IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE B.P.RAY FRIDAY, THE 27TH MAY 2011 / 6TH JYAISHTA 1933 ST.Rev..No. 123 of 2004() ------------------------- AGAINST ORDER IN TA.170/2003 of S.T.A.T.ADDL.BENCH,ERNAKULAM .................... PETITIONER/APPELLANT IN T.A/ASSESSEE: --------------------------------------------------------- M/S. COCHIN SHIPYARD LTD., PERUMANOOR, KOCHI-15. BY ADV. . SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.ANIL D. NAIR SMT.PRIYA MAHESH SMT.PRIYA MANJOORAN RESPONDENT(S): / RESPONDENT IN T.A: --------------------------------- STATE OF KERALA. BY DR.K.P.PRADEEP, GOVERNMENT PLEADER THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 27/05/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & BHABANI PRASAD RAY, JJ. ---------------------------------- S.T.Rev. No.123 of 2004 --------------------------------- Dated, this the 27th day of May, 2011 J U D G M E N T Ramachandran Nair, J. Heard learned counsel for the petitioner and learned Government Pleader for the respondent. 2. Question raised in the Revision case is against limiting the deduction claimed pertaining to administrative overheads in the computation of turnover of works contract at 49% of the total claim. 3. The petitioner is a Public Sector Undertaking engaged in ship building and ship repair. It seems that during the year in question, i.e. 1996-97, the Company was engaged only in ship repair operations. In computing the taxable turnover of works contract, namely ship repair work, the assessing officer allowed full deduction of labour cost employed by the Company and also payment made to labour S.T.Rev.No.123/2004 -2- contractors for the sub contracts awarded. However, over and above this, the petitioner claimed deduction of complete overheads i.e. salary and other benefits given to administrative staff on the ground that the entire expenditure is attributable to ship repair work. However, the Assessing Officer limited the claim to 49% because according to him, the Company is engaged not only in labour supply for the purpose of repair of ships but it is also engaged in procurement and supply of materials required for repair, on which tax is payable. The appellate authorities including the Tribunal confirmed the assessment against which this revision is filed. 4. Learned counsel for the petitioner contended before us that since during the year 1996-97 the petitioner was engaged only in repair work of ships, the entire overheads were debited to repairs and there was no bifurcation. Further according to him, material cost was separately mentioned, on which tax was also paid. We notice that out of the total turnover of Rs.131 crores towards ship repair work, the S.T.Rev.No.123/2004 -3- petitioner has declared nearly Rs.31 crores towards the turnover of material cost involved in the repair of ships. Section 5C of the KGST Act provides for various deductions in the computation of taxable turnover. When the petitioner is engaged in supply of materials as well as supply of labour in the ship repair work, necessarily overheads have to be bifurcated on a rational basis. This is exactly what the Officer has done, which is confirmed by the Tribunal. Therefore we do not think there is any scope for us to vary the ratio of apportionment of overheads made by the Officer, which is confirmed by the Tribunal. Consequently this Revision case is dismissed. (C.N.RAMACHANDRAN NAIR, JUDGE) (BHABANI PRASAD RAY, JUDGE) jg