Decided on April 30,2010

Tecumseh Products India Limited Appellant


J. Shyam Sundar Rao, Chairman - (1.)THIS is an appeal filed against Revisional Orders of Deputy Commissioner (CT), Hyderabad Division, Hyderabad in RR No. 24/2003 -04, dated 15 -10 -2004. The appellant is M/s. Tecumseh Products India Limited, Balanagar, Hyderabad. It is on the rolls of Commercial Tax Officer, Ferozguda. The Commercial Tax Officer passed final assessment orders for the assessment year 1998 -99 by his order dated 13 -11 -2001 under the provisions of APGST Act.
(2.)THE Deputy Commissioner (CT), Hyderabad Rural Division by virtue of powers conferred under Section 20(2) of the APGST Act, having observed that the assessment order passed by the Commercial Tax Officer is prejudicial to the interests of revenue, issued pre -revision show cause notice calling for the objections of the assessee. The assessee filed its objections. However, the objections were rejected by the Revisional Authority after hearing the appellant and confirmed the proposed revision. Aggrieved by the same, the present appeal is preferred. In the appeal grounds it has been contended as follows:
The Revisional Authority erred in rejecting the contentions of the appellant that it is liable to tax at flat rate of 1% only under Section 5A without reference to Section 5F of the APGST Act. The Deputy Commissioner erred in holding that Section 5 is main charging section and Section 5F is also separate charging section. The Deputy Commissioner overlooked the fact that Section 5A operates with "notwithstanding anything contained in this Act". Hence the reasoning that Section 5 and 5F are independent is untenable. The turnover is taxable measure in all charging sections. As far as dealers whose total turnover is more than Rs. 10 lakhs are concerned, they are liable to tax at flat rate of 1%. In any event, the Deputy Commissioner erred in withdrawing the deductions allowed by the assessing authority towards sales tax collections to the extent of disputed turnover. He grossly erred in holding that Section 2(s)(i) cannot be applied in view of Rule 6(2). The Deputy Commissioner cannot read the Rule as superior to Section. As per Section 2(s)(i), "Turnover" means the amount set out in the bill of sale excluding the amount collected as sales tax or tax due under the Act whichever is less. As per the Section, sales tax collections are excluded from the purview of turnover itself at the threshold. Hence, there is no requirement of the separate Rule providing for deduction of sales tax collections. Merely because the deduction of sales tax collections is referred in Rule 6(1) and there is no similar reference in Rule 6(2) relating to computation of works contract turnover, it does not mean that sales tax collections are not excludable from the works contract turnover computed under Section 5F.

At the time of hearing of the appeal, it has been contended by the counsel for the appellant that the order passed by the Deputy Commissioner is not in accordance with law since the definition of turnover under Section 2(1)(s) of the Act excludes the sales tax component with effect from 1 -4 -1995. Therefore, it is contended that levying tax on sales tax component is nothing but tax on tax.

(3.)HOWEVER , the learned State Representative appearing for the revenue contends that the exemptions under Rule -6 to Clauses a to I did not refer to sales tax and hence while computing the tax leviable for the works contract, the turnover also includes sales tax, which is the gross consideration received by the appellant while executing the contracts. It has been contended by the State Representative that the turnover under Section 2(s)(iii)(a)(i), means turnover which is nothing but the turnover assessed by the assessing authority for the consideration received for the value of the goods incorporated while executing the works contract.

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