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2009 DIGILAW 128 (KER)

STATE OF KERALA v. INDEC INTERIORS

2009-02-12

C.N.RAMACHANDRAN NAIR, K.SURENDRA MOHAN

body2009
JUDGMENT C. N. RAMACHANDRAN NAIR, J. – The question raised is whether turnover of works contract involving sale of plywood is entitled to be assessed at two per cent or at 12 per cent under entry 12 of the Fifth Schedule to the Kerala General Sales Tax Act, 1963. We have heard Government Pleader appearing for the petitioner and counsel appearing for the respondent/assessees. Admittedly the respondent/assessees are engaged in interior decoration work involving various goods purchased by them. Plywood is one such item purchased by them by paying tax at 10 per cent. Under the Fifth Schedule plywood is an item taxable at two per cent at the last sale point. After determining the taxable turnover on works contract the assessing officer assessed the entire turnover at 12 per cent under item 12 of the Fourth Schedule to the KGST Act which is sought to be justified by the Government Pleader in the revisions filed by the State. On going through the orders of the Tribunal and that of the first appellate authority we do not think the claim of the respondents could have been allowed without reference to each and every contract, the nature of work executed and as to whether plywood was supplied in the same form or supplied after conversion into furniture or any other form. The taxable turnover determined in all the cases is much more than the purchase turnover of plywood. Therefore, the respondents cannot claim tax at two per cent on the entire turnover which does not represent works contract with the use of plywood alone. Interior decoration work involves use of various kinds of materials taxable at different rates. For so much of the items which are purchased within the State and used in the same form, the respondents are entitled to exemption or lower rate of tax under the Fifth Schedule. However, unless accounts are produced showing purchase, use and closing stock held, it would not be possible for the officer to bifurcate the taxable turnover attributable to plywood and other materials. Neither the Tribunal nor the first appellate authority considered the claim with reference to the purchase turnover, closing stock and the use of items in the work. In fact no single contract is seen considered by any authority. Neither the Tribunal nor the first appellate authority considered the claim with reference to the purchase turnover, closing stock and the use of items in the work. In fact no single contract is seen considered by any authority. In the circumstances we feel the only course open to us is to set aside the orders passed by the appellate authorities and that of the assessment with a direction to the assessing officer to revise the assessment on production of documents and to redo the assessment on respondent producing work orders, purchase bills and other accounts for revising the assessments. All the issues are left open for the parties to raise before the officer with records. The sales tax revisions are disposed of cancelling the assessments modified by the appellate authorities including Tribunal.