Held : No.
The petitioner is registered under A.P. VAT Act and carries
out works contract activity in the State of A.P. Petitioner has entrusted
contracts to various "sub-contractors" either wholly or partially. It was the
contention of the petitioner that the State can either collect the tax under
the A.P. VAT Act from the sub-contractor or from the petitioner; i.e., from
the principal contractor, and in the event of the State deciding to collect
the tax from the petitioner, the amount of tax, if any, collected from the
sub-contractor, must be given credit to while determining the tax liability of
the petitioner. It was the contention of the petitioner even if the contract
is executed through a sub-contractor, there can be one taxable event for the
purpose of the A.P.VAT Act, if, the VAT Act were to be consistent with the
scheme of the constitution and accordingly tax can be collected only one for
such taxable events. The said contention of the petitioner was not accepted by
the revenue and accordingly the demand was raised on the appellant without
allowing deduction of tax paid by sub-contractor.
Under the scheme of A.P. VAT Act sec 4(7) creates a levy of
tax on dealers executing "Works Contract" and every such dealer who executes
"works contract" shall pay tax on the value of goods utilized by him in
execution of the Works Contract. On this pretext revenue assessed the
petitioner without allowing deduction of tax paid by the sub-contractor to the
government treasury.
While dealing with the petition the court observed that in
the transaction of a works contract, the property in goods passes directly to
the employer by the theory accretion. In a case where a contract is executed
through a sub-contractor the property in goods does not passes to contractor
but to the employer directly and, therefore, there can be only one sale which
is recognized by the legal fiction created under sub-article (29A) of Article
366 and accordingly it observed that the understanding of the state that there
are two taxable events in such a transaction has no legal basis and would be
violative of article 14 of constitution as well. Ratio as laid down in case of
State of Madras vs. Gannon Dunkerley & Co. (Madras) Limited [9 STC 353]
& Builders Association of India vs. Union of India [73 STC 370]
applied. Accordingly demand raised was set aside which was preceded on a
plainly erroneous understanding of the law that there are two taxable events,
one in the hands of sub-contractor and one in the hands of contractor.
[M/s Larsen & Toubro Limited And another vs. State of
Andhra Pradesh & Others [148 STC 616(AP)]
Held : No.
Dealer was assessed and later on proceedings for
reassessment were also initiated, against him. Simultaneously on certain
discrepancies found on the examination of the material on record, revision
proceedings were initiated by the superior authority and the revision order
was passed. On appeal, Tribunal set aside the revision order by observing that
since the reassess-ment proceedings were initiated, action of revision on
dealer is not legal.
Against the said order of the Tribunal, revenue filed the
revision petition before the High Court. The High Court after looking to the
provisions under the U.P. Act held that both sections; i.e., section relating
to revision and reassessment can operate on different fields and under
different circumstances and accordingly held that revision order passed by the
superior authority is legal. Decision in case of A.K. Corporation vs. State
of Uttar Pradesh 96 STC 31 & United Tractors vs. State of Uttar Pradesh
105 STC 48 relied on.
[Commissioner, Trade Tax, U.P. Lucknow vs. Jagdamba
Agencies 148 STC 524 (All)]
