Research › Search › Judgment

Rajasthan High Court · body

2010 DIGILAW 215 (RAJ)

Ali MohdAbdul Mazid v. C. T. O. , Bikaner

2010-01-27

VINEET KOTHARI

body2010
Hon'ble DR. KOTHARI, J.—These two revision petitions arise out of the order of Tax Board dated 12.12.2008 allowing the Revenue's Appeals against the order of Deputy Commissioner (Appeals), Bikaner dated 28.12.2007. 2. The learned Tax Board by the impugned order held against the petitioner assessee that for the work contract executed by him during the year 2003-04 and 2004-05 for the Urban Improvement Trust, Bikaner for construction of some buildings in the Engineering College, Bikaner, the assessee was liable to pay the exemption fees in respect of such works contracts @ 1.5% of the gross value of the contract in terms of the Undertaking given by it as per Rule 12 of the Rajasthan Sales Tax Rules, 1995 and the learned Assessing Authority was justified in resorting to Section 30 of the Rajasthan Sales Tax Act, 1994 because in the original assessment order framed by the assessing authority, the said assessing authority had ignored such Undertaking given by the assessee and finding it to be filed belatedly during the course of assessment period, the learned assessing authority passed the assessment order determining lesser tax liability on the assessee than even the exemption fees of 1.5% as payable by the assessee as per the said Undertaking given by him to the awarder of the contract i.e. UIT, Bikaner. 3. Learned counsel for the petitioner assessee, Mr. J.L. Purohit submitted that the Undertaking in question for the five works contracts executed by the petitioner assessee was filed belatedly and the same was not in accordance with Rule 12 of the Rules, which requires such undertaking to be filed within one month from the date of such contract and, therefore, the assessee had the option to request the assessing authority to pass his assessment on the basis of purchases and sales made by him during the said period, irrespective of such Undertaking agreeing for deduction of exemption fee @ 1.5% of the gross value of contract from the payment made by the awarder of the contract i.e. UIT, Bikaner to the contract. He submitted that the original assessment order from 1.4.2003 to 31.3.2004 was legal and valid and on mere change of opinion, the subsequent assessing authority could not resort to Section 30 of the Act to reopen such earlier assessment and frame assessment on the basis of such Undertaking which provides for levy of exemption fee @ 1.5% to be realised from the petitioner assessee. He , therefore, submitted that the Deputy Commissioner (Appeals) was justified in allowing the appeal of the assessee against such order passed by him under Section 30 of the Act by the order dated 28.12.2007 and the learned Tax Board has erred in reversing the said order of Deputy Commissioner (Appeals) and holding against the assessee that exemption fee @ 1.5% would be leviable. 4. On the side opposite, Mr. Mathur, learned counsel for the Revenue submitted that Rules prescribe for option to the assessee, who executes the works contracts for Govt. Department like the UIT Bikaner to go in for similar & hassle free assessment procedure and pay exemption fee @ 1.5% of the gross value of the contract to save him from difficulties of regular assessment procedure and requirement of maintaining & filing of all details of sales and purchases made by the assessee for execution of such works contracts & evidences and returns filed by the assessee in form ST 5A is accepted as such, if he opts for exemption scheme by giving such Undertaking under Rule 12 of the RST Rules 1995. 5. Learned counsel for the respondent Revenue, therefore, urged that even if during the course of execution of works contracts, if such Undertaking is filed belatedly, the contractor is liable to pay such exemption fee for the period prior to giving of such option by paying such installment of exemption fee with interest @ 2% per month within 30 days of exercising such option. He submitted that there is no provision in the said Rules to permit the assessee to withdraw from the said option or undertaking once given to the Revenue Authorities or awarder of the contract in terms of Rule 12 and therefore, in the present case, the assessee cannot take a stand contrary to his own undertaking on the ground that same was not filed within one month from the execution of works contracts. He submitted that the assessment order originally passed by the assessing authority imposing lesser tax liability than even the exemption fee @ 1.5% was obviously incorrect assessment and to being to tax net the escaped tax liability, the assessing authority could very well resort to Section 30 of the Act and realise the full exemption fee for the works contracts in question in accordance with Rule 12 of the Rules and Undertaking given by the assessee himself. He, therefore, justified the orders of the learned Tax Board and submitted that the revision petitions filed by the assessee before this Court have no force. 6. I have heard the learned counsels at some length and given my thoughtful consideration to the submissions made at the bar. 7. Chapter III of RST Rules, 1995 deals with various rules regarding exemption from tax to the assessee. Rule 12 of the said Chapter III gives `Option to works constractors to get exemption from tax.' The said Rule is quoted hereinbelow in extenso for ready reference:- "12. Option to works contractors to get exemption from tax.- (1) In case of works contracts, as may be notified by the State Government, a contractor may opt for Automatic Exemption fee in lieu of tax payable for each of such works contract. (2) Where the contractor exercises option under sub-rule (1), a specific clause to this effect shall have to be incorporated in the contract entered by him with the awarder or in the alternate he should submit an undertaking to this effect, in the following format duly executed by him. Undertaking I....(name of the contractor)....(address), having RST/CST Nos. ...do hereby declare that had been assigned works contract relating to....(description of the works contract), for Rs. ...(mention contract amount) by.... (name and address of the awarder), vide work order No....dated ...do hereby opt for the Automatic Exemption. fee under this rule and undertake to pay the notified exemption fee for the said contract and also in respect of the additional work assigned to me. I....(name of awarder)....(address), do hereby undertake to deduct from each of the payment made to the contractor, in respect of the above works contract awarded to him including any additional work assigned to him, the exemption fee at the rate notified by the State Government from time to time. I....(name of awarder)....(address), do hereby undertake to deduct from each of the payment made to the contractor, in respect of the above works contract awarded to him including any additional work assigned to him, the exemption fee at the rate notified by the State Government from time to time. Signature of the Awarder Signature of the contractors Seal of the awarder (3) A copy of such contract or the undertaking shall be furnished, to the Assistant Commissioner or the Commercial Taxes Officer of the area where the office of such awarder is situated or any other officer authorized by the Commissioner, by the awarder within one month from the date of such contract. Moreover, a copy of such contract or the undertaking shall also be sent by the awarder to the assessing authority of the contractor in this period. (4) The Automatic Exemption Fee for such works contracts, as notified by the State Government from time to time, shall be payable by the contractor in the following manner:- (a) Where an awarder is a Department of the State Government, a corporation, a public undertaking, a co-operative society, a local body, an autonomous body, a trust or a private of public limited company, such awarder shall deduct automatic exemption fee at such rate as notified by the State Government from time to time from each bill of payment to be made in any manner to such contractor, and all the provisions of payment of tax provided in these rules for such contractors shall mutatis mutandis apply. (b) In the case of contract covered by clause (a), where the contractor has already received some payments against the works from the awarder before exercising the opinion under sub-rule (1), he shall deposit the notified exemption fee duly computed on the payment already received by him with interest at the rate of two percent per month within thirty days of exercise of such option. Failure to deposit such amount in the stipulated period will debar the right to opt for exemption fee. (c) In case, the awarder is not covered by clause (a), the automatic exemption fee shall be payable by the contractor in equal monthly installments in the period not exceeding the period of contract. However, the first of such installment shall be deposited within thirty days of the commencement of the work under the contract. (c) In case, the awarder is not covered by clause (a), the automatic exemption fee shall be payable by the contractor in equal monthly installments in the period not exceeding the period of contract. However, the first of such installment shall be deposited within thirty days of the commencement of the work under the contract. (5) If the whole of the receipts of the contractor during the year are covered under exemption fee under this rule, the assessment of such contractor would be finalized on the basis of duly filed annual return in Form ST 5A and the contractor will not be required to appear before the assessing authority for such assessment." 8. The power to grant exemption from tax is given to the State Government under Section 15 of the Rajasthan Sales Tax Act, 1994, which says that, `notwithstanding contained in this Act, where the State Government is of the opinion that it is necessary or expedient in public interest so to do, it may, be notification in the Official Gazette exempt fully or partially, whether prospectively or retrospectively from tax the sale or purchase of any goods or class of goods or any person or class of persons, without any condition or with such condition as may be specified in the notification.' 9. The exemption from tax given to the works contractor subject to payment of exemption fee @ 1.5% under a separate notification namely SO No. 406 dated 29.3.2001 was enacted to facilitate the procedure of assessment for the works contractor particularly executing civil works for Govt. Departments. Sub Rule (5) of Rule 12 makes it very clear that upon availing such exemption, subject to aforesaid exemption fee, the assessment of such contractor shall be finalized on the basis of duly filled returns in Form ST 5A and the contractor will not be required to appear before the assessing authority for such assessment. Thus, upon availing such exemption under this Chapter, the assessee contractor gets an advantage in the form of his return being accepted as such and saves him from the rigmarole of assessment procedure and he does not have to maintain detail records also and produce the same before the assessing authority, if he so avails the exemption by paying the prescribed exemption fees. 10. The question arising in the present case before this Court is raised in rather altogether different circumstances. 10. The question arising in the present case before this Court is raised in rather altogether different circumstances. According to the assessee, the tax liability originally assessed in his case by the assessing authority was found to be less than the exemption fee and, therefore, he tried to wriggle out from his own undertaking given under Rule 12 and go for regular assessment procedure. The learned counsel for the assessee submitted that since the Undertaking was filed after the prescribed period of one month, the same deserves to be ignored. He also submitted that for some of the works contracts no such undertaking was even furnished to the assessing authority, therefore, the assessee cannot be bound to opt for the exemption scheme by paying exemption fee @ 1.5%. The said contention of learned counsel for the assessee is not acceptable for the obvious reasons. The reason behind assessee's move to wriggle out of his own Undertaking in this case is not very clear. May be he realised that the tax liability otherwise would be less than the exemption fee payable under the said Rule 12. It is well settled that there is no equity about taxation. Principle of equity and liberal or sympathetic consideration have no place in taxing Statutes. Once the contractor gives the undertaking and option under Rule 12 to go in for this stream of assessment, sub-rule (5) does not provide for any exit from the same. On the contrary, the said scheme is envisaged for the benefit of assessee- works contractor himself. The cases are very rare where the actual tax liability of such works contract would be less than the exemption fee payable by the works contractor. However, this is not for this Court to examine the factual aspect of the matter as to whether the actual tax liability would be less or more. The question before this Court is as to whether despite undertaking and option of the assessee contractor given to the awarder of the contract and the awarder having deducted the exemption fee in lieu of such tax, the assessee can resile from said undertaking and insist upon the assessing authority to go in for regular assessment procedure & obtain refund of such exemption fees deducted by Awarder and made over to Revenue Authorities, as he did in present case. The answer of this Court is in negative and against the assessee. The answer of this Court is in negative and against the assessee. 11. As far as the question of resorting to Section 30 of the Act is concerned, the said provision permits the assessing authority to frame assessment in case some taxable turnover has escaped assessment. The said provision gives wide power to the assessing authority to bring to tax such escaped turnover or tax liability. The exemption fees payable by the contractor is in lieu of the tax liability and by payment of said exemption fees the assessee gets advantages as envisaged in Rule 12. It is beyond the pale of doubt in the present case that by resorting to Section 30 of the Act the assessing authority has only applied Rule 12 and bound the assessee by his own Undertaking. Merely because the exemption fees payable under Rule 12 may be more than the actual tax liability as was found in the original assessment, it cannot furnish any ground to the assessee to resile from his own undertaking at the stage of assessment and insist upon the assessing authority to frame the assessment in regular manner. It is obvious that at that time neither the assessee nor the assessing authority may have enough details and evidence to pass regular assessment and come at the correct tax liability of the assessee because having availed the exemption scheme by paying exemption fees in lieu of tax, the assessee may not have maintained the complete records to determine the correct tax liability. In such a case, allowing the assessee to resile from his own undertaking and ask the assessing authority to frame regular assessment may cause serious prejudice to both, the assessee and assessing authority. Possibly that is why. Rule 12 did not provide for any exit route, once the assessee has opted for exemption scheme by paying exemption fee @ 1.5% of the gross value of the contract. 12. In view of this, learned Tax Board cannot be said to have erred in setting aside the order of Deputy Commissioner (Appeals) and upholding the reassessment order framed by the assessing authority under Section 30 of the Act to realize full exemption fees from the works contractor as per his Undertaking under Rule 12 of the Rules of 1995. 12. In view of this, learned Tax Board cannot be said to have erred in setting aside the order of Deputy Commissioner (Appeals) and upholding the reassessment order framed by the assessing authority under Section 30 of the Act to realize full exemption fees from the works contractor as per his Undertaking under Rule 12 of the Rules of 1995. The said order passed by the assessing authority can neither be said to be erroneous or without jurisdiction nor the assessee can be allowed to wriggle out from his own Undertaking under Rule 12 of the RST Rules, 1995. Accordingly, these revision petitions of the assessee being devoid of merit are hereby dismissed. No costs.