STATE OF JHARKHAND AND ORS. versus VOLTAS LTD., EAST SINGHBHUM

Citation: [2007] 6 S.C.R. 276 · Decided: 09-05-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed
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Judgment (excerpt)

A 
STATE OF JHARKHAND AND ORS. 
f 
v. 
f 
VOLTAS LTD., EAST SINGHBHUM 
MAY 9, 2007 
B 
[S.B. SINHA AND MARKANDEY KA TJU, JJ.) 
Sales Tax-Bihar Sales Tax Act-Section 21-Bihar Sales Tax Rules-
.... ,. 
Rule 13A-Taxable turnover in case of works contract-Permissible 
c deductions-Held: It is not merely the labour charges which are deductible 
from the value of the works contract, but all other charges/amounts also, 
except the value of the goods sold in execution of the works contract-This 
is because only the value of the goods sold can be taxed as sales tax. 
"' 
Bihar Finance Act-s.24, proviso-Sales tax assessment proceedings in 
D respect of works contract-Re-assessment pursuant to remand was to be done 
within two years-But actually made after more than six years-Held: 
Proceedings were clearly time barred. 
,_ 
..<( 
Respondent company is engaged in the execution of contracts of 
E designing, supplying, installation, fabrication, testing and commissioning of 
air-conditioning plants. The assessing authority acknowledged that the 
contracts in question were works contracts and the material supplied in the 
execution of the works contracts only are liable to be taxed. However, the Sales 
Tax Authorities held that the incidence of tax is commensurate with actual 
transfer of property that takes place in the execution of works contract. Hence 
F the present appeal. 
An additional question raised in appeal to this Court is whether the 
assessment proceedings in question were beyond limitation. 
G 
Dismissing the appeal, the Court 
HELD: 1. It is not merely the labour charges which are deductible from 
' 
the value of the works contract, but all other charges/amounts also, except 
the value of the goods sold in execution of the works contract. This is because 
only the value of the goods sold can be taxed as sales tax. (Para 13) 
H 
276 
ST A TE OF JHARKHAND ''- VOL TAS LTD .. EAST SINGHBHUM (MARKANDEY KA TIU.I.] 
277 
Larsen & Toubro Ltd. v. State of Bihar, 134 STC 354, approved 
A 
Gannon Dunkerley and Co. & Ors. v. State of Rajasthan & Ors., (1993) 
1 SCC 364, relied on. 
State of Madras v. Gannon Dunkerley & Co. (Madras) (1959) SCR 379, 
referred to. 
B 
2. The proceedings in question were beyond limitation. It appears that 
against three assessment 'lrders for the period 1990-91, 1991-92 and 1992-
93, the respondent preferred three appeals before the Joint Commissioner, 
Commercial Taxes (Appeal). The appellate authority passed a common order 
on 31st August, 1998 and communicated the decision vide Memo No. 2177 C 
dated 5th November, 1998 to the assessing authority and other officers. The 
assessing authority was directed to make a re-assessment. As per the proviso 
to Section 24 of the Bihar Finance Act, the assessing authority was supposed 
to complete and pass the re-assessment order pursuant to the remand by 5th 
November, 2000, two years from the date of communication of such order to D 
the assessing authority. However, the assessment was not concluded and fresh 
assessment on remand was made on 27th November, 2004 i.e. after more than 
six years of communication of the said order. Hence, it was clearly time 
barred. (Para 15J [281-B, C, D, E) 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2408 of2007. 
E 
From the Final Judgment and Order dated 22.06.2006 of the High Court 
of Jharkhand at Ranchi in W.P.(T) No. 482 of2005, with W.P.(n No. 467 of 
2005 with W.P(T) No. 493 of2005 and W.P.(T) No. 466 of2005. 
Nargendra Rai, B.B. Singh and Kumar Rajesh Singh for the Appellants. F 
R.F. Nariman, Sr. Adv., Pratap Venugopal, Surekha Raman, E. Venu 
Kumar and Harshad V. Hamaad (for MIS. K.J. John & Co.) for the Respondent. 
The Judgment of the Court was delivered by 
MARKANDEY KAT JU, J. I. Leave granted. 
2. This appeal by special leave has been filed against the impugned 
judgment & order 22.6.2006 of the Jharkhand High Court in Writ Petitions 
Nos. 482, 467, 493 and 466 of2005. 
G 
H 
A 
278 
SUPREME COURT REPORTS 
[2007) 6 S. C.R. 
3. Heard learned counsel for parties and perused the record. 
4. The respondent, a company registered under the Indian Companies 
Act, 1913 is engaged inter alia in the execution of works contracts of designing, 
supplying, installation, fabrication, testing and commissioning of air-
conditioning plants. The assessing authority acknowledged that the contracts 
B in question were works contracts and the material supplied in the execution 
of the works contracts only are liable to be
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