TaxTMI 
TaxTMI 
TaxTMI 
2023 (9) TMI 1369
X X X X Extracts X X X X
X X X X Extracts X X X X
....Sales Difference 6,41,25,705/- 14.5% 92,98,227/- Exempted sales disallowed 6,50,599/- 5% 32,530/- Sale of Assets 6,05,000/- 5% 30,250/- TDS Deduction 83,14,003/- 2% 1,66,280/- Sundry Creditors treated as un-registered purchases 90,05,493/- 5% 4,50,275/- Total 21,67,26,240/- 1,72,11,279/- 3. On the aforesaid amount, the tax due of the petitioner has been arrived as detailed below: Total Due 1,72,11,279/- Less: ITC adjusted 58,28,477/- Balance 1,13,82,802/- Less: Paid NIL Balance 1,13,82,802/- Less: TDS 33,78,375/- Balance 80,04,427/- 4. The above table indicates that the reported turnover as per the returns comes to only Rs. 10,19,52,599/- (Rs.9,63,47,907/- + Rs. 56,04,692/-). However, in the beginning of the impugned order in the second table, the reported turnover has been arrived as Rs. 10,65,71,282/-. 5. The estimated taxable turnover has been arrived at Rs. 19,81,79,432/-, by deducting 30% towards labour charges and like charges from the total contract income of Rs. 28,31,13,474/- reported in the Profit & Loss Account. 6. The petitioner is a Civil Contractor and executes works contract for statutory Corporations and State Depa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 12. A sum of Rs. 9,16,08,150/- was arrived as the suppressed taxable turnover which was proposed to be assessed at 5% and 14.5% in the ratio of 70:30 as detailed below: Details Amount (Rs.) Total Contract Income 28,31,13,474.00 Less: 30% towards labour and like charges 8,49,34,042.00 Total estimated taxable turnover 19,81,79,432.00 Less: Sales reported 10,65,71,282.00 Suppressed sales turnover proposed to assess at 5% and 14.5% in the ratio of 70:30 9,16,08,150.00 13. That apart, several discrepancies were also pointed out under the following heads: (i) Purchase difference of Rs. 1,96,208/-; (ii) Purchases effected from unregistered dealer for Rs. 34,50,508/- for being assessed at 5% under Section 12 of the TNVAT Act, 2006; (iii) Turnover of Rs. 9,63,47,907/- to be assessed at 5%; (iv) Turnover of Rs. 56,04,692/- to be assessed at 14.5%; (v) ITC of Rs. 10,37,164/- carried forward from 01.04.2016 asking the petitioner to furnish proof of records; (vi) Rs. 6,50,599/- for exempted sales; (vii) A sum of Rs. 6,05,000/- for sale of Innova; (viii) Hire income of Rs. 11,49,978/- liable to tax under Section 4 of the TNVAT Act, 2006; (ix) Assessment of Rs. 5....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in Tax Case (Revision) Nos.31 to 34 of 2017 vide its order dated 10.01.2018. 20. It is submitted that the Hon'ble Division Bench has considered the difficulties of dealer that it is not possible to cull out each and every item transferred along with related Gross Profit and thus the dealer can arrive at the taxable turnover notionally by calculating the deemed sales value by adding a percentage to the value of purchase. 21. It is submitted that it is the practice of the dealers to adopt 10% gross profit on the purchase value of the items used in the execution of works contract to arrive at the deemed sales turnover for which tax at the respective rate was paid to the Department. 22. The learned Senior Counsel for the petitioner further submits that the said decision was also rendered in the context of provisions of TNVAT Act, 2006 in the light of the practice adopted under Section 3-B of the TNGST Act, 1959. That apart, it is submitted that some of the issues which are framed especially one pertaining to sundry creditor, purchase bill was given up in the course of notice and reply. However, the same was confirmed vide the impugned order. Hence, it is submitted that the impug....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Article 226 of the Constitution of India and therefore the petitioner should be asked to approach the Appellate Authority. 30. I have considered the arguments advanced by the learned Senior Counsel for the petitioner and the learned Government Advocate for the respondent. 31. Section 5(1) of the TNVAT Act, 2006 is the charging provisions for works contract. The taxable turnover is to be determined under Rule 8(5) of the TN VAT Rules,2007. Only the amounts specified in Clauses (a) to (i) to Rule 8(5) of the TNVAT Rules, 2007 are to be allowed to be deducted for determining the taxable turnover in the case of works contract. 32. Section 5(1) of the TNVAT Act, 2006 and Rule 8(5) of the TNVAT Rules, 2007 reads as under:- Extract from TNVAT Act,2006 Extract from TNVAT Rules, 2007 Section 5: Levy of tax on transfer of goods involved in works contract:- Rule 8(5): Procedure for assessment:- (1) Notwithstanding anything contained in this Act, but subject to the provisions of this Act, every dealer, shall pay, for each year, a tax on his taxable turnover, relating to his business of transfer of property in goods involved in the execution of works contract, either in the same form o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of the works contract (1) (2) (3) 1. Electrical Contracts 15 2. All structural contracts 15 3. Sanitary contracts 25 4. Watch and / or clock repair contracts 50 5. Dyeing contracts 50 6. All other contracts 30 34. In alternative, a dealer had an option to pay tax at the compounded rate under Section 6 of TNVAT Act, 2006. In this case, the petitioner has opted to pay tax under Section 5(1) of the TNVAT Act, 2006. 35. As per clause (c) to Sub Rule (5) to Rule 8 of TN VAT Rules, 2007, all amounts paid to the sub-contractors as consideration for execution of works contract whether wholly or partly is to be deducted. 36. However, proviso to clause (c) to Sub Rule (5) to Rule 8 of the TN VAT Rules,2007 indicates that no such deduction shall be allowed unless the dealer claiming deduction, produces proof that the subcontractor is a registered dealer liable to pay tax under the Act and that the turnover of such amount is included in the return filed by such subcontractor. 37. As per Clause (d) to Sub Rule (5) to Rule8 of the TN VAT Rules, 2007 all amounts actually incurred towards labour charges and other charges not involving any transfer of property in goods. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sible for paying any sum to any dealer for execution of works contract, shall at the time of payment of such sum for the amount calculated at the rates specified therein. 44. As far as Civil Works Contract is concerned, deduction is to be made at 2%. As per Rule 9(i)(b) of the TNVAT Rules, 2007, any person who makes a deduction under Section 13 of Act, is required to pay the amount sum so deducted electronically to the Assessing Authority for making assessment along with a statement in electronic form on or before 20th day of every succeeding month along with proof of payment. 45. The deductor has to issue a certificate of deduction of tax in Form-T and shall issue the same to the contractor which is available for being adjusted towards the tax liability. 46. In this case, the petitioner has executed that on the works contract for the Greater Chennai Corporation. The petitioner has also stated that for the works contract provided to the Greater Corporation of Chennai, the Greater Corporation of Chennai has deducted a sum of Rs. 56,18,991/- as tax deduction at source which was subject matter of W.P.No.26508 of 2021. 47. The aforesaid amount of Rs. 56,18,991/- would represent 2% ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Singh, AIR 1964 SC 358 and a recent decision of the Hon'ble Supreme Court in Union of India &Ors. Vs. Mahendra Singh in Civil Appeal No.4807 of 2022, wherein also the above view was followed. 56. This Principle will apply for determination of taxable turnover in the works contract under Rule 8(5) of the TN VAT Rules, 2007. 57. The petitioner cannot arrive at the taxable turnover arbitrarily without giving particulars of the value of the goods and value of the services and other items to claim deduction involved to arrive at an arbitrary taxable turnover contrary to scope of Rule 8(5) of the TNVAT Rules, 2007 by merely adding 15% to the value of the purchases. The petitioner was duty bound to give particulars. I am afraid of the view taken in Tvl.ITD Cementation India Ltd., Vs. State of Tamil Nadu in Tax Case (Revision) Nos.31 to 34 of 2017 cannot be applied in the light of the Rule 8(5) of the TN VAT Rules, 2007. Therefore, there is no merits in the challenge to the impugned order. 58. That apart there are other amounts which have been confirmed in the impugned order. Therefore, on this count also there is no scope for interference with the impugned order. I do not find any....