Dipak Chakraborti, (Technical Member) - (1.) SRI Ashok Kumar Ghosh, proprietor of Engineers Collaboration at 222, Shyamnagar Road, Kolkata 700 007, in this petition filed under section 8 of the West Bengal Taxation Tribunal Act, 1987 has challenged the assessment order dated November 3, 2008 passed by the Sales Tax Officer, Salt Lake Charge (respondent No. 1) under section 46 of the West Bengal Value Added Tax Act, 2003 (in short, "the VAT Act") pertaining to the assessment period four quarters ending on March 31, 2006. The appellate order dated November 11, 2009 passed by the Senior Joint Commissioner of Commercial Taxes, 24 Parganas Circle (respondent No. 2) has also been challenged. The dispute is mainly with regard to the determination of contractual transfer price (in short, "CTP"). According to the petitioner, the CTP was determined arbitrarily without considering the facts and provisions of the VAT Act and Rules framed thereunder. The assessment was made upon rejection of the returned figures on the ground that in computing the net CTP, the dealer followed neither rule 30(1) nor rule 30(2) of the Value Added Tax Rules, 2005 (in short, "the VAT Rules"). It is admitted that in the returns CTP was shown at Rs. 9,91,859 whereas the actual figure subsequently admitted stood at Rs. 11,38,084. This was, however, determined at Rs. 20,32,804 and tax at 12.5 per cent was levied on the same amount in terms of the provision under section 18 of the VAT Act. Sri B. Bhattacharyya, learned advocate appearing on behalf of the petitioner, draws our attention to the provisions of sub -rules (1) and (2) of rule 30 of the VAT Rules. Sub -rule (1) of rule 30 deals with deduction for charges towards labour service and other like charges actually incurred. It prescribes, subject to the production of books of accounts, records and other proofs before the appropriate assessing authority on demand by such authority, a dealer liable to pay tax under section 14, may for the purpose of determining its taxable contractual transfer price on which tax is payable during any period, deduct under clause (b) of sub -section (2) of section 18, from contractual transfer price received or receivable, the amount of the following charges actually incurred by such dealer : (a) Labour charges for execution of works contract; (b) Charges for planning and designing and architect's fee; (c) Charges for obtaining on hire or otherwise machinery and tools used for the execution of works contract; (d) Cost of consumables such as water, electricity, fuel, etc., used in the execution of works contract, the property in which is not transferred in the course of execution of works contract; (e) Cost of establishment of the contractor to the extent it is related to supply of labour and services; (f) Other similar expenses related to supply of labour and services; and (g) Profit earned by the contractor to the extent it is related to supply of labour and services.
(2.) SUB -rule (2) of rule 30 prescribes as below : Where in the case, the amounts referred to in clauses (a) to clause (g) of sub -rule (1), or the taxable contractual transfer price for application of proper rate of tax, are not ascertainable from the books of accounts and records maintained by the dealer or where a dealer does not maintain books of accounts and records worthy of credence as found by the assessing authority, or the auditing authority, the taxable contractual transfer price and the application of different rates of tax thereon, may be determined under sub -section (3) of section 18, - - (i) after deducting, from contractual transfer price, amounts of contractual transfers as provided in clause (a), clause (c) and clause (d) of sub -section (2) of section 18 and then (ii) the balance of contractual transfer price, after deduction as referred to in (i), may be apportioned, to arrive at the taxable contractual transfer price, after deducting the amount calculated at the rate specified in column (3) of the table below for different types of contracts, and different rates of taxes shall be applicable on such percentages as mentioned in column (4) of the table on such balance of contractual transfer price. Since it is not necessary to go through the table for coming to a decision with regard to the allegation made in this petition the said table is not reproduced here.
(3.) IT is argued by the learned advocate that a close scrutiny of sub -rule (2) of rule 30 would reveal that this rule is applicable only when the taxable contractual transfer price for application of proper rate of tax is not ascertainable from the books of accounts and records maintained by the dealer or where a dealer does not maintain books of accounts and records worthy of credence as found by the assessing authority or the auditing authority. It is not admitted by the petitioner that CTP cannot be ascertained from the books of accounts as maintained by him. Similarly, even in the order of assessment, it has not been alleged that the petitioner does not maintain his books of accounts and records worthy of credence. Therefore, the allegation that the petitioner did not follow the provision of sub -rule (2) of rule 30 of the VAT Rules is not correct. The petitioner produced relevant records and documents and even the balance sheet. The allegation that the petitioner could not produce any documents in support of its claim under rule 30B of the VAT Rules is also strongly denied. Tax on taxable contractual transfer price is levied in terms of the provision under section 18 of the VAT Act. In terms of sub -section (1) of section 18, tax is levied at four per cent in respect of the goods specified under section 14 of the Central Sales Tax Act, 1956, at four per cent where goods represent those involved in printing of materials and at 12.5 per cent where goods represent other than those referred to above. In this case, the petitioner purchased iron and steel and cement from PWD but those were not at all considered. Moreover, deduction under the head "food for labour and others" was allowed for Rs. 36,210 whereas in the final accounts, it was shown at Rs. 38,2010. Similarly the cost of temporary huts was allowed for Rs. 8,614 whereas the actual figure as per balance sheet was Rs. 24,418. Cost of medical expenses (labour) was not allowed at all. This shows, as submitted by the learned Advocate, total non -application of mind. There was no reason for respondent No. 1 to levy tax at 12.5 per cent on the entire amount. It is pointed out by the learned advocate that even the appellate authority (respondent No. 2) had failed to appreciate the facts of the case and for reasons not discussed in the appellate order determined the profit on labour charges at Rs. 22,689. He also confirmed levy of tax at 12.5 per cent on the CTP re -determined by him without considering the fact that the petitioner had purchased iron and steel, an item falling under section 14 of the Central Sales Tax Act. It is, therefore, submitted by the learned advocate that the assessment order as well as the appellate order be set as de with the direction to the appellate authority to examine the documents to be produced by the petitioner at the time of reassessment.;