TaxTMI 
TaxTMI 
2016 (6) TMI 750
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....le 10(2)(b) of the KVAT Rules. Such a view had been taken on the ground that the assessee had not opted to pay tax at compounded rate. According to the petitioner, the building is constructed by the assessee and the transfer takes place only when the building is registered and transferred to the member. Until such time, parties are bound only by an agreement for sale. That apart, the petitioner is not executing any work as the entire construction is awarded to contractors and therefore, the petitioner does not come under the purview of the Act. It is further contended that the petitioner happened to take registration under the Act in March, 2008 at the instance of the Officers of the Department. 3. Further, it is contended that, from 2008 onwards, petitioner used to pay tax at compounded rate. When notice was received stating that the petitioner has not opted for payment of tax by filing compounding application, petitioner had filed a consolidated reply on 11/1/2016 indicating that some more time may be granted, if it is found that petitioner has not opted for the compounding facility. 4. Petitioner raises three specific contentions. One is that petitioner has opted to pay ta....
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....nded that petitioner comes within the said definition. In para 5 of the counter affidavit, it is stated as under: "5. It is submitted that the self assessment annual return in Form 10 B filed by the petitioner on 16.6.2015 is as shown below: Contract amount received during the Quarter Exemption under Rule 10 Taxable Turn over 151286889 NIL 151286889 The above self assessment return itself admits that the petitioner executed an agreement with the members and constructing flats for them after collecting advance." On these facts, it is contended that the authority was justified in making the assessment in terms of Ext.P1 order. 7. Having heard the learned counsel appearing for the petitioner and the learned Government Pleader appearing on behalf of the respondents, the first question to be considered is whether it was open for the respondent to issue notice under Section 25(1), when the return is not rejected under Section 22 of the KVAT Act, within the period prescribed under Rule 35 of the KVAT Rules. Sections 22(1) and (2) read as under; "22. Assessment in case of non-filing of return and filing of defective return -(1) Where the return su....
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....nsider necessary: Provided that before making an assessment under this sub-section the dealer shall be given a reasonable opportunity of being heard. Provided further that where the escapement is due to the application of incorrect rate of tax, no assessment under this sub-section shall be made where the dealer files revised return and pays the tax which has escaped assessment along with interest under sub-section (5) of section 31 and thrice the interest as settlement fee." It is clear from the reading of Section 25 that it is a special power given to the assessing officer to take action if for any reason the whole or any part of the turnover of the business of a dealer has escaped assessment in any year or has been under assessed. Therefore, when a fact situation gives rise to a situation warranting interference under Section 25(1), Section 22 cannot control Section 25. Section 25 is an independent power available to the Department to consider and take action in respect of escaped assessment, under assessment etc,. That apart, Section 22(2) would further clarify that even in an instance where revised return is filed, assessment is deemed to be completed subject to Sectio....
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....pharma division the appellant cannot deny that they have not opted for payment of tax at compounded rate under section 8(e) of the Act. All what the Commissioner has stated is that once the appellant has started billing in accordance with compounding scheme, then the same itself amounts to opting to pay tax under the compounding scheme and the appellant cannot therefore back out of the same. We uphold this position declared by the Commissioner because by the appellant's conduct the purchasers have claimed exemption under the proviso above referred. In other words, the sale of the drugs and medicines by the appellant should be assessed on MRP at four per cent as provided under section 8(e) of the Act. So far as other products are concerned, compounding is not applicable and the normal provisions of the Act will be applied for assessment and levy of tax. If there is surviving dispute then it is for the appellant to pursue the same before the statutory authority in appeal." This judgment apparently will not apply to the facts of the present case. The Division Bench was only approving a clarification issued by the Commissioner wherein the Division Bench clarified that "all what ....
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....ny contract to do construction, the above three things are fully met. In a contract to build a flat, there will necessarily be a sale of goods element. Works contracts also include building contracts and therefore without any fear of contradiction, it can be stated that building contracts are a species of the works contract." It was also held that where a contract comprises of both, may be a works contract and a transfer of immovable property, such contract does not denude it of its character as works contract. It is held at para 97 as under: "97. In light of the above discussion, we may summarise the legal position, as follows: 97.1. For sustaining the levy of tax on the goods deemed to have been sold in execution of a works contract, three conditions must be fulfilled: (i) there must be a works contract, (ii) the goods should have been involved in the execution of a works contract, and (iii) the property in those goods must be transferred to a third party either as goods or in some other form. 97.2. For the purposes of Article 366(29-A)(b), in a building contract or any contract to do construction, if the developer has received or is entitled to receive valuable consider....
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.... services. In other words, the single and indivisible contract, now by the Forty-sixth Amendment has been brought on a par with a contract containing two separate agreements and the States now have power to levy sales tax on the value of the material in the execution of works contract. 97.9. The expression "tax on the sale or purchase of goods" in Schedule VII List II Entry 54 when read with the definition clause (29-A) of Article 366 includes a tax on the transfer of property in goods whether as goods or in the form other than goods involved in the execution of works contract. 97.10. Article 366(29-A)(b) serves to bring transactions where essential ingredients of "sale" defined in the Sale of Goods Act, 1930 are absent within the ambit of sale or purchase for the purposes of levy of sales tax. In other words, transfer of movable property in a works contract is deemed to be sale even though it may not be sale within the meaning of the Sale of Goods Act. 97.11. Taxing the sale of goods element in a works contract under Article 366(29-A)(b) read with Entry 54 List II is permissible even after incorporation of goods provided tax is directed to the value of goods and does not ....