TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 1695
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....ovisions for payment of tax at compounded rates for works contracts for future interpretative reference. 3. First, a wood cut of the facts which are absolutely essential and unexpendable for resolution of the issues raised in these cases: The petitioner is a works contractor and an assessee on the files of the Commercial Tax Officer, Palakkad. For the assessment year 2009-10, the petitioner was permitted to pay tax at compounded rate for a particular works contract obtained by them. However, on verification of the books of accounts for the years 2008-09 and 2009-10 by the Intelligence Officer, Commercial Taxes, Palakkad, it was detected that the petitioner had not conceded the turnover relating to the sale of Villas and Flats and other works contract amounting to Rs. 1,85,09,146/- and Rs. 7,35,750/-, for the years 2008- 09 and 2009-10 respectively. The petitioner was, therefore, assessed for a total taxable turnover reckoned by adding the suppressions to the total turnover declared. The petitioner admitted the offence and pleaded for composition under Section 74 of the Kerala Value Added Tax Act ('the Act' for brevity) and prayed for payment of tax at compounded rates as p....
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.... Notwithstanding anything contained i Section 6,- (a)(i) any works contractor not being a dealer registered under the provisions of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), and who is not an importer may, at his option, instead of paying tax in accordance with the provisions of the said section, pay tax at three per cent of the whole contract amount; (ii) any works contractor not falling under clause (i) above may, at his option, instead of paying tax in accordance with the provisions of the said section, shall pay tax at three per cent of the contract amount after deducting the purchase value of goods excluding freight and gross profit element consigned into the State on stock transfer or purchased from outside the State and for the purchase value of goods to deducted shall pay tax at the scheduled rate applicable to such goods. Provided that notwithstanding anything contained in sub-clause (ii) above, the compounded tax payable by any works contractor under this clause in respect of works contracts awarded by Government of Kerala, Kerala Water Authority or Local Authorities shall be four per cent of the whole contract amount: Provided further that the provi....
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....he will be governed by the normal method of taxation provided by Section 5(1)(iv). Sub-section (8) provides that the option to come under sub-section (7) or (7-A) has to be exercised by the contractor "either by an express provision in the agreement for the contract or by an application to the assessing authority to permit him to pay the tax in accordance with any of the said sub-sections". In these circumstances, it is evident that a contractor who had not opted to this alternate method of taxation cannot complain against the said sub-sections, for he is in no way affected by them. Nor can the contractor who has opted to the said alternate method of taxation, complain. Having voluntarily, and with the full knowledge of the features of the alternate method of taxation, opted to be governed by it, a contractor cannot be heard to question the validity of the relevant sub-sections or the rules." 7. As early as in the year 1994, a Division Bench of this Court in Jyothish Kumar v. State of Kerala (1994 KHC 376) had clearly declared the ambit of the provisions in the following words: "As the compounded rate of tax is payable pursuant to the option exercised by the appellants and as a....
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....ement between the parties with an object to dispense with the rigors of regular assessment. The dealer is given the choice to opt for compounded payment of tax and once the option is exercised and the same is accepted by the concerned authority, it is no longer open to the dealer to request for a regular assessment as envisaged under section 5 or 5A of the KGST Act." 11. It is, no doubt, true that all the above judgments have been delivered by the courts with respect to the provisions in the KGST Act. But we notice that the provisions in that Act and in the VAT Act are virtually worded on identical terms. It is ineluctable that the provisions to pay tax at compounded rates is only in lieu of the obligation to pay tax under Section 6 of the Act. Therefore, the primary charging Section is always Section 6 of the Act and Section 8, which provides for payment of tax at compounded rates, is only an optional method offered to the assessee for ease and convenience in payment of tax. The main charging Section, namely, Section 6 of the Act, proposes levy of tax on sale or purchase of goods and is couched in the following words: Section 6. Levy of tax on sale or purchase of goods.- (1) E....
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....) of section 8, or under clause (f) of section 6 every dealer dealing exclusively in goods included in the First Schedule, every Central or State Government or any Union Territory and any Department therefor, Local Authority and any Autonomous Body and every works contractor shall file quarterly returns in form Nos.10, 10A, 10D or 10F, as te case may be, for the quarter ending the 30th June,30th September, 31st December and 31st March to the assessing authority on or before the 25th of the month following the respective quarter." 24B. Contractors to file Declaration.-(1) Every contractor or/promoter/developer or by whatsoever name called who undertakes construction or development of flats or apartments or villas shall file a declaration in form No.49 along with returns containing the details of ongoing projects, transfer or apartments/flats/villas made and the works contract tax paid under the Act etc in respect of every purchaser/intending purchaser. (2) Where such contractors are holding flats or apartments or villas the contract of which was undertaken prior to 1st April, 2007 but pending to be transferred as on the 1st April, 2007 and a portion of or full tax for its cons....
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....ear at the compounded rates. What is granted to the assessee is the permission to pay tax at the compounded rate with respect to a composite works contract covered by a particular work order and not to all the contracts or works unrelated to such work order, that may be obtained and executed by the assessee during that relevant year. This becomes all the more clear from a reading of Rule 24B, which makes it obligatory for every contractor or promoter or developer to file a declaration in Form No.49 along with the returns containing all the details of on going projects, transfer of apartments/flats/ villas. Form No.49 requires the assessee to give the details of on going projects being executed by them in Part-A of the Form, the details of transfer of flats, apartments etc. in Part-B thereof and the name of the project, description of the apartment and name and address of the intending purchaser in Part-C of the Form. It is, therefore, inscrutable that what is intended is that the contractor discloses all the works that had been carried on by them, pay tax individually for such works under the provisions of Section 6 or under Section 8 at compounded rates for such each individual wo....