TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 312
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....ity distribution line for Maharashtra State Electricity Distribution Company Limited (MSEDCL) and one works contract project for Gas Authority of India Limited (GAIL) for laying down the pipeline of gas between Dabhol to Panvel. (ii) The Petitioner with respect to two contracts with MSEDCL claimed deduction from the contract price @ 25% as per Table prescribed in Rule 58 of the MVAT Rules for arriving at value of transfer of property in goods. However, with respect to contract with GAIL, the Petitioner claimed deduction under Rule 58(1)(a)-(h) on actual basis aggregating to Rs. 30,59,93,405/-. (iii) On 18th February 2013, Deputy Commissioner of Sales Tax issued a notice to the Petitioner for verification of books of accounts to examine discrepancies found in the course of the business audit conducted by the revenue. The said notice records discrepancies found by the revenue after verification of the books of accounts. The said notice was made returnable on 25th February 2013. (iv) On 28th February 2013, the Petitioner replied to the aforesaid notice and annexed copies of ledger in support of its submission. (v) On 18th March 2013, the Petitioner filed further submission pur....
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....ow cause notice was also raised by Sales Tax Revenue Audit Team, which was duly replied by the Petitioner. The Petitioner further submitted that for a turnkey projects, there cannot be two separate agreements, one for sale of the goods and another for supply of labour and services. The Petitioner relied upon the decision in the case of Builders Association of India 73 STC 370 (SC) and Gannon Dunkerley & Co. Vs. State of Rajasthan (1993) 88 STC 204 (SC) in support of its contention that turnkey project is indivisible. The Petitioner requested Respondent No. 3 to close the proceedings initiated under Section 25 of the MVAT Act pursuant to the said submissions. (xi) On 23rd November 2020, the successor of Respondent No. 3 issued a similar show cause notice to review the assessment order on the ground that deduction under Rule 58 amounting to Rs. 9,41,22,626/- on profit of supply of labour and services has been wrongly allowed. According to Respondent No. 3, under Rule 58(1)(h) deduction in respect of profit earned by the contractor to the extent related to the supply of said labour and service is only allowable, whereas profit of Rs. 9,41,22,626/- was alleged to be the profit earned....
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....07 for rectification of mistakes in the order in review dated 8th March 2021. The Petitioner also filed various submissions in support of its application for rectification of the order. (xviii) On 6th July 2021, Respondent No. 3 rejected the rectification application. In the said order, the Respondents justified the review order by placing reliance on proviso to Rule 58(1). 4. It is on this background that the Petitioner has approached this Court praying for quashing of the order dated 8th March 2021 passed under Section 25 of the Maharashtra Value Added Tax Act, 2002 (MVAT Act) and the order rejecting the rectification application dated 6th July 2021 under Section 24 of the MVAT Act. 5. Submissions of the Petitioner :- The Petitioner submitted that they are challenging the very jurisdiction of the Respondents to pass the impugned order which is contrary to the decision of the Supreme Court in case of M/s. Gannon Dunkerley and Co. & Ors. Vs. State of Rajasthan & Ors. (1993) 1 SCC 364 and contrary to the provisions of the Act and furthermore contrary to the principles of the natural justice and therefore, even though an alternative remedy is provided under the MVAT Act, the pres....
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....m-Assessing Authority and Ors. 2023 SCC Online SC 95 to contend that writ is maintainable since an alternative remedy is not an effcacious remedy and they are challenging very jurisdiction of the authority in passing the review order and also violation of principles of natural justice. 6. Submissions of the Respondents : Per contra, the Respondents contended that the petition is not maintainable since there is an alternative and adequate remedy of an appeal provided under the Act. The Respondents further contended that the order under Section 25 has not exceeded the show cause notice dated 22nd October 2018 since the said show cause notice refers to Rule 58 without specifying the clause of Rule 58 and therefore, dis-allowance of all the deductions under Rule 58(1) (a) to (h) are justified and the same cannot be said to have been passed without giving a show cause notice. The Respondents also relied upon the second notice dated 23rd November 2020 in support of their submission on this account. The Respondents relied upon the assessment order to justify the order passed under Section 25 of the MVAT Act and further submitted that since the deductions on account of profit on supply of....
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....of property in Goods (whether as good or in some other form) involved in the execution of a works contract. (1) The value of the goods at the time of the transfer of property in the goods (whether as goods or in some other form) involved in the execution of a works contract may be determined by effecting the following deductions from the value of the entire contract, in so far as the amounts relating to the deduction pertain to the said works contract:- (a) labour [service tax collected separately and service charges] for the execution of the works; (b) amounts paid by way of price for sub-contract, if any, to sub-contractors; (c) charges for planning, designing and architect's fees; (d) charges for obtaining on hire or otherwise, machinery and tools for the execution of the works contract; (e) cost of consumables such as water, electricity, fuel used in the execution of works contract, the property in which is not transferred in the course of execution of the works contract; (f) cost of establishment of the contractor to the extent to which it is relatable to supply of the said labour and services; (g) other similar expenses relatable to the said supply of ....
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....tems under Rule 58(1)(a) to (h), amounting to Rs. 30,59,93,405/-. The Respondents have not brought to our notice any document which would show that the show cause notice was issued for disallowing all the items specified in Rule 58(1)(a) to (h). It is well settled that any order beyond the show cause notice is bad-in-law. The Supreme Court in case of Commissioner of Customs, Mumbai vs M/s. Toyo Engineering India Limited, 2006 (7) SCC 592 noted that the Department cannot be allowed travel beyond the show cause notice. The Supreme Court further observed that it would be against the principles of natural justice that a person who has not been confronted with any ground is saddled with liability thereof and since the issue did not form the basis of the show cause notice and was not even confronted to the order passed beyond show cause notice is to be quashed. 11. The Supreme Court in case of Commissioner Of Central Excise, Nagpur vs. M/s. Ballarpur Industries Ltd., 2007 (8) SCC 89 observed that if Rule 7 of the Valuation Rules 1975 have not been invoked in the show cause notice, it would not be open to the Commissioner to invoke the said rule in the remand proceedings. The view expres....
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....final review order is without jurisdiction. In our view, there was no show cause notice invoking proviso to Rule 58(1) before being made applicable in the review order and, therefore, on this account also, the review order has been passed beyond the show cause notice and without jurisdiction. 13. Even otherwise, in the assessment order dated 11th December 2015, the Assistant Commissioner of Sales Tax has recorded a finding that he has verified the books of accounts with respect to the claim of the dealer under Rule 58 on actual basis. Insofar as the GAIL project is concerned, the assessment order records verification of trial balance, expense ledger copies, contract copies, sample invoices, sub-contractors works order, etc. The audit done under Section 22 of the Act by the Deputy Commissioner prior to the passing of the said assessment order also accepts the maintenance of the books of accounts by the Petitioner with respect to the works contract executed by the Petitioner. 14. In our view, therefore, even on this account, the jurisdictional condition required for applying the rates prescribed in the table to Rule 58(1) have not been complied with before passing the review order ....