IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 447 of 2005()
1. STATE OF KERALA REP.BY
... Petitioner
Vs
1. P.SUNIL KUMAR, CIVIL CONTRACTOR,
... Respondent
For Petitioner :GOVERNMENT PLEADER
For Respondent :SRI.E.P.GOVINDAN
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice A.K.BASHEER
Dated :13/11/2008
O R D E R
H.L.Dattu,C.J. & A.K.Basheer,J.
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S.T.Rev.No.447 of 2005
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Dated, this the 13th November, 2008
ORDER
H.L.Dattu,C.J.
Revenue’s revision petition, being aggrieved by the orders
passed by the Kerala Agricultural Income Tax and Sales Tax Appellate
Tribunal, Additional Bench, Palakkad in T.A.No.229 of 2002 dated
30.1.2003.
(2) The assessee is a civil contractor. For the relevant
assessment year, the nature of work executed by the petitioner was
demolition of compound wall, construction of well, construction of water
tanks, etc.
(3) The assessee is also a registered dealer under the Kerala
General Sales Tax Act, 1963 (“Act” for short). He had filed an application
before the assessing authority to permit him to pay the tax at the compounded
rate, under Sections 7(7) and 7(7A) of the Act. Pursuant to the request so
made, the assessing authority had permitted the petitioner to pay the tax at
the compounded rate under Section 7(7) of the Act.
(4) The assessee had filed its annual returns in Form No.9
along with the necessary documents before the assessing authority for the
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assessment year in question. The assessing authority has completed the
assessments under Section 7(7) of the Act and has levied tax on the taxable
turnover of the dealer at 2%.
(5) May be realizing that a particular taxable turnover of the
dealer has escaped assessment, the assessing authority had issued a notice
under Section 19 of the Act, proposing to reassess the dealer. Though it was
objected to by the assessee, the assessing authority has completed the
reassessments under Section 19 of the Act and has brought the taxable
turnover of the dealer under Section 7(7A) of the Act and has levied tax at
the rate of 5% on the taxable turnover of the dealer.
(6) The assessee was unsuccessful before the first appellate
authority. That is how he had carried the matter in second appeal before the
Tribunal in T.A.No.229 of 2002.
(7) The Tribunal has allowed the assessee’s appeal, being of
the view, that, the contract work that was carried out by the dealer is in the
nature of the civil works and, therefore, the compounding has to be done by
the assessing authority only under Section 7(7) of the Act and the rate of tax
payable is only at 2%.
(8) Calling in question the correctness or otherwise of the said
order passed by the Tribunal, the Revenue is before us in this revision
petition.
STRev.447/2005. 3 –
(9) The Revenue has framed the following question of law for
our consideration and decision. It is as under:
“Whether on the facts and in the circumstances of the
case, the Tribunal is justified in holding that the construction
of compound wall, well, earthern drain, etc., would fall under
civil work as mentioned in section 7(7) of the K.G.S.T.Act?”
(10) Sri.Muhammed Rafiq, learned counsel appearing for the
Revenue would submit, that, considering the nature of work that was
awarded and executed by the assessee, it cannot be brought within the
definition of “civil works” and, therefore, the Tribunal was not justified in
directing the assessing authority to modify the reassessment passed under
Section 19 of the Act and grant the benefit of compounding by levying tax
only at the rate of 2% on the taxable turnover of the dealer. In aid of his
submission, the learned counsel relies on the observations made by a
Division Bench of this Court in the case of Abdul Majeed v. State of Kerala
[2006 (3) KLT 548]. In the said decision, this Court has observed that:
“The items mentioned in Section 7(7) are specific, such
as building, bridges, roads, railway tracks, walls, including
repair or maintenance of such civil works which do not take in
drains or culverts. Court is not justified in adding items which
the legislature in its wisdom has not included”.
(11) Sri.E.P.Govindan, learned counsel appearing for the
respondent-assessee, would submit, that, having permitted the assessee to
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pay the tax at the compounded rate under Section 7(7) of the Act and without
modifying that order, the assessing authority could not have passed a
reassessment order under Section 19 of the Act.
(12) The argument canvassed by the learned counsel looks
attractive, but that argument was not canvassed by the assessee, either before
the assessing authority or before the first appellate authority or before the
Appellate Tribunal. What was not pleaded/urged and argued, cannot be
permitted to be urged for the first time in a revision petition. Therefore, we
cannot accept the contention of Sri.E.P.Govindan, the learned counsel
appearing for the assessee.
(13) Now, what remains to be considered by us is, whether the
nature of work that was awarded to and executed by the petitioner is a “civil
work” as defined under Section 7(7) of the Act. If, for any reason, the said
contract work does not fall under Section 7(7) of the Act, then it would only
fall under Section 7(7A) of the Act.
(14) The assessing authority, in its reassessment order, has
noticed the contract that was awarded to the assessee. They are – removing of
compound wall, construction of well, construction of water tank, etc. The
assessing authority, at the time of passing reassessment order, is of the
opinion, that, the work that was executed by the assessee is not in the nature
of civil works and, therefore, the order passed by him earlier requires to be
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annulled and a fresh order requires to be passed under Section 7(7A) of the
Act, thereby levying 5% tax on the taxable turnover of the dealer. This order
was questioned by the assessee before the first appellate authority, where he
was not successful and before the Tribunal, the assessee’s contention was
that the contract that was awarded to the assessee is in the nature of civil
work and, therefore, the assessing authority could not have reassessed the
dealer under Section 7(7A) of the Act. The Tribunal, after referring to the
meaning of the expression “civil works”, holds, that removing of compound
wall, construction of well, construction of water tank, etc. would also come
within the purview of the definition of “civil works” and, therefore, has
granted the relief to the assessee by allowing the appeal filed by the assessee.
(15) In view of what has been stated by a Division Bench of
this Court in Abdul Majeed’s case (supra), wherein the expression “civil
works” has been explained, removing of a compound wall, construction of
well, construction of water tank, would not fall within the definition of “civil
works” and, therefore, the assessing authority was justified in passing the
order under Section 19 of the Act by revising his earlier order passed for the
assessment year 1996-97 and directing the petitioner to pay tax at the rate of
5% on the taxable turnover.
(16) In view of the above discussion, the revision petition filed
by the Revenue requires to be allowed and the orders passed by the Tribunal
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requires to be annulled.
(17) Accordingly, we pass the following:
Order
(i) The revision petition is allowed.
(ii) The order passed by the Tribunal in T.A.No.229 of 2002 dated
30.01.2003 is set aside.
(iii) The reassessment orders passed by the assessing authority under
Section 19 of the Act, as confirmed by the first appellate authority in
S.T.A.No.II-225/2001 dated 30.1.2002, is sustained.
Ordered accordingly.
H.L.Dattu
Chief Justice
A.K.Basheer
vku/dk Judge