Ashwani Kumar Mishra, J.—The revisionist, herein, is a works contractor, who is aggrieved by the order of the authorities under the Act, as affirmed by the order of the Tribunal, in so far as the payment made towards the labour charges have been disallowed deduction and only 30% deduction for the purpose has been permitted. The matter pertains to the assessment year 2010-2011. Reliance is placed upon Rule-9 of The Uttar Pradesh Value Added Tax Rules, 2008.
2. Sri Krishna Agrawal, learned counsel appearing for the assessee has invited attention of the Court to Rule-9 of the VAT Rules. Rule-9(1) (d) and 9(3) are relevant and thus reproduced :-
"Rule 9. Determination of turnover of sale of goods involved in the execution of a works contract -
(1) Subject to other provisions of these rules, the tax on turnover of sale of goods where such sale is affected by way of transfer of property in goods (whether as goods or in some other form) involved in the execution of a work contract shall be computed on the taxable turnover of sale of taxable goods. For the purposes of determining the taxable turnover of sale of such goods, the amounts specified below shall be deducted if included in the gross amount received or receivable in respect of the works contract :-
(2) all amounts representing the value of service and labour and profit thereon;
(3) Where accounts maintained by the contractor do not show separately the value of labour and services and amount of profit accrued on such labour and services, or accounts maintained by the dealer are not worthy of credence or if the dealer has not maintained accounts, for the purpose of determining turnover of goods in which transfer of property in goods has taken place, in cases other than those mentioned in the table below, an amount, representing twenty percent of gross amount received or receivable, shall be deducted towards labour and services and amount of profit accrued thereon and in the cases described or mentioned in column 2 of the table given below, amount of deduction towards such labour and services and amount of profit accrued thereon shall be computed at the rate percentages, given in column 3 against the entry in column 2 of the table, of the amount received or receivable".
3. Learned Counsel, with reference to Rule-9 (1)(d) contends that the amount representing the value of service and labour and profit is liable to be deducted if it is included in gross turnover while determining the taxable turnover of sale of such goods. It is contended that such benefit can be granted if it is shown separately, as has been done herein. Submission is that only in its absence or where necessary ingredients to attract sub Rule-(3) exists on record that benefit under rule 9(1)(d) can be denied. It is contended that there is no justification reflected in the orders of the authority, which may justify discrediting the figures disclosed in the Books of Account by the assessee so as to warrant having recourse to sub Rule (3) of Rule-9.
4. It is also contended on behalf of the assessee that it had not purchased stone (Khanda) and that addition to its turnover by Rs. 40,00,000/- was without any basis. It is stated that merely because such purchases were made in previous years would not be a ground to include such amount in the correct year as well.
5. Learned Standing Counsel, on the other hand, has invited attention of the Court to the assessment order and an attempt is sought to be made that appropriate accounts, in respect of the figures reflecting labour works were not maintained and furnished.
6. I have heard learned counsel for the parties and have perused the materials brought on record.
7. Rule-9 regulates determination of turnover in a works contract. It is clear that the amount representing the value of service and labour and profit thereon is liable to be deducted if it is included in the gross amount received in respect of works contract. The assessee herein is works contractor and has submitted his books of account in which he has admitted liability to pay tax amounting to Rs. 1,04,60,958/-. The assessing authority has observed that a show cause notice was issued to the assessee, stating that in respect of the earth work and labour work, details of payment have not been funished. The assessee responded to the show cause notice by contending that separate work orders/bills have been issued and after appropriating the amount incurred towards the earth work and labour work, the books of account have been drawn, clearly segregating the amount payable in the relevant head. From the order passed by the assessing authority, this court finds that there is no finding returned in the order to discard the books of account of the assessee, holding that accounts maintained by the dealer are not worthy of credence or that the amount payable towards the labour has not been separately shown. The first appellate authority as well as the Tribunal have merely dittoed the opinion expressed by the assessing authority and 30% amount claimed as labour charges alone have been held admissible for deduction.
8. From the reading of the Rule, it is apparent that 20% amount towards labour charges could be held admissible for deduction, by virtue of Rule-9(3) of the Rules, in a case where the amount payable towards labour charges are not separately shown or that the accounts maintained by the dealer are not worthy of credence. 20% deduction would be admissible upon the total value of the contract, if the account of the assessee are not accepted. However, the authorities would have to examine with reference to the materials placed as to whether the claim of the assessee falls within the purview of Rule-9(1) (d) or 9(3) of the Rules. Unless the matter is examined from that perspective, the authorities would not be justified in rejecting the figures representing the value of service and labour and profit in the books of account.
9. Since in the facts of the present case this Court finds that the required exercise warranted at the level of the authorities to deal with the liability of the assessee to pay VAT with reference to the provisions contained under Rule-9 of the Rules, have not been under taken, as such, the Tribunal was not justified in rejecting the claim of the assessee.
10. The question of law, formulated for consideration in this revision is answered by holding that in the absence of any discussion and finding based upon the materials placed, doubting the figures reflected in the books of account to show the value of service of labour, the authorities were not justified in denying the benefit admissible to the assessee under Rule-9(1)(d) of the Rules. The Tribunal in such circumstances, would examine the matter afresh, keeping in view the provisions of Rule-9 and in light of the observations made above.
11. The second question posed for consideration in this revision is also answered by holding that in the absence of any material existing on record showing purchase of stone (Khanda) of Rs. 40,00,000/-, the authorities would not be justified in including such amount in the turnover merely for the reason that such purchases were made in the previous years. The figures shown for the current year along are relevant for such purposes.
12. Revision, accordingly, stands disposed of.
