Larsen and Toubro Limited, Bangalore vs State of Karnataka

V. Gopala Gowda, J.-This revision petition is filed by the assessee questioning the correctness of the order dated 31-12-2002 passed by the Sales Tax Appellate Tribunal concurring with the findings of the Assessing Authority and the First Appellate Authority fastening tax liability on the civil works executed by the assessee and dismissing the appeal of the assessee, urging various legal grounds and framing six substantial questions of law at paragraph 27 of the petition.

Having regard to the undisputed fact noticed from the assessment order regarding the classification "works contract civil works" the rate of tax levied is 8%, which is neither mentioned in the proposition notice nor supported reasons are assigned for fastening such a liability. The First Appellate Authority and the Tribunal have not noticed this important aspect. There must be factual foundation for the imposition of tax liability in respect of the civil and mechanical works executed by the assessee.

In the monthly returns submitted by the assessee under Section 12-B of the Karnataka Sales Tax Act, 1957, the declared goods are iron and steel and the rate of tax prescribed is 4% in the schedule. Accordingly tax is paid on the total turnover. The same has been accepted by the authorities. In case the authorities found that the returns are incorrect or incomplete, they have got right not to accept the returns and to pass best judgment assessment after affording an opportunity to the assessee to prove the correctness of the returns.

In the instant case, it is pointed out from the original records that proposition notice has been issued but not even a single word is stated with regard to the correctness or otherwise of the returns filed by the assessee. It is not even stated that the goods used in the works are declared goods and 4% tax paid is not correct. No reasons are forthcoming in the assessment order. Even the Appellate Authorities also have not noticed the same.

Learned Additional Government Advocate requests to remand the matter for reconsideration.

In the circumstances, the revision petition is allowed and the impugned order is set aside. The matter is remitted back to the Assessing Authority for reconsideration in the light of the observations made above, afford opportunity to the assessee and pass appropriate order within four months from the date of receipt of a copy of this order.

It is fairly submitted that on the profit margin of sub-contractors and supply of goods from the customers, the turnover tax need not be deducted to impose tax.