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Maharashtra Value Added Tax Act, 2002 - The appellant is an authorized dealer for Maruti Suzuki India Ltd and also deals in resale of Water Proofing material and undertakes waterproofing contracts - Taxation of works contract on closing work in progress

Levy of sales tax on “service tax” collected separately in the bills on the works contracts - Levy of VAT on warranty claim - Abatement on denting/painting contracts - Disallowance of credit for WCT TDS - Omission of ITC on fixed assets

  • HELD – Considering the submissions that the work was not completed during this period, and the bills were not raised during the assessment year to the customers; and the appellant has discharged its tax liability in the subsequent years, when the bills were raised in the subsequent years
  • the First appellate authority to verify the facts and if the bills are raised in subsequent financial year, the claim should be allowed and the transaction should be taxed in subsequent financial year – the order passed by the lower authority in this respect is confirmed and the levy of tax on the amount received from the manufacturers of the motor vehicles to the appellant for replacement of spares and consumables during the warranty period of the vehicles is upheld
  • the appellant’s activity is squarely covered under entry at serial no.9 of the table to proviso in Rule 58(1) which is in respect of painting and polishing in which deduction is allowable at 20% from the total contract value - from the provisions in sub-section 4 of section 31 of the MVAT Act, it is crystal clear that the appellant is entitled to claim credit of the amount deducted by his employer only when employer issues the TDS certificate. There is nothing illegal in disallowing the credit of TDS during the financial year 2008-2009 – assessee appeal is partly allowed
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Maharashtra Value Added Tax Act, 2002 - section 31(1), (4) and (9) - Works Contract - Deduction of tax at source - assessee appeal for credit of TDS – denial of credit of TDS certificate - First Appellate Authority also denied the credit of TDS certificate submitted by appellant on the ground that the department could not confirm whether the amount is received in the government treasury or not. Appellant also could not produce challan of T.D.S. paid by the employer

HELD – in the present case the employer is required to deduct tax at source under section 31(1) of the Act. It is the sole responsibility of the employer - Sub-section (9) of Section 31 provides where tax is deductible at source by the employer then supplier shall not be called upon to pay tax himself to the extent to which the tax has been deducted in respect of the said supplier. Even if we read section 31 in toto, scheme is made full proof. Tax payable on the transaction is partly required to be paid by the employer and partly to be paid by the contractor - Assessing Authority could initiate the recovery proceedings against employer on the basis of certificate submitted by the appellant – the provisions in the Act does not provide that the certificate in Form 402 should be accompanied by the challan of T.D.S. The contractor has complied with statutory requirements. Hence, appellant is entitled for credit. It is the sole responsibility of the departmental authority to recover T.D.S. from the employer if it is not paid – assessment order and First Appeal Order are quashed -assessee appeal is allowed



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  • Orissa HC upholds Tribunal, ballasts, boulders or chips supplied to Railways is “mineral” as per  Entry 117 of Schedule provided under Orissa Sales Tax Act, 1947 (Act), exigible to tax at 4%, not at residuary rate of 12%, under Entry 189 of Schedule provided under the Act;
  • Holds that, agreement for supply and delivery of stacks of machine crushed track ballast inclusive of all charges incurred, not a ‘works contract’, but one for ‘sale’ of goods, however, loading of ballasts supplied is a labour charge, not ‘sale’;
  • Observes, ballasts are deduced from spalls which are extracted from quarry and ballasts may be of different size to make it boulder or chips, while neither of these are found in the taxable list, however, applying “common parlance test”, it can be concluded that same is nothing but ‘mineral’, however, rejects Tribunals aid to definition contained in other Statutes;
  • Referring to case of Stonecraft Enterprises –V, remarks, “it appears that the word “mineral” is a word of common parlance used in various way but cannot be used in narrow sense. Similarly, ………entries in the schedules of sales tax and excise statutes draws colour from the other words therein because of the principle of noscitur a sociis”;
  • Rejecting Revenue’s contention that, assessee for first time raised plea about taxability of ballast, boulder or chips under Entry 117 of taxable list, states, issue whether goods are exigible to tax at 4% or 12% is a question of law and same can be raised at any stage, moreover, rejects Revenue’s contention that plea of exigibility to tax at 4% is barred by limitation :
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Posted by on in VAT



Kerala Value Added Tax Act - Section 8(a) - mandate to continue under the compounding scheme once applied for and allowed – revenue contends that the petitioner having applied for compounding for all works in the year 2015-16; the second work awarded in that assessment year would also be treated as compounded

HELD - by the use of words “shall”; till 2014 there was a mandate to continue under the compounding scheme once applied for and allowed. In the year 2014-15, the same was confined such continuance till the end of the assessment year. The word 'shall' as employed in the earlier proviso was also changed to 'may', making the continuance optional.

There was no change in the assessment year 2015-16, and hence there was no such proviso, which required a dealer, who had applied for compounding, for a work in the earlier year to continue under the compounding scheme itself in that year also - the 4th proviso of Section 8(a) was introduced only after the commencement of the subject assessment year being 2016-17 - the mere fact that the petitioner's work, which commenced in the previous year, had been compounded for that year would not require continuance under the scheme in the subsequent year, for reason of there being no provision available requiring such a continuance - the omission to file a monthly return can only be considered an inadvertent omission.

The Assessing Officer also had not taken any proceedings against the petitioner, for reason of non-filing of monthly returns - the impugned assessment order would stand set aside and the petition is allowed

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Posted by on in VAT
  • Kerela Finance Minister Announces one time settlement scheme for works contractors involved in installation of kitchen cabinet works, aluminium fabrication works, air-conditioning plant installation, granting exemption from paying tax at scheduled rates, where compounded tax at 2% of total contract value was paid provided all purchases are from within the State;
  • On GST front, the State law shall be passed in next Assembly Session to be convened for passing the Budget, and explains that training to officers is being conducted and intensive awareness campaign is planned for dealers and public, while proposing to install smart surveillance cameras at border roads and bye-routes to check tax evasion
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