Manoranjan Virk, Member (A) -
(1.) THE above three appeals are filed by the same appellant on a common issue. Therefore, a common order is being passed. The appeals in T.A. No. 515/07 & 516/07 which are related to assessment years 1998 -99 & 1999 -2000 respectively are against the revision orders of the Additional Commissioner (CT)(Legal), Hyderabad. The appeal in T.A. No. 723/07 is for the assessment year 1999 -2000 and is against the revision order of the Deputy Commissioner (CT), Abids Division, Hyderabad. All the three revisions have been made on the same issue viz., whether the assessment of the appellants' turnover related to works contract for the above assessment years is to be completed under Rule 6(3)(1) or under Rule 6(3)(ii) of the APGST Rules, 1957. As per the revisional authorities, since the appellant failed to maintain contract -wise accounts as envisaged under Rule 45(1 -c) and since the value of goods involved in execution of a works contract and the amounts referred at clause (a) to (i) of sub -rule (ii) of Rule 6 are not ascertainable from the accounts maintained by the dealer, it was not correct on the part of the assessing authority to resort to Rule 6(3)(i) for arriving at the taxable turnover of the appellant. The appellant has, however, stated that they had produced before the assessing authority not only their accounts books but also audited statements of their Profit & Loss Account and on the basis of the same, the assessing authority had come to the conclusion that Rule 6(3)(i) can be resorted to for arriving at assessable turnover. They have produced before us work plan certificates issued by APSEB to drive home the point that all their works contracts were spread over more than one year and therefore Rule 6(3)(1) was the appropriate rule to be applied. However, to a pointed question about whether they have maintained their accounts as per the guidelines given under Rule 45(1 -c) the appellant has admitted that being a company which undertakes gigantic projects spread over many years it had not been possible for them to maintain their records strictly as envisaged under Rule 45(1 -c). They have further argued that their audited Profit & Loss Account and Account Books presented by them before the C.T.O., were sufficient to ascertain the extent of material used by them in their projects. Since the value of goods purchased by them that were being supplied or used in the execution of their works contracts (and such contracts being also spread over more than one year) was ascertainable from such accounts, it was not right on the part of the authorities to calculate their taxable turnover resorting to rule 6(3)(ii).
(2.) THE learned State Representative has supported the orders of the revisional authorities and has argued that the appellant cannot be given exemption from maintaining his accounts as per Rule 45(1 -c) which is the correct rule to be referred for all assessments relating to works contracts. In the absence of maintenance of such accounts he argued that the deductions for the purpose of Rule 6(3)(i) were not ascertainable from the books of the appellant. Under the circumstances, the revisional authorities were right in ordering that the taxable turnover of the appellant should be arrived as per Rule 6(3)(ii). He has, further, stated that the appellant had failed to produce the books of accounts before the revisional authorities. According to him, if the deductions to be allowed as per Rule 6(2) are ascertainable from the books of accounts of the appellant and the appellant also states that the same books of accounts had been presented before the assessing authority what prevented them from doing so before the revisional authorities? If the appellant had produced proper evidence before the revisional authorities and if the deductions referred to in clause (a) to (i) of sub -rule (2) of Rule 6 had been ascertainable, the appellant should have proved the same either before the revisional authorities or before this Tribunal. Having heard both sides, we have gone through the Rule 6(2) and Rule 6(3) of the APGST Rules, 1957. The same read as follows:
Rule 6(2) Notwithstanding anything contained in sub -rule (1) the tax under Section 5F, shall be levied on the turnovers of a dealer who transfers property in goods, whether as same goods or in some other form, involved in the execution of works contract. In determining the turnover of a dealer liable to tax, the amounts specified in clauses (a) to (I) shall, subject to the conditions specified therein, be deducted from the total turnover of the dealer.
(a) Labour charges for execution of the works;
(b) Amount paid to a sub -contractor for the execution of works contract provided such a subcontractor is a registered dealer and that turnover is included in the return filed by him before the assessing authority concerned;
(c) Charges for planning, designing and architect's fees;
(d) Charges for obtaining on his or otherwise machinery and tools used for the execution of the works contract;
(e) 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;
(f) Cost of establishment of the contractor to the extent it is relatable to supply of labour and services;
(g) Other similar expenses relatable to supply of labour and services;
(h) Profit earned by the contractor to the extent it is relatable to supply of labour and services;
(i) All amounts for which goods exempted by the notification under Section 9(1) are transferred in execution of works contract provided the goods are transferred in the same form as they were purchased;
(j) All amounts for which the goods specified in the Third Schedule are transferred by a dealer when such sales are exempt from the tax liable, under any of the provisions of the Act, provided, that the goods are transferred by the dealer as the same goods as they were purchased;
(k) All amount for which the goods specified in the Fourth Schedule are transferred by the dealer in execution of the works contract provided that the goods are transferred as the same goods as they were purchased;
(l) 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 or transferred outside the State under Section 4 or transferred in the course of import or export under Section 5 of the Central Sales Tax Act, 1956.
Rule 6(3)(i) Incases where the execution of a works contract extends over a period of more than one year, the total turnover for the purpose of sub -rule (2) for that year shall be deemed to be the value of goods purchased for being supplied or used in the execution of such contract in that year.
(ii) In the case where the value of goods involved in the execution of a works contract or the amounts referred at clause (a) to (i) of sub -rule (2) in such contract are not ascertainable from the accounts of a dealer or where under section 5 -H contractee is required to deduct tax at source, the turnover of the dealer for the purpose of Section 5F or 5H, shall be determined after deducting the amount calculated at the following percentages for different types of contracts from the amounts paid or payable to the dealer for carrying out such contract:
From a reading of the above rules, it is clear that to arrive at taxable turnover adopting Rule 6(3)(i), the requirement is not only that the works contracts should be spill over contracts but also that the amounts which are deductible as per clauses (a) to (i) of Rule 6(2) should be ascertainable from the accounts of the dealer. However, if the same are not ascertainable from the accounts, then the taxable turnover of the dealer of works contract shall be determined after deducting the amount calculated at the percentages given for different types of contracts under Rule 6(3)(ii)(a) to (f) from the amounts paid or payable to the dealer for carrying out such contract. At Item No. b under Rule 6(3)(ii), the percentage prescribed for all structural contracts was 30% during the relevant years and it is seen that this percentage was adopted by the revisional authorities for arriving at the taxable turnover of the appellant, as the appellant failed to produce accounts maintained by them under Rule 45(l -c). In fact, admittedly, the appellant did not maintain accounts as envisaged under Rule 45(1 -c). Therefore, there was no question of producing the same before the revisional authorities or of the deductions under Rule 6(2) being ascertainable from whatever accounts were maintained by the appellant. This plea of a big company which takes up gigantic contracts and therefore was unable to maintain contract -wise accounts is also not acceptable. Big companies who take up gigantic projects also have gigantic means, and these days when everything can be computerized maintaining proper contract -wise accounts as per Rule 45(1 -c) shall not be a problem for anyone. Clearly, therefore, the assessing authority had made a mistake in resorting to Rule 6(3)(i) and relying upon the audited Profit & Loss Account Statements alone and not the original accounts of the dealer which were not strictly maintained as per Rule 45(1 -c). We, therefore, see no reason to interfere with the orders of the revisional authorities.
In result, all the appeals are dismissed.
Dictated to Stenographer, transcribed by him and pronounced on this the 1st day of June, 2009.;