PAWAN KUMAR JAIN Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) Writ petitions have been preferred by the assessees raising the question whether section 9-B of the M. P. Commercial Tax Act, 1994 is applicable to the works contract, if yes, then what is the mode of determination of commercial tax.

(2.) Facts are being referred to from W.P. No. 15798/2006. Petitioner is engaged in the business of construction works of Central Public Works Department and Telecom Departments. In the course of the execution of the works contracts, buildings material like Gitti, Sand, Cement, Timber, Plywood, aluminum, steel, bricks etc. are used Iron, steel and cement is supplied by the respective government departments for whom the work is executed.

(3.) The assessment under Madhya Pradesh Commercial Tax Act, 1994 (hereinafter referred to as the 'Act') for the period 1-4-2000 to 31-3-2001 was completed. Order (P/l) dated 28-1-2004 was passed. The main dispute raised before the Assessing Officer was whether Value Added Tax (VAT) as contained in section 9-B of the Act is leviable on material consumed in the process of works contract. The submission of the petitioner before the Assessing Officer was that section 9-B is not applicable. VAT has been imposed under section 9-B on purchases of all the materials including cement. Under section 9-B VAT is levied on the resale of goods. In the execution of work, cement, iron/steel, aluminum section, plywood, paint and timber are not used as such. Cement is mixed with gitti, sand along with iron steel and it becomes concrete in the construction work. Other items are also not used as such, but, are converted in the form of door, windows etc. The timber used as shuttering material is not transferred in the works contract but after it is used is taken out and is again used. Thus, there is no resale of these goods as original identity of these goods is lost when used in works contract. The resale ordinarily means sale of goods in the same form in which they were purchased without subjecting them to any process. Though there is sale as defined under section 2(t)(ii) of the Act, but, it is not a resale for levy of VAT under section 9-B of the Act, value of these goods cannot be subjected to VAT under section 9-B. It is further submitted that the expenditure incurred on account of labour etc. cannot form a part of the contractual transfer price, simply because they are not valuable consideration for any goods. Revision was preferred against the assessment order. Revision has been dismissed vide order (P/5) dated 21-3-2006. Aggrieved by the assessment order and order passed in revision, writ petitions have been preferred. Facts and grounds in other cases are similar.