STATE OF JHARKHAND AND ORS. v. VOLTAS LTD., EAST SINGHBHUM

Citation: [2007] 6 S.C.R. 276

Court: Supreme Court of India

Bench: S.B. SINHA, MARKANDEY KATJU

Case summary

STATE OF JHARKHAND AND ORS. v. VOLTAS LTD., EAST SINGHBHUM.pdf

Judgment text

STATE OF JHARKHAND AND ORS. f v. f VOLTAS LTD. , EAST SINGHBHUM MAY 9, 2007 [S. B. SINHA AND MARKANDEY KATJU, JJ. ) Sales Tax-Bihar Sales Tax Act-Section 21-Bihar Sales Tax Rules- .... ,. Rule 13A-Taxable turnover in case of works contract-Permissible deductions-Held: It is not merely the labour charges which are deductible from the value of the works contract, but all other charges/amounts also, except the value of the goods sold in execution ofthe works contract-This is because only the value of the goods sold can be taxed as sales tax. "' Bihar Finance Act-s. 24, proviso-Sales tax assessment proceedings in respect ofworks contract-Re-assessment pursuant to remand was to be done within two years-But actually made after more than six years-Held: ,_ Proceedings were clearly time barred. .. prescribed in the Rules to make the provisions workable and constitutionally vaHd. In the matter ofGannon Dunkerley & Co.

(1993) 88 STC 204 the Supreme Court observed that as sub-section (3) of section 5 and sub-rule (2) of rule 29 of the Rajasthan Sales Tax Act and the Rules were not providing for particular deductions, the same were invalid. In the present matter the constitutional provision of law ~~ys that particular deductions would be provided but unfortunately nothing is provided in relation to the other charges either in section 21 itselfor in the rules framed in exercise of the powers conferred by section 58 of the Bihar Finance Act. In our considered opinion sub-clause (i) of clause (a) of section 21(1) read with rule 13A ofthe Rules did not make sub-clause(! ) fully workable because the manner and extent of deduction relating to any other charges has not been provided prescribed by the State. " 13. We fully agree with the view taken by the Patna High Court in the aforesaid decision. It is not merely the labour charges which are deductible ,:...

from the value of the works contract, but all other charges/amounts also, STATE OFJHARKHAND "· VOLTAS LTD . EAST SINGHBHUM[MARKANDEYKATJU, J ] 28 J except the value of the goods sold in execution of the works contract. This is because only the value of the goods sold can be taxed as sales tax. It may be mentioned that the respondent had initially only chimed deduction of labour charges, but that was in view of the understanding of the law at that time. The matter became clear only after the decision ofthis Court in Gannon Dunkerley & Co. v. State of Rajasthan (supra). 14. It may further be mentioned that the observations made by the Division Bench ofthe High Court about the rate of tax were unnecessary, and they are therefore set aside. 15. We also agree with the view taken in the impugned judgment that the proceedings in question were beyond limitation.

It appears that against three assessment orders for the period 1990-91, 1991-92 and 1992-93, the respondent preferred three appeals i. e. JUSTA 56/97-98, 57/97-98 and 58/97- 98 before the Joint Commissioner, Commercial Taxes (Appeal), Jamshedpur Division, Jamshedpur. The appellate authority passed a common order on 31st August, 1998 and communicated the decision vide Memo No. 2177 dated 5th November, 1998 to the assessing authority and other officers. The ..... assessing authority was directed to make a re-assessment. As per the proviso to Section 24 of the Bihar Finance Act, the assessing authority was supposed to complete and pass the re-assessment order pursuant to the remand by 5th November, 2000, two years from the date of communication of such order to the assessing authority. However, the assessment was not concluded and fresh assessment on remand was made on 27th November, 2004 i. e. after more than six years ofcommunication ofthe said order. Hence, it was clearly time barred.

16. From the records, it appears that the appellate order passed on 31st August, 1998 was communicated to the assessing authority vide Memo No. 2177 dated 5th November, 1998. The respondent obtained a certified copy of the same in January, 1999. Memo No. 204 dated 6th August, 2003, as referred to by the counsel for the State is the second time communication, which was only a reminder. Thus, the appellate order having been communicated to the assessing authority vide Memo No. 2177 dated 5th November, 1998 for the purposes of limitation the period will start from 5th November, 1998 and will be complete on 5th November, 2000 i. e. two years from the date of • _.... , communication of such order to the assessing authority. We accordingly hold that the assessment order made after remand on 27th November, 2004 and the consequential demand of notice raised in pursuance of such order of re- A assessment, all dated 29th November, 2004 are time-barred under Section 24 of the Bihar Finance Act.

17. However, the contention of the respondent herein is that the assessment should be directed to be completed on the basis that the rate of tax would be 8%. As at present advised, this Court need not go into the said B question. 18. Thus we find no infirmity in the impugned judgment. The appeal is accordingly dismissed. No costs. B. B. B. Appeal dismissed.