Keti Construction (I) Ltd. vs Commercial Taxes Officer

J.K. Ranka, J—Instant revision petition by the petitioner-assessee is directed against the order dated April 16, 2012 passed by the Rajasthan Tax Board in Appeal No. 1007/2010/Kota. It relates to the assessment year 2009-10. Brief facts of the case are that the petitioner-assessee is a contractor and was awarded works contract by the Rajasthan Urban Sector Development Investment Program (RUIDP) for Sewerage Treatment Plant (STP) regarding design, construction, supply, erection, testing, commissioning for a total contract of Rs. 31,75,10,374 on November 4, 2009. The petitioner-assessee was of the opinion that it falls within the definition of "civil work" and, being covered by Notification No. 12(63)FD/Tax/2005-80 dated August 11, 2006, is liable to get exemption on payment of exemption fees at 1.5 percent, of the total value of the contract as provided under item/category No. 2 of the said notification and accordingly submitted application for issuance of exemption certificate to this effect. However, the assessing officer (AO) was of the view that looking to the nature of the contract, i.e., installation of plant and machinery including PSPO water treatment plants, laying of pipeline with material, it falls under the item/category 3 of the above-mentioned notification and as such, is liable to charge exemption fees at 2.25 percent, and accordingly passed the assessment order.

The said assessment order was challenged in appeal before the Deputy Commissioner (Appeals) (DC (A)), who too, after analysing the contract with RUIDP, upheld finding of the AO holding that it falls within the same notification but under item/category 3 of the notification and is liable to exemption fee at 2.25 percent, and not at 1.50 percent, and accordingly dismissed the appeal.

On a further appeal by the petitioner-assessee, the Tax Board also, after analysing the material on record, came to a finding of fact that the claim of the AO is just and proper and accordingly rejected the appeal filed by the assessee which is assailed in this petition.

The learned counsel for the petitioner-assessee drew attention of this court and contended that on perusal of the terms of the contract, it is clear that the assessee was awarded contract for a period of five years and the scope of work under the contract, namely, setting up of sewerage system, plant and machinery and maintenance for five years and drew attention of the court to the terms and contract and vehemently contended that all the three authorities have not decided the real controversy and have gone only on the basis that the item/category 3 of the aforesaid notification which mentions "works contracts relating to installation of plants and machinery including PSPO, water treatment plants, laying of pipeline with material", the exemption fee at 2.25 percent, is leviable and accordingly contended that the order of the Tax Board is perverse and questions of law arise out of the order of the Tax Board. In support of his submission, learned counsel for the petitioner-assessee relied upon the judgments rendered in the case of Associated Cement Companies Limited v. State of Karnataka [2007] 7 VST 691 (Kam) , Bharat Vijay Mills Ltd. Vs. Commissioner of Commercial Taxes, (1992) 85 STC 23 .

Per contra, learned counsel for the respondent-Revenue contended that the terms of the contract clearly envisage that it is nothing but water treatment plant with some other activities which are part of water treatment plant and therefore, the AO as well as both the appellate-authorities came to a definite finding of fact about the assessee falls under category 3 and the exemption fee being applicable at 2.25 percent, under the said notification. He contended that it is basically a question of fact and after analysing the material and evidence on record, the authorities below have come to a finding of fact and no question of law can be said to arise out of the order of the Tax Board.

I have considered the arguments advanced by counsel for the parties and in my view, it is essentially a finding of fact recorded by the lower authorities and the Tax Board, after appreciation of evidence, material on record and looking to the terms of the works contract, has clearly come to a definite finding of fact that the work assigned to the petitioner-assessee cannot be segregated and its main activity was construction/establishing plant and machinery of the sewerage treatment plant and that apart laying down pipelines with material which falls under the item/category 3 of the notification. It is also apparent that the work is a composite one and neither from the contract nor the activity undertaken by the petitioner-assessee, he has been able to segregate for the amount incurred by it on different activities separately. The work assigned by the petitioner as per the work order reads as under:

"Design, construction, supply, erection testing, commissioning and five year operation and maintenance of Sewage Treatment Plant 10 MLD near Surwal Village including all civil, electrical, mechanical, pumping and other allied works'' and supply, paying, laying, joining, testing and commissioning of outfall sewer, various Trunk sewers and lateral sewers correction to out fall, along with all necessary manhole, appurtenances, etc., at Sewai Madhopur."

The list enumerated in the notification dated August 11, 2006 is also quoted hereinunder:

On reading of the work assigned to the petitioner, and the notification (supra), in my view, there was composite agreement of contract and the major activity being of laying of pipeline with material, water treatment plant, etc., then it would certainly be falling in item/category No. 3 of the notification and all the three authorities in unison have come to a finding of fact based on the terms of the contract. Accordingly, once it is a finding of fact based on the terms of the contract, in my view, no question of law can be said to arise out of the order of the Tax Board and this court does not find any perversity, illegality and impropriety in the order impugned so as to call for interference. As regards the judgments, relied upon by counsel for the petitioner-assessee are concerned, in my view, the same are distinguishable and inapplicable to the facts of the present case as in the present matter, it is only on the basis of appreciation of evidence. Consequently, the revision petition, being devoid of any merit, is accordingly dismissed with no order as to costs.