors by name M/s.Venkata Sai....
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....oviso to Rule 3(2)(i-1) of KVAT Rules. He has taken me through the decision of the Apex Court and the relevant provisions of KVAT Act and KVAT Rules. He has placed reliance on the judgment of a Division Bench of Andhra Pradesh High Court in the case of GANNON DUNKERLEY & CO. Vs. GOVERNMENT OF ANDHRA PRADESH - 1997 VOL.105 SALES TAX CASES 227 urging that a similar rule framed by the State of Andhra which was pari materia with Rule 3(2)(i-1) of KVAT Rules has been declared as unconstitutional. 6. Learned Additional Government Advocate has contended that a statutory appeal has been provided to the Tribunal against the order passed by the Joint Commissioner of Commercial Taxes and therefore, writ petition is not maintainable. He has urged that petitioner ought to have produced relevant documents showing that sub-contractors had included the amount received by them from the contractor while submitting their returns. He has urged that challenge to Rule 3(2)(i-1) of KVAT Rules is misconceived inasmuch as the said rule has been incorporated to achieve the object of ascertaining what has been exempted from tax at the hands of a contractor. He has also urged that writ of certiorari cannot b....
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....ion becomes clear, namely, that even if there is no privity of contract between the contractee and the sub-contractor, that would not do away the principle of transfer of property by the sub-contractor by employing the same on the property belonging to the contractee. This reasoning is based on the principle of accretion of property in goods. Thus, in our view, in such a case the work executed by a sub-contractor, results in a single transaction and not multiple transactions. This reasoning is also borne out by section 4(7) which refers to value of goods at the time of incorporation in the works executed. In our view, if the argument of the Department is to be accepted, it would result in plurality of deemed sales which would be contrary to article 366(29A)(b) of the Constitution as held by the impugned judgment of the High Court.............................................................. Therefore, in our view, the principle to be adopted in all such cases is that the property in the goods would pass to the owner/contractee on its incorporation in the works executed. This principle finds place in sub-section (7)(a) of Section 4 of the said 2005 Act." 8. A perusal of the judgmen....
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....rnover for the relevant tax period from April, 2011 to March, 2012, despite issue of notice by the revisional authority in respect of sub- contractor M/s.Venkat Sai Constructions Private Limited, the returns of turnover filed by it were obtained from efs system and on scrutiny, it revealed that sub-contractor M/s.Venkat Sai Constructions Private Limited, Mysuru, had not declared turnover in any of the returns filed from April, 2011 to March, 2012, thus, there was clear non-compliance of the rule by the sub-contractor and therefore, the Assessing Authority was incorrect in allowing deduction of turnover of Rs. 32,89,60,004/- towards sub-contractor's turnover of M/s.Venkata Sai Construction Private Limited, Mysuru. 11. It has to be noticed here that in the rejoinder filed, petitioner has stated that the sub-contractor M/s.Venkata Sai Constructions Private Limited had indeed filed revised returns before the Assistant Commissioner of Commercial Taxes (Audit)-2, Mysuru on 12.12.2012 disclosing the receipts from the petitioner and the tax payable enclosing copy of the same as Annexure-G to the rejoinder. The declaration furnished by the said sub-contractor to the petitioner dated 21....