IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN TUESDAY, THE 19TH OCTOBER 2010 / 27TH ASWINA 1932 ST.Rev..No. 162 of 2010() ------------------------- TA.114/2009 of DY.COMMR.KERALA AGRL.IT &STAT,KZD. .................... REVISION PETITIONER --------------------------------------- S M C PROJECTS (INDIA) LTD., GOLD TOWER NO.50, 2ND FLOOR, RESIDENCY ROAD, BANGALORE-25. BY ADV. SRI.C.SANKUNNY RESPONDENT(S): --------------- STATE OF KERALA, REPRESENTED BY THE GOVERNMENT PLEADER, HIGH COURT OF KERALA, ERNAKULAM. BY G.P. SRI. MOHAMMED RAFEEQ THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 19/10/2010, ALONG WITH STRV NO. 163 OF 2010 STRV NO. 168 OF 2010 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR, & K. SURENDRA MOHAN, JJ. -------------------------------------------- S.T. Rev. No. 162, 163 & 168 of 2010 -------------------------------------------- Dated this the 19th day of October, 2010 JUDGMENT Ramachandran Nair, J. Two questions are raised in the connected revisions filed by the assessee, which relate to the sales tax assessments for the years 2000- 01, 2001-02 and 2002-03. We have heard Sri. C. Sankunny, counsel appearing for the petitioner and Sri. Mohammed Rafeeq, Government Pleader appearing for the respondent. 2. Before proceedings to consider the case on merits, we notice that petitioner is a Civil Construction Contractor who could have availed of compounding facility and settled the tax liability at 2% of the turnover of civil construction work. However, instead of choosing the benefit, which is availed by civil contractors generally, petitioner filed regular returns claiming deductions. 3. The first question raised pertains to petitioner's claim of deduction of cost of establishment of the dealer to the extent it is relatable to the supply of labour and services covered by section 5C(1) STRV 162,163 & 168/2010 2 (c)(iv) of the KGST Act. We notice that for the first year the assessing officer worked out the cost of establishment of the petitioner at 52.8 per cent which though was increased to 68% by the first appellate authority, the Tribunal reduced it and refixed it at the percentage fixed by the assessing officer for the reason that the first appellate authority's order is arbitrary and is without any basis. For the remaining years, the dispute is only on the percentage of establishment cost fixed by the assessing officer, modified by the first appellate authority and refixed by the Tribunal. We do not find any substantial question of law arising from the finding on the amount of cost of establishment of the petitioner, that is eligible for deduction under the above provision of the Act. This has to be worked out based on facts and figures and evidence produced by the petitioner, and so long as it is done in accordance with the provisions of the Act, then there is no scope for interference in revision by the High Court in regard to finding on facts. We therefore reject this claim of the petitioner. 4. The second question raised is with regard to denial of exemption on the turnover of amount given to sub contractors. We STRV 162,163 & 168/2010 3 find that the reason for denial of exemption is because petitioner has not produced evidence in terms of the proviso to Section 5C(1)(b), which states that in order to claim exemption, dealer has to produce proof that sub contractor is a registered dealer and is liable to pay tax under the Act and the turnover in respect of which exemption is claimed should have been included by the sub contractor in their turnover. The clear cut finding of the Tribunal is that petitioner has not produced proof in terms of the proviso to the Section. Even though counsel for the petitioner contended that declarations from the sub contractors were produced and they were proof that sub contractors are registered dealers, still exemption is declined. We do not think production of declarations towards proof of registration of sub contractors under the Act is sufficient to grant exemption. Further proof to be produced is that turnover pertaining to the work awarded by the petitioner should have been assessed in the hands of the sub contractor and such sub contractor should have paid tax on such turnover for the petitioner to claim exemption. In the absence of proof of the same, we feel, lower authorities, including the Tribunal, rightly STRV 162,163 & 168/2010 4 rejected petitioner's claim. We do not find any merit in the Tax Revisions and the same are accordingly dismissed. (C.N.RAMACHANDRAN NAIR) Judge. (K. SURENDRA MOHAN) Judge. kk STRV 162,163 & 168/2010 5