2014-VIL-348-KAR
THE STATE OF KARNATAKA Vs M/s TRANSGLOBAL POWER LIMITED
Karnataka Value Added Tax, 2003 – Execution of the works awarded by M/s Karnataka Power Transmission Corporation Ltd for construction of power lines and erection of transmission towers – Work contracts of composite nature – Turnkey project – Whether the contract executed by the assessee for M/s KPTCL is it a divisible contract or indivisible contract notwithstanding the fact, it is treated as a composite contract – HELD – It is not a case where a contract which is entered into is not divisible as contract for supply of material and contract for labour. Even if it is a composite contract, if it is a divisible contract, then the levy of tax cannot be on the basis of works contract only. In cases of composite contract, which are not divisible, such contract should be treated as work contract and levy should under Schedule VI of entry 23. In the instant case, there are four contracts in nature and each one of them is separate. In respect of the contract for sale of material taxes have been paid in accordance with law, no tax is payable in respect of contract for supply of labour. In civil works, it is a work contract and tax is levied under Schedule VI entry 23 – The finding recorded by the Tribunal that it is a divisible contract and the order passed by the revisional authority was erroneous is proper. Tribunal was justified in setting aside the order of revisional authority and restoring the order passed by the prescribed authority. Therefore, the substantial question of law is answered in favour of assessee – The taxes collected by the authorities in pursuance of the revisional order shall be refunded to the assessee within two months – Revenue appeal dismissed