Quashed

Rofiqul Islam and 11 Ors. v. the State of Assam and 9 Ors.

Gauhati HC8 Sept 2025WP(C)/6250/2018

Case brief

AI extract

What is this about?

Tractor owners engaged for flood de-siltation work challenged a direction to deduct 5% VAT from their bills to meet an audit objection. The court held the transaction was purely a contract for labour and services with no transfer of property in or right to use goods, so no sale under Section 2(43) AVAT Act arose and quashed the communication.

What did the court decide?

Communication dated 08.08.2018 directing deduction/realisation of 5% VAT from petitioners' bills was set aside and quashed.

Rofiqul Islam and 11 Ors. Vs the State of Assam and… — Writ and Judicial Review | Gauhati HC (2025)

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GAHC010196032018

2025:GAU-AS:12481

THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

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Case No. : WP(C)/6250/2018

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ROFIQUL ISLAM AND 11 ORS. S/O- AKABBAR ALI, VILL- JHARNAR CHAR PT-IV, P.O. JHARNARCHAR, P.S. FAKIRGANJ, DIST- DHUBRI, ASSAM

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2: FOYZAR RAHMAN S/O- ABDUL MANNAN SK VILL- TAKIMARI P.O. HAZIRHAT P.S. SUKCHAR DIST- SOUTH SALMARA MANKACHAR ASSAM

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3: ANJUMANARA BEGUM W/O- LT SHODAGOR ALI VILL- TAKIMARI P.O. HAZIRHAT P.S. SUKCHAR DIST- SOUTH SALMARA MANKACHAR ASSAM 4: ZIL HOQUE S/O- HOZORAT ALI VILL- KHOPATI PART-II P.O. HAZIRHAT P.S. SUKCHAR DIST- SOUTH SALMARA MANKACHAR ASSAM

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5: GOLAM MASTAFA SK S/O- ABUL KASHEM VILL- JHAUDANGA PART-3 P.O. JHAUDANGA P.S. MANKACHAR DIST- SOUTH SALMARA MANKACHAR

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ASSAM

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6: ASRUTZAMAN SK S/O- SATTER ALI SK VILL- TATIPARA P.O. HAZIRHAT P.S. SUKCHAR DIST- SOUTH SALMARA MANKACHAR ASSAM 7: SARDAR ESTIAK AHMED S/O- SHIRAJUL HOQUE SARDER VILL- PAGLARTOLA P.O. FEKAMARI P.S. SOUTH SALMARA DIST- SOUTH SALMARA MANKACHAR ASSAM 8: ENAMUL ISLAM MANDAL S/O- LT HAZI AZIZUR RAHMAN MANNDAL VILL- GOTABARI P.O. HAZIRHAT P.S. SUKCHAR DIST- SOUTH SALMARA MANKACHAR ASSAM 9: SHAHINUR ISLAM S/O- SULTAN MOZID VILL- JHAWDANGA PT-III P.O. JHAWDANGA P.S. MANKACHAR DIST- SOUTH SALMARA MANKACHAR ASSAM 10: ABUL HUSSAIN S/O- GOLZAR HUSSAIN VILL- SALMARA PT-VI P.S. FAKIRGANJ DIST- DHUBRI ASSAM 11: ZIYADUR RAHMAN S/O- LT HAZI JOYNAL ABEDIN VILL- BOROKOLIYA PT-II P.S. FAKIRGANJ DIST- DHUBRI ASSAM 12: HOZRAT ALI

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S/O- MOKSED ALI VILL- KAZAIKATA PT- IV P.S. BILASIPARA DIST- DHUBRI ASSA VERSUS THE STATE OF ASSAM AND 9 ORS.

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REP. BY THE COMM. AND SECY. TO THE GOVT. OF ASSAM, REVENUE AND DISASTER MANAGEMENT DEPTT., DISPUR, GHY-6 2:THE SECY. TO THE GOVT. OF ASSAM AGRICULTURAL DEPTT. DISPUR GHY-6 3:THE DIRECTOR OF AGRICULTURE ASSAM KHANAPARA GHY-22 4:THHE PRINCIPAL ACCOUNTANT GENERAL (AUDIT/ACCOUNTS) MAIDAMGAON BELTOLA ASSAM GHY-29 5:THE CHIEF EXECUTIVE OFFICER ASSAM STATE DISASTER MANAGEMENT AUTHORITY DISPUR GHY-6 6:THE DY COMMISSIONER DHUBRI P.O. AND DIST- DHUBRI ASSAM PIN- 783301 7:THE ADDL. DY. COMMISSIONER DHUBRI P.O. AND DIST- DHUBRI ASSAM PIN- 783301 8:THE EXECUTIVE ENGINEER (AGRICULTURE) DHUBRI DIVISION GAURIPUR

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P.O. GAURIPUR- 783302

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9:COMMISSIONER AND SECRETARY TO THE GOVT. OF ASSAM (FINANCE AND TAXATION DEPARTMENT).

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10:COMMISSIONER OF TAXES ASSAM

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B E F O R E

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HON’BLE MR. JUSTICE DEVASHIS BARUAH

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Advocates for the petitioner(s) :Mr. BD Das, Senior Advocate

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Mr. M Khan

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Ms. J Gotha

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Advocates for the respondent(s) :Mr. S Dutta,

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Standing Counsel,

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Revenue & Disaster Management Department,

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Govt. of Assam Mr. B Choudhury Mr. B Gogoi, Addl. AG, Assam Mr. RK Talukdar Mr. G Bokolial, Govt. Advocate, Assam

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Date of hearing & judgment : 09.09.2025

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JUDGMENT & ORDER(ORAL)

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Heard Mr. BD Das, the learned senior counsel, assisted by Ms. J

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Gotha, the learned counsel appearing on behalf of the petitioners. I have also heard Mr. S Dutta, the learned Standing Counsel, Revenue and Disaster Management Department, Govt. of Assam, Mr. B Choudhury, the learned counsel, who represents the Agriculture

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Department, Mr. RK Talukdar, the learned counsel appearing on behalf of the Accountant General, (Audit/Accounts), Assam, Mr. G Bokolial the learned Junior Govt. Advocate, Assam who appears on behalf of the Deputy Commissioner, Dhubri and Mr. B Gogoi, the learned Additional Advocate General, Assam, who also represents the Finance Department, Govt. of Assam.

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The grievance of the petitioners herein is the communication dated 08.08.2018 issued by the Additional Deputy Commissioner, Dhubri, thereby directing the Executive Engineer, Agriculture, Dhubri Division to realise VAT amount @ 5% from the bills of the petitioners and deposit the same through the Treasury Challan under the proper head of account and submit a report at an early date to meet the raised audit objection.

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For appreciating the dispute, it is relevant to take note of that the Joint Secretary to the Government of Assam, Revenue and Disaster Management Department vide the communication dated 28.05.2015 to the Principal Accountant General, Assam conveyed the Administrative Approval of the Governor of Assam amounting to Rs.10 Crores for de-siltation work of 12,347.32 hectares of agricultural land, where silt were deposited due to flood in 2014, under 8(eight) numbers of districts as detailed out in the said communication.

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The materials on record show that the Agricultural Department of

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the Government of Assam at the time of granting the Administrative Approval analysed the cost required for hire of tractors for 1(one) hectare of land and assessed that the cost involved would be Rs.8,100/- per hectare.

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The record further reveals that the Executive Engineer, Agriculture, Dhubri Division, issued a Short Notice Inviting Quotation inviting owners of tractors, registered under the Central Motor Vehicles Act, 1988 (for short, the Act of 1988) for de-siltation work by tractorization in agricultural lands, affected by siltation in various locations. It was mentioned that the Administrative Approval was received from the Government of Assam, Revenue and Disaster Management Department, but the payment would be released to the owners, only after satisfactory completion of the works and subject to release of funds by the Government of Assam.

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The criteria which was stipulated in the said Short Notice Inviting Quotation were that the bidders must be owner of the tractor registered under the Act of 1988; should possess valid registration certificate; should have up-to-date insurance coverage; should possess pollution certificate(where necessary); should possess PAN card; and the drivers of the vehicles should have up-to-date driving licence for tractors under the Act of 1988 and the rules framed thereinunder.

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The Short Notice Inviting Quotation, however did not detail out as to how the work was to be carried out as well as to who shall have the control over the tractors while carrying out the work in question. Pursuant thereto, the petitioners herein were issued various Work Orders. Taking into account its relevance, one of such Work Orders, which is a part of Annexure-4 series is reproduced hereinunder:

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“ OFFICE OF THE EXECUTIVE ENGINEER (AGRICULTURE) DHUBRI DIVISION GAURIPUR

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No.EE/Agri/GRP/SDRF/T-213/2015-16/1055 Date:10/12/15 From: Sri B K Nath, EE (Agri) Dhubri Div.Gauripur

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To Sri Rafiqul Islam

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Vill. Jharnarchar, Pt. IV, P.O. Jharnarchar Owner Tractor Regd. No. AS 17B/2084

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Sub:- Desiltation by Tractorisation in the Village Jharnarchar, Pt. II, III IV V, Majerchar Pt. III and Dimartola poyesty, Area 310 Hac.

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Ref:- your quotation No. nil dtd.20/11/15

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Sir,

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With reference to above, I am to inform you that your quotation for desiltation by tractorisation work has been approved @ Rs.8100/- per Hactor of Agricultural land. You are to report to the Junior Engineer Sri. ____________ for immediate commencement of the work, as the season is ideal for plantation of Jute, Early Ahu etc, you are directed to prepare the field by (i) 10" deep ploughing & followed by ii) Double Harrowing.

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The log book has to be maintained on daily basis & APR should be kept ready as soon as the tractorisation work is completed with countersignature of the beneficiary concerned.

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Photographic evidence of the field prior to tractorisation and tractorisation process under going has also to be submitted with the beneficiary concerned present in the photograph also should be submitted after completion of desiltation works.

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Instruction issued by the supervising officer/staff in this regard has to be

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complied and non compliance in this regard will be very seriously viewed & appropriate action be initiated.

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Yours faithfully,

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Executive Engineer(Agri) Dhubri Division, Gauripur”

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A perusal of the above-quoted Work Orders would show that on the basis of the quotation submitted by the petitioners for de-siltation by tractorisation work was approved @Rs.8100/- per hectare of agricultural land and there was a direction as to how the fields were to be prepared i.e. (i). 10” deep ploughing and followed by (ii). Double Harrowing.

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The petitioners were also required to provide photographic evidence of the field prior to tractorization as well as during tractorization process and photograph also should be submitted after completion of the de-siltation work.

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It is the specific stand of the petitioners that the works were duly completed to the satisfaction of the respondent authorities and thereupon payments were duly made. The grievance of the petitioners, however, is that subsequent thereto, a communication was received by the Assistant Deputy Commissioner, Dhubri to the Executive Engineer Agricultural Dhubri Division whereby there was a direction to realise VAT amount @5% from the bills of the petitioners and deposit the same through the Treasury Chalan under proper head

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of account and it is under such circumstances, the petitioners have, therefore, approached this Court by filing the present writ petition.

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It is relevant to take note of that the case set out by the petitioners in the writ petition appears to be that the petitioners were not registered contractors nor suppliers or dealers, rather they were farmers-cum-owners of the tractors and under such circumstances, the question of directing imposition of VAT to be paid by the tractor owners was not permissible. The second ground of attack on the impugned communication dated 08.08.2018 is that neither in the Short Notice Inviting Quotation nor in any other documents including the Work Orders, anything was disclosed about the liability of VAT to be paid by the owners of the tractors and it was the contention of the petitioners that if VAT was required to be paid, they could have submitted the quotation with different rates. It was also contended that as the project was sanctioned and carried out for the benefit of farmers, the liability of VAT was exempted and accordingly the payment was made only after deducting 1% income tax. In addition to that, the petitioners have also submitted that the work which the petitioners were asked to carry out was at a very low rate i.e. @Rs. 8,100/- per hectare and to that effect the petitioners have raised grievances to enhance the rate by considering the financial hardships faced by the petitioners. However, the same was not considered in carrying out the project of 2014-15, but in the subsequent year the

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amount has been revised to Rs.12,200/- per hectare as nobody was interested to carry out the project with the earlier rate of Rs.8,100/-.

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The record reveals that pursuant to filing of the instant with petition, the Court vide an order dated 12.09.2018 issued notice and stayed the realisation of 5% VAT from the petitioners on the ground that there was absence of the element of sale in the contract.

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The record further reveals that the respondent No. 4 had filed an affidavit-in-opposition, wherein it has been stated that the respondent No.4 ought not to have been impleaded in the instant proceedings and the petitioners were only aggrieved with the order dated 08.08.2018 and no reliefs have been sought for against the respondent No.4. It was further mentioned that 15(fifteen) number of contractors were awarded the de-siltation work of 3,494 hectares of agricultural land. After completion of the contract work by the contractors, payments were made to them after deducting 1% income tax. It was mentioned that the Government had notified the composition scheme for the works of contractors, vide the Notification dated 29.04.2005 which provided for deduction of 5% tax on the total aggregate value of the work. It was stated that after crossverification, it was observed that the district authority i.e. the Deputy Commissioner Dhubri had only deducted 1% income tax on their respective bills without deducting VAT which revealed that there was a

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loss of Government Revenue amounting to Rs.14.15 lakhs towards VAT. It is under such circumstances, the Audit Officer of the respondent No. 4 sought explanation from the Deputy Commissioner, Dhubri as to why the VAT amount was not deducted from the bills of the contractors which resulted in undue financial loss to the Government Revenue. It was further mentioned that without any response to the query made by the respondent No.4, the Deputy Commissioner Dhubri had taken steps to recover the VAT from the contractor's bills. It was further mentioned that when an objection is raised by the Audit Officer, the same are subject to discussion and debate. It is also the duty of the concerned Department upon whom the objection is raised to either accept or raise objection to the audit findings. It was further mentioned that in the instant case the fact that the contractors were not registered under the Assam Value Added Tax Act, 2003 (for short, the AVAT, 2003) was not disclosed to the audit and resultantly audit asked only about the circumstances under which recoverable VAT was not deducted. It was, therefore, stated that it was for the Deputy Commissioner, Dhubri to find out the reasons for not incorporating the clause relating to the recovery of VAT as per the existing Rules, while executing the contract.

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The respondent No.6 had filed an affidavit-in-opposition wherein it was mentioned that the respondent No. 6 received a communication from the Audit Officer AG, Assam and, thereupon, the Assistant

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Commissioner of Taxes, Dhubri was requested to issue necessary instruction/clarifications vide the letter dated 28.05.2018 and after receiving clarification from the Assistant Commissioner of Taxes, Dhubri by the letter dated 17.07.2018, the Executive Engineer Agriculture, Gauripur was requested to realise the VAT amount @ 5% from the contractors by the letter dated 08.08.2018.

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This Court finds it very pertinent to take note of the communication issued by the Assistant Commissioner of Taxes, Dhubri dated 17.07.2018 which is Annexure-III to the affidavit-in-opposition filed by the respondent No. 6. The contents of the said communication being relevant is reproduced hereinunder:

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“GOVERNMENT OF ASSAM

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OFFICE OF THE ASSISTANT COMMISSIONER OF TAXES DHUBRI UNIT: DHUBRI

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No. 885 Dated Dhubri the 17/07/2018

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To,

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The Addl. Deputy Commissioner,

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Dhubri

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Sub.: Regarding Admissibility of VAT.

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Ref.: Your letter No. DDM (R). 9/2014/297 Dated 28.05.2018.

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Sir,

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I have the honour to inform you the following:

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The Assam Value Added Tax Act, 2003 has been repealed from 01.07.2017 and hence no VAT need to be deducted from any bill drawn on or after 01/07/2017. No GST has to be deducted at source either.

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Regarding bills invoiced prior to 01/07/2017, "agricultural implements, not operated manually or not driven by animal was covered by item No.1, second schedule to the AVAT Act, 2003, and such was taxable @6%.

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Date of the invoice is the criterion to establish whether the goods were taxable

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under the AVAT Act of the GST Act.

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Regards.

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Yours faithfully,

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(S Chakraborty) Office of the Assistant Commissioner of Taxes Dhubri”

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It is pertinent to mention herein that the communication dated 17.07.2018 has been quoted taking into account that the respondent Nos.9 and 10 have chosen not to file any affidavit-in-opposition.

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This Court had duly heard the learned counsels appearing on behalf of the parties and had also perused the materials on record.

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During the course of the hearing, this Court enquired with Mr. B Gogoi, the learned Additional Advocate General, Assam, who is also the learned Standing Counsel, Finance and Taxation Department, Government of Assam as to why the respondent Nos.9 and 10 have not filed any affidavit-in-opposition. It was submitted that on account of there being no clarity in the Short Notice Inviting Quotation as well as in the Work Orders, it was difficult on the part of the respondent Nos.9 and 10 to arrive at a conclusion as to whether the transaction in question would come within the ambit of “tax on sale or purchase of goods” as defined in Article 366(29A) of the Constitution of India as well as the definition of “sale” defined under Section 2(43) of the AVAT, 2003.

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This Court in the previous segments of the instant judgment had duly taken note of the Short Notice Inviting Quotation as well as the Work Orders which have been issued by the respondent authorities. This Court has also taken note of the communication issued by the Assistant Commissioner of Taxes, Dhubri which is Annexure-III to the affidavit-in-opposition filed by the respondent No.6.

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It surprises this Court to take note of the communication issued by the Assistant Commissioner of Taxes, Dhubri dated 17.07.2018 whereby it was mentioned that the tax would be payable on the transaction in question, taking that it is sale of agricultural implements, not operated manually or not driven by animal, inasmuch as, the Officer from the Taxation Department had construed the transaction to be the sale of the tractor within the meaning of Section 2(43)(i) of the AVAT, 2003.

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Further to that, the said communication dated 17.07.2018 mentions that the date of invoice is a criterion to establish whether the goods were taxable under the AVAT 2003 or the GST Act. Be that as it may, on the basis of the said communication dated 17.07.2018, the impugned communication dated 08.08.2018 was issued. The question, therefore, arises as to whether the transaction in the present case would come within the ambit of the definition of “sale” as defined within the meaning of Section 2(43) of the AVAT, 2003.

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The pleadings of the respondents as well as the stand of the Assistant Commissioner of Taxes, Dhubri are not clear as to how the transaction in the present case would come within the ambit of the definition of “sale” as defined in Section 2(43) of the AVAT 2003.

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The learned Senior Counsel appearing on behalf of the petitioners, however, submitted that a perusal of the Short Notice Inviting Quotation as well as the individual Work Orders so issued would show that there was nothing mentioned that there was any transfer of the right to use of the tractors in question to come within the ambit of Section 2(43)(iv) of the AVAT, 2003. The learned Senior Counsel rather submitted that a perusal of the Short Notice Inviting Quotation as well as the Work Orders would only show that the petitioners were required to carry out the work of de-siltation by using their own tractors and it was purely a contract for providing labour and services and the tractors in question at all time remained under the pervasive control of the petitioners. In that regard, the learned Senior Counsel refers to the judgment of the Supreme Court in the case of M/s.K.P. Mozika Vs. Oil and Natural Gas Corporation Ltd. and others reported in 2024 SCC Online SC 28 and placed reliance upon paragraph 33.

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The question which arises, therefore, is as to whether the transaction in question can be said to be a “sale” within the meaning

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of Section 2(43) of the AVAT, 2003. Sub-Clause(ii) of Section 2(43) stipulates that a transfer of property in goods (whether as goods or in some other form) involved in execution of work’s contract would come within the meaning of “Sale”. The question arises as to whether in the present facts the transaction in question would come within the ambit of transfer of property in goods involved in the execution of work’s contract. The Short Notice Inviting Quotation as well as the Work Orders only show that the bidders/petitioners were only required to carry out de-siltation of the land by tractorisation at the rate approved at Rs.8100/- per hectare. It is further seen from the criteria that the bidders have to be the owners of the tractors in question and carry out the de-siltation of the land. In the opinion of this Court, there is no transfer of property in goods involved in the present case. It appears to be purely a simple contract of labour and services for carrying out the work of de-siltation by tractorisation.

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The next question arises as to whether the transaction in question can be said to be a transfer of right to use in goods as defined in Sub-Clause (iv) of Section 2(43) of AVAT, 2003. The Supreme Court in the case of M/S. KP Mozika (supra) categorically observed that the levy of tax is not on the use of the goods, but is on the transfer of right to use of the goods which accrue only on account of the transfer of the right. In the instant case, it is seen that the tractors in question remained under the control of the petitioners and

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the petitioners are only required to carry out the work of de-siltation by tractorisation. Under such circumstances, the question of there being a transfer of right to use any goods to come within the ambit of Sub-Clause (iv) of Section 2(43) of the AVAT 2003, does not arise.

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At this stage, this Court finds it very pertinent to observe that while determining the liability of a subject to tax, a strict interpretation is required to be given as to whether the subject would fall within the ambit of tax. In the present case, it was the responsibility of the respondents to place how the transactions in question would be liable for payment of tax or for that matter the transactions would be sale within the meaning of the AVAT, 2003. It is a settled principle of law that if the revenue authorities fail to satisfy that the transactions would be covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy. In the instant case, the respondents have completely failed to show how the transactions in the present case would attract tax under the AVAT, 2003.

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Considering the above, as the transaction in question did not involve any element of sale as defined under Section 2(43) of the AVAT, 2003, the question of deduction of any tax @5% does not arise in the facts and circumstances of the instant case.

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Accordingly, this Court is of the opinion that the impugned

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communication dated 08.08.2018 requires interference. Consequently, the instant writ petition stands disposed of thereby setting aside and quashing the communication dated 08.08.2018.

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JUDGE

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Comparing Assistant

Rofiqul Islam and 11 Ors. v. the State of Assam and 9 Ors.

Case brief

What is this about?

What did the court decide?

Rofiqul Islam and 11 Ors. v. the State of Assam and 9 Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

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