IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 284 of 2009()
1. MR.T.P.TONY, CONTRACTOR,
... Petitioner
Vs
1. STATE OF KERALA,
... Respondent
For Petitioner :SRI.P.N.DAMODARAN NAMBOODIRI
For Respondent : No Appearance
The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice V.K.MOHANAN
Dated :21/12/2009
O R D E R
C.R.
C .N. RAMACHANDRAN NAIR &
V.K. MOHANAN, JJ.
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S.T. Rev. Nos. 284, 286 & 287 OF 2009
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Dated this the 21st day of December, 2009
JUDGMENT
Ramachandran Nair, J.
The question raised is whether driving of bore-well is civil
construction work entitling the petitioner to pay tax at compounded
rate at 2% under Section 7(7) of the KGST Act. We have heard
counsel appearing for the petitioner and Government Pleader
appearing for the respondent.
2. In the definition of “civil construction work” construction of
“well” was not originally included. However, through a later
amendment several items of civil work including construction of well
are brought under the scope of “civil construction work”. This Court
in the decision in STRev. No. 160 of 2002 held that the later
amendment is clarificatory in nature and therefore the several items
of civil work later brought under the definition clause should also be
treated as “civil construction work” for periods prior to the
amendment also. Relying on this decision, counsel for the petitioner
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submitted that since construction of well is brought within the
meaning of “civil construction work” through later amendment and
since this Court has already held that later amendment is clarificatory
in nature, and since the purpose of bore-well is the same as well,
petitioner is entitled to payment of tax at compounded rate on the
turnover of construction of bore-well as “civil construction work”.
3. After hearing both sides, we feel the provisions of tax on
works contract cannot be applied to bore-wells in the same way it
applies to other wells. A well is normally constructed by digging and
removing earth to sufficient depth for collection of water. Digging and
removing of earth does not involve supply of any materials and so
much so, the digging of well as such does not involve any tax on
works contract. The position is the same so far as bore-well is
concerned because the difference between ordinary well and bore-
well is only on dimension and probably depth. Driving of bore-well is
a mechanical process and the driller while driving the bore brings out
earth and form the bore-well at the desired depth. Like ordinary
well, driving of bore-well also does not involve supply of any goods
and so much so there cannot be any sales tax on works contract.
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However, invariably in the construction of well as well as bore-well,
contractor may be required to make construction involving supply of
materials and even installation of motor. Tax liability arises only on
these activities and if a well is protected through protective walls
inside or outside, it is civil construction work which attracts tax. If the
contract is a combined one, involving digging and construction of
wall, then the same is a civil construction work on which tax liability
could be settled at compounded rate under Section 7(7) of the Act.
However, in respect of bore-well normally civil construction is not
involved, but in the course of of or after driving the well, sometimes
pipes are inserted inside the tube-well to give inside protective wall
to the bore-well which is to prevent side walls caving in. This is
invariably done at atleast upto the level soil formation is found and
discontinued or is not required when bore-well is made on solid rock
formation. The installation of pipe inside the bore-well, we
understand is called “casing”. However, if bore well is made without
involving driving of pipe casing inside then the same does not involve
tax liability. However, if contract work for bore-well involves supply of
casing, motor or construction of pump house and the like, then
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depending upon the nature of work done tax has to be levied at the
appropriate rate. In other words, if the materials supplied are not civil
construction materials such as PVC pipes, GI Pipes and installation
of motor, etc., then rate of tax at compounded rate under Section 7
(7) is not applicable. On the other hand, if the construction of bore-
well involves construction of any room above it or a motor house or
the like, the same should be treated as civil construction work on
which tax liability could be settled at the compounded rate under
Section 7(7) of the Act.
In view of our finding and observations above, and since none
of the authorities below has considered the above aspects of the
matter, which will be clear from the copies of contract, work bills
issued by the petitioner and payments approved by the Water
Authority and Awarders we allow the revisions by setting aside the
order of the Tribunal and remand the matter to the assessing officer
for recomputation of liability after verifying the contract. We also
direct the assessing officer to verify from the Water Authority about
the reimbursements of tax made by the Water Authority to the
petitioner and if collection or reimbursement of tax is in excess of tax
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assessed, then such excess will be forfeited under Section 46A(1) of
the Act in accordance with the procedure contained therein.
Petitioner will produce copies of contract, work bills raised and
approved by the Water Authority and also details of payment
received by them for the assessing officer to issue revised
assessment.
(C.N.RAMACHANDRAN NAIR)
Judge.
(V.K. MOHANAN)
Judge.
kk
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