The Allahabad High Court in the case of revision application under section 58 of the Uttar Pradesh (UP)Value Added Tax Act, 2008, held that the benefit of exemption /deduction must be decided by following a stricter approach.
Sanya Construction And Developers Pvt.Ltd, the revisionist filed an application for revision under Section 58 of the Uttar Pradesh (UP)Value Added Tax Act, 2008 about Assessment Year 2012-13, wherein it was questioned whether on the facts and circumstances of the case the Commercial Tax Tribunal was legally justified in holding that the cement imported from outside the State of U.P., the turnover is liable to be reduced as per Rule 9 of the Value Added Tax Rules?
The revisionist submitted that the assessee has not established factum of import of goods and specific execution of work contract and, therefore, the benefit under Rule 9 Sub Rule (1)(e) of the U.P. Value Added Tax Rules, 2008, (‘the Rules’) would not apply to the assessee. It is further submitted that the judgment passed by the Coordinate Bench in M/s Comfort Systems Vs. Commissioner Commercial Tax, U.P.is not applicable to the present case as in that case there was no dispute that the goods have been imported from outside the State of U.P. for utilization in the works contract.
The respondent-assessee has argued that when the goods are coming from outside the State and the Tribunal comes to a specific finding that the goods were brought into the State to carry out a pre-existing works contract, the benefit of deduction contemplated under Section 9(1)(e) of the Rules would be available to the assessee.
Upon perusal of the order of the Tribunal it is patently clear that the goods were imported from outside the State of U.P. and were used in one project in the State of U.P. There does not appear to be any perversity in the finding of the Tribunal about the above factum. In my view, such being the case, Rule 9 (1)(e) of the Rules would apply, and the petitioner would be entitled to the benefit.
Once the Tribunal had found that the movement of goods from the outside state had been caused by the pre-existing works contract and that the goods thus imported had been applied solely for the execution of those works contracts and there was no allegation or finding that such goods had been imported by the assessee independent of the works contract, the enquiry necessary to decide the dispute should end there.
According to the facts found by the Tribunal, the deemed sale was one performed in the course of inter-state sale as the movement of the goods had been occasioned from outside the state, only for execution of the works contracts, by the assessee.
“The general rule of law in taxing statutes is that in case of any doubt, the benefit should be given to the assessee. However, in case of exemption and deduction to be given, a stricter approach may be followed, as per the catena of judgments of the Supreme Court, to examine whether the assessee is eligible for such benefit. In the present case, there is no factual dispute of goods having been imported from outside the State of U.P. and, therefore, the assessee qualifies for the said benefit.”, Justice Shekhar B. Saraf.
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