TaxTMI 
TaxTMI 
2025 (12) TMI 817
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....pipes, manifolds, Christmas trees, rigid jumpers, tying spools and infield umbilical lines etc. Under the contract the material, mentioned above was to be supplied by M/s. Allseas Marine Contractors and the petitioner was required to carry out engineering, planning and fabrication activities in relation to the installation of the sub-sea constructions. It is also the contention of the petitioner that about 80% of this work was done beyond 12 Nautical miles from the coast of Andhra Pradesh. 2. The petitioner had registered itself under the provisions of the Service Tax Act. Apart from this, the petitioner also obtained registration, as a dealer, under the provisions of the Andhra Pradesh Value Added Tax Act, 2005 [for short "the APVAT Act"] and the Central Sales Tax Act, 1956 [for short "the CST Act"]. The petitioner, on the ground that less than 1% of the value of the contract involved transfer of goods, had approached the 1st respondent for quantification of taxable turnover for the purposes of deduction of tax at source. The 1st respondent is said to have issued a certificate, in Form 501D, dated 10.04.2008, determining the taxable turnover at 3.5% of the total value of the co....
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....ment, dated 20.02.2010. 5. The petitioner contends that it has produced all its accounts, before the 1st respondent. However, the 1st respondent instead of going through the said accounts, to satisfy himself, on the turnover which would be exigible to tax, had arbitrarily rejected all the accounts and the documents produced by the petitioner and proceeded to complete the assessment by invoking the Rule-17(1)(g) of the APVAT Rules. Under the said Rule, the assessment authority, in the absences of books and accounts of a dealer, is entitled to levy tax on 70% of the disclosed turnover after giving a standard deduction of 30%. The petitioner contends that Rule-31, which requires maintenance of accounts does not contemplate maintenance of profit and loss account and only requires maintenance of accounts showing the purchase of goods etc. It is contended that the 1st respondent, refused to accept this interpretation of the Rule-31 and insisted on proper books of accounts being placed before the 1st respondent. As such books of account were not produced, the 1st respondent, invoked Rule 17(1)(g) of the APVAT Rules without any further verification and the same is invalid. 6. Sri V. ....
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....t sought additional information including profit and loss account and trial balance for the period March, 2008 to December, 2008, the petitioner had submitted a letter, dated 03.02.2009, stating that the petitioner was not required to maintain any books of accounts in India, under the provisions of Income Tax Act, 1961 [for short "the IT Act 1961"], as the petitioner had opted to offer its income on deemed basis of 10% gross receipts under the provisions of Section 44 BB (3) of the IT Act 1961 read with Section 44 AA (2) (iii) of the IT Act 1961. The petitioner also stated that though formal books of accounts were not maintained, project accounts had been maintained and extracts from such account including the profit and loss account from 1st September, 2007 to 31st March, 2008 and 1st April, 2008 to 31st December, 2008 are said to have been sent. Further correspondence continued on these lines where the petitioner continued to insist that it was not required to maintain the books of accounts under the provisions of the IT Act, 1961, but the accounts maintained by the petitioner had been produced before the 1st respondent. 9. The 1st respondent, by its notice, dated 03.04.2009 s....
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.... to be the profits and gains of his business, as the case may be, during such [previous year; or]] (iv) where the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,] keep and maintain such books of account and other documents as may enable the 2[Assessing Officer] to compute his total income in accordance with the provisions of this Act. [Provided that in the case of a person being an individual or a Hindu undivided family, the provisions of clause (i) and clause (ii) shall have effect, as if for the words "one lakh twenty thousand rupees", the words "two lakh fifty thousand rupees" had been substituted: Provided further that in the case of a person being an individual or a Hindu undivided family, the provisions of clause (i) and clause (ii) shall have effect, as if for the words "ten lakh rupees", the words "twenty-five rupees" had been substituted.] (3) The Board may, having regard to the nature of the business or profession carried on by any class of persons, prescribe, by rules, the books of account and other documents (....
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....ified in that sub-section, if he keeps and maintains such books of account and other documents as required under sub-section (2) of section 44AA and gets his accounts audited and furnishes a report of such audit as required under section 44AB, and thereupon the Assessing Officer shall proceed to make an assessment of the total income or loss of the assessee under sub-section (3) of section 143 and determine the sum payable by, or refundable to, the assessee.] Explanation:- For the purposes of this section,- (i) "plant" includes ships, aircraft, vehicles, drilling units, scientific apparatus and equipment, used for the purposes of the said business; (ii) "mineral oil" includes petroleum and natural gas.]" 11. Section 44 AA (2) of the Income Tax Act, 1961 requires all persons, falling within the parameters set out therein, to maintain books of accounts, as prescribed. Section 44 BB (3) of the IT Act 1961 carves out an exception, for non-resident persons carrying on any business of providing services or facilities relating to extraction of mineral oil. These persons can either maintain the prescribed books of account and undergo assessment proceedings or ....
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....and services iii) charges for planning, designing and architect's fees; iv) charges for obtaining on hire or otherwise machinery and tools used for the execution of the works contract; v) cost of consumables such as water, electricity, fuel etc., used in the execution of the works contract the property in which is not transferred in the course of execution of a works contract; vi) cost of establishment of the contractor to the extent it is relatable to supply of labour and services; vii) other similar expenses relatable to supply of labour and services; viii) profit earned by the contractor to the extent it is relatable to supply of labour and services; ix) all amounts for which goods exempted under Schedule I are transferred in execution of works contract; x) turnover of goods involved in the execution of works contract which are transferred in the course of inter-State trade or commerce under Section 3 of the Central Sales Tax Act, 1956 or transferred outside the State under Section 4 or transferred in the course of import or export under Section 5 of the said Act. 13. Rule 17(1)(g) of the AP VAT Rules rea....
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....d be to remand the matter back to the assessing authority to give an opportunity to the petitioner to submit the entire records relating to the works contract executed by the petitioner. Upon such production of the records, the 1st respondent shall then decide whether the said material is sufficient to account for all the material/goods which are being incorporated into the works contract by the petitioner for the relevant period. In the event, the 1st respondent is satisfied with the material produced by the petitioner, the assessment proceedings can be completed on the basis of such material. In the event, the 1st respondent comes to the opinion that the accounts produced by the petitioner do not meet the requirements of Rule 31, it would be open to the 1st respondent to specifically set out the missing details and material which is required by the 1st respondent to complete the assessment proceedings. The petitioner would be required to make good such deficit of accounts, failing which, it would be open to the 1st respondent to invoke Rule 17 (1)(g) of the A.P.VAT Rules. 16. The petitioner had also raised two additional issues before this Court. Firstly, that the petitioner h....
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....s, Preventive (Mumbai) Vs. Noble Asset Co. Ltd 2008 (230) ELT 22 (Bom.). V. Great Eastern Shipping Co. Ltd. Vs. State of Karnataka (2020) 3 SCC 354. VI. AbanLoyd Chiles Offshore Ltd. Vs. State of Karnataka (2008) 227 ELT 24 (SC). VII. Raj Shipping Vs. State of Maharashtra (2016) 89 VST 460. VIII. Larsen and Toubro Ltd. Vs. Union of India [2011] 45 VST 361 (Guj). IX. Commissioner of Sales Tax, Mumbai Vs. Pure Helium (India) Ltd. (2012) 49 VST 12 (Bom.). X. Burmah Shell Oil Storage and Distributing Co. of India Ltd. Vs. Commercial Tax Officer (1960) 11 STC 764. XI. Fairmacs Trading Company Vs. State of Andhra Pradesh (1975) 36 STC 260. XII. Decision of US Federal Supreme Court in United States Vs. State of California 332 US 19 (1947). XIII. Decision of the Canadian Supreme Court reported as Offshore Mineral Rights [1967] SCR 792. XIV. Reg Vs. Keyn 1876 2 EX D 63, CCR. 19. Apart from these Judgments, Learned Senior Counsel also cited extracts, from the following authoritative commentaries, as here under:- I. 'Law relating to waters' by Coulson and Forbes, chapter titled 'Of the Sea an....