AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 628
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....iate framing of any other questions and we clarify that they are kept open in the manner pointed out by this order. 4. The appellant before us claims to be a joint venture. It is established by a special agreement dated 11th May 2006 between M/S JSC Zangas, a Russian Company and M/S Kalpataru Power Transmission Limited, a Indian Company registered under the Indian Companies Act, 1956. A contract was awarded to this joint venture by M/S Gail (India) Limited (for short, "M/S GIL"). The subject matter of the contract was laying down a pipeline for carrying gas between Panvel and Dabhol in the State of Maharashtra. 5. After setting out the terms and conditions based on which the work order was to be executed, it is stated that both joint venture partners have separate registrations under the Maharashtra Value Added Tax Act 2002 (for short, "MVAT Act"). They filed returns for the Financial Years 2007-2008 and 2008-2009. M/S KPTL being a subcontractor of JV, paid the tax on the entire value of goods used in the execution of the works contract as per Section 45(4) of MVAT Act. 6. The books of the joint venture thereafter showed the figures, which are set out in para 4 of the mem....
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....rincipal Contractor pertaining to material used in execution of contract are liable to be taxed at the rate specified under the law. With this, we pass the following order. O R D E R VAT Appeal Nos.254 and 255 of 2014 are partly allowed. Both these appeals are remanded back to the file of Joint Commissioner of Sales Tax (first appellate authority) for a computation of correct tax liability of the appellant. Bank charges and interest paid are financial expenses and not the establishment charges of the contract, hence they are not deductible. Amount paid to M/s. ZANGAS for services along with service tax paid thereon is deductible from sale proceeds. Out of balance sale proceeds, appellant is entitled to take deduction on account of profit relatable to service portion of the entire contract. First appellate authority is directed to calculate deduction under Rule 58(1)(h) for both the years. Said deduction shall e allowed from Rs. 51,27,129/for the year 200708 and from Rs. 17,39,000/for the year 200809 as given in above Table2, and balance sale proceeds are related to cost of material used in execution of entire contract. This portion is liable to tax at the rate specified....
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....s a pleading of the appellant and it is claiming deduction of bank charges and interest, but that relief was already rejected in the judgment of VAT Appeal Nos.254 and 255 of 2014 by holding that they are financial expenses and not the establishment charges of the contract. Hence, the appellant is not entitled to claim the same again or it is estopped by record. So far as profit on labour is concerned, the appellate authority has held that in absence of evidence, the appellant is not entitled to claim any deduction in regard thereto. 17. However, in its prior order, the Tribunal makes a reference to two tables and pertinently in relation to the first table, it is claimed that it sets out the particulars of total receipts, less payment to subcontractor, less service charges paid to M/S JSC Zangas (3%), balance turnover taxed less bank charges, interest, service tax paid, service charges and profit and then makes a total. These amounts have been paid in terms of the table for the two Financial Years. 18. The Chartered Accountant appeared throughout, namely, before the First Appellate Authority and the Tribunal as well, after referring to his arguments and the entire record, the Tri....
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....entire contract. There is an admission of the appellant recorded that there is no sale of goods by JV. Mere 1% of sale proceeds retained by JV for meeting its own expenses cannot be the subject matter for levy of tax. Then the appellant is faulted for not submitting any evidence that it had supplied labour and services and thus it had accrued profit. Hence the balance amount is pure profit earned by the appellant and not profit relatable to supply of labour and services as the said components are supplied by the subcontractor. If this conclusion is to be reached on the basis of the judgments, including that of the High Court of Karnataka, then, we do no see where was the occasion to refer to it, particularly in the absence of pleadings and related documents. It is unfortunate that though there was an extensive hearing followed by the written submissions, the Joint Commissioner has failed to apply his mind. He says that the Chartered Accountant was asked to submit the scheme of taxation followed by the subcontract to enable him to adopt the same for the purpose of levy of tax in the proceedings before him. It is stated that there is no record available with the appellant. We are ve....
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.... way of dealing with the matters and leaving them incomplete necessitate frequent remands. That is not in the interest of public as ultimately recovery of public revenue is delayed. 22. In the circumstances and in facts peculiar to this case, we allow the Appeals. We remand the matter to the Joint Commissioner of Sales Tax, who shall pass a fresh order on merits and in accordance with law, after giving the appellant a full opportunity to produce any documents other than, which are already on record. In the event, any clarifications are necessary, they could be sought from the appellant's representative. The Joint Commissioner shall pass a fresh order on the issues remanded to him by the Tribunal in its earlier order of 31st December 2016 delivered in VAT Appeal Nos.254 and 255 of 2014. The Joint Commissioner shall complete this exercise as expeditiously as possible and within a period two months from today. 23. We clarify that beyond emphasizing, what is the controversy between the parties and recording dissatisfaction about the manner in which the Appeals have been disposed of, we have not expressed any opinion either in favour of the appellant or against them. We cla....