A Single Bench of Allahabad High Court has held that in the case of segregation of works contract and supply of materials maintainable in view of agreement separate Goods and Services Tax shall be payable.
A Revision petition had been filed by Buldelkhand Engineers, under Section 58 of the U.P. Value Added Tax Act, 2008.whether the works contract awarded to assessee for the year 1989-1990 could be divided into two parts i.e., supply of goods and works contract. The Assessing Authority had made an assessment on 31.3.1994 holding that the assessee was liable to pay tax on the works contract which was awarded to it by the Auraiya Gas Power Project, District – Etawah.
The assessee challenged the assessment order before the first Appellate Authority, who allowed the appeal in terms of the notification dated 27.4.1987, issued under Section 3(f) of the U.P. Trade Tax Act, 1948. But in the second appeal the order was passed in favour of revenue.
Krishna Agarawal, who appeared for the revisionist submitted that the assessee was not covered under the notification dated 27.4.1987 and he could not be taxed for the works contract executed as the description of works contract mentioned in the schedule of the notification did not match with the work, which had been awarded to the assessee.
He further submitted that the agreement, which was entered between the assessee and the Auraiya Gas Power Project, had clearly established in Clause 2.4 that the consolidated payment was to be made to the contractor for supply of goods and the works contract. He further submitted that there was no division between the work executed by the contractor and the cost of the material supplied.
A.C. Tripathi, on behalf of the state submitted that, the contract was divisible and the Assessing Authority had rightly taxed on the work contract executed by the assessee. He further contended that though the agreement provided for the payment of the consolidated amount and there was no division, the specification of work had clearly mentioned and described the work to be executed by the contractor as well as the material supplied.
A Single Bench of Justice Rohit Ranjan Agarwal allowed the petition and set aside the impugned order observing that, “The agreement, which was arrived between the parties, did not segregate between works contract and the material to be supplied. The agreement specifically provided for the payment of lump-sum money to the contractor for the material as well as the works contract. The interpretation given by the Assessing Authority and Tribunal cannot be sustained in view of the agreement arrived between the parties. The notification dated 27.4.1987 is not applicable in the case of assessee.”
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