August 2013
Veeaar Constructions vs. State of Andhra Pradesh, [2011] 45 VST 352 (AP)
By C. B. Thakar, Advocate
G. G. Goyal, Janak Vaghani, Chartered Accountants
Reading Time 2 mins
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Sales-Works Contract- Determination of Sale Price- Deduction For Depreciation, Maintenance and Cost of Consumables-Used in Execution of Works Contract-Permissible-Section 5F of The Andhra General Sales Tax Act, 1957 and Rule 6(2) (D) of The Andhra General Sales Tax Rules, 1957
Facts
The dealer filed revision petition before the Andhra Pradesh High Court against the appeal order passed by the Tribunal confirming order of the appellate and reassessing authority in not granting deduction from contract value for depreciation on Vehicle, Maintenance Expenses on Tipper and Consumables used in execution of works contract for the purpose of determining sale price of goods to levy of tax under the act.
Held
The assessee is entitled for exemption not only on the charges for obtaining on hire or otherwise machinery and tools used for execution of the works contract but also on the amounts spent by the contractor on such machinery as a consequence of using them for the execution of the works contract including the value of the proportionate wear and tear of the machinery which is otherwise identified as depreciation on the premise that it is equivalent to the hire charges spent otherwise. The dominant idea for exempting the said charges should be use of the machinery for execution of the works and the amounts spent by the contractor on such machinery. Otherwise, there is no necessity to use the word “or otherwise” under rule 6(2)(d). Accordingly, the revision petition filed by the dealer was allowed.
