L.Palamalai, Member - (1.)THE prayer in this original petition is to set aside the notice of Commercial Tax Officer, Royapettah Assessment Circle -I dated September 26, 1997 wherein the petitioner was denied the facility to pay compounded rate of 2 per. cent tax on civil works contract executed by him on the ground that the works carried out by the petitioner fall under sanitary contract or other contract and not under civil works contract and to give a direction to the assessing authority to permit the petitioner to pay compounded rate of tax under Section 7 -C of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act") with effect from April 1, 1997.
(2.)THIRU K.J. Chandran, Senior Counsel for the petitioner, contended as follows :
The petitioner is engaged in executing turnkey jobs mostly connected to water supply schemes in Tamil Nadu. The said activity involves systematic planning, designing, manufacture of PSC pipes, supply at the sites of work, excavation, laying of pipes, joining, testing, including refilling of trenches, other connected civil works and commissioning of pipe lines apart from maintenance of 6 to 12 months and handing over to the clients or the departments concerned.

The petitioner by a petition dated April 30, 1997 opted for composition under Section 7 -C of the Act for the assessment year 1997 -98. The said provision reads as follows :

Section 7 -C. Payment of tax at compounded rates by civil works contractor. - -(1) Notwithstanding anything contained in Section 3 -B, every dealer referred to in item (vi) of Clause (g) of Section 2, in so far as civil works contract is concerned, may at his option, instead of paying tax in accordance with Section 3 -B, pay, on the total value of the civil works contract executed by him in a year, tax calculated at the rate of two per cent of such total contract value of the civil works executed by him in that year.

(2) Any dealer who executes civil works contract may apply to the assessing authority along with the first monthly return for the financial year, his option to pay the tax under Sub -section (1) and shall pay the tax during the year in monthly instalments and for this purpose, he shall furnish such return within such period and in such manner as may be prescribed :

Provided that the option under this sub -section for the financial year commencing on the first day of April, 1993 and the 1st day of April, 1994 shall be exercised on or before the 30th day of June, 1994."

(3.)THE Commercial Tax Officer, Royapettah Assessment Circle I, in his letter dated May 3, 1997 stated that it is not clear whether the petitioner is eligible to pay at compounded rate of tax and therefore advised to file monthly returns as per Section 3 -B of the Act from April, 1997 till such time specific permission to pay tax under Section 7 -C of the Act is granted. On June 20, 1997, relying on the decision of the Allahabad High Court in Purolator India Ltd. v. State of U.P. reported in [1997] 105 STC 373 wherein it was held that civil contracts would include installation of the waste water treatment plant and construction of the sewage treatment plant and in "Engineers Enterprises v. Deputy Commissioner (Executive), Sales Tax reported in [1997] 105 STC 378 wherein construction of "washable apron" was held to be falling under civil contract which was approved by the Supreme Court on March 26, 1997 as reported in Commissioner of Sales Tax v. Engineers Enterprises [1997] 105 STC FRSC 9. The petitioner again applied for permission to pay compound tax under Section 7 -C of the Act. Meanwhile, the Special Commissioner and Commissioner of Commercial Taxes was also addressed by the petitioner for a clarification in the matter. The Special Commissioner on September 12, 1997 clarified that the works undertaken by the petitioner being sanitary contracts will not be construed as civil works for payment of tax under Section 7 -C of the Act. From a mere perusal of the Section 7 -C of the Act it is clear that notwithstanding Section 3 -B, if once a dealer opts for payment of tax under the compounded rate, the benefit is conferred on him under the Act. The said provision is not applicable only in cases where repair, maintenance or upgradation is carried on existing structures. Moreover, the explanation makes it clear that the said provision is applicable in cases where it involves civil construction which is inherent part of a new construction. In such circumstances, the proceedings of the first respondent is untenable.