Allowed

M/S Bharath Construction v. the State of Karnataka

Karnataka HC5 Jan 2016WP/54688/2015

Case brief

AI extract

What is this about?

The High Court of Karnataka allowed multiple writ petitions filed by construction companies to quash tax endorsements. The court held that sub-contractors cannot be taxed on amounts already deducted by principal contractors, citing Warsaw Engineers and clarifying that tax must be adjusted to avoid double taxation.

What did the court decide?

Petitions allowed; respondents directed to adjust tax already collected from principal contractors.

M/S Bharath Construction Vs the State of Karnataka — Writ and Judicial Review | Karnataka HC (2016)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 05^TH DAY OF JANUARY 2016

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BEFORE

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THE HONOURABLE MR. JUSTICE ANAND BYRAREDDY

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WRIT PETITION Nos.54688 AND 54693 AND 56303-56338

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OF 2015 (T-RES)

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CONNECTED WITH

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WRIT PETITION Nos.54856-54867 OF 2015 (T-RES)

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WRIT PETITION Nos.56085-56086 AND 57259-68 OF 2015

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(T-RES)

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IN W.P.Nos.54688 AND 54693 AND 56303-56338 OF 2015

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BETWEEN:

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M/s. Bharath Construction Company, No.36/16, 4^th Cross, Shakthi Kuteera, AECS Layout, Kundalahalli, Bangalore 560 037. (Represented by its Proprietor Sri. B. Baburao).

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…PETITIONER

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(By Shri Atul K Alur, Advocate)

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AND:

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The State of Karnataka, Represented by its Finance Secretary, Government of Karnataka, Vidhana Soudha, Bangalore 560 001.

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The Commissioner of Commercial Taxes Karnataka, Vanijya Terige Karyalaya-1, Gandhinagar, Bangalore 560 009.

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The Deputy Commissioner of Commercial Taxes (Audit) 5.2 DVO-5, 5^th Floor, Vanijya Therige Karyalaya -2, Koramangala, Bangalore 560047.

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…RESPONDENTS

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(By Shri S.V.Giri Kumar, Additional Government Advocate)

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These Writ Petitions filed under Articles 226 and 227 of the Constitution of India, praying to quash the endorsement issued by the third respondent dated 8.7.2015 at Annexure-F in so far as the petitioner is concerned and etc;

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IN W.P.Nos.54856-54867 OF 2015

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BETWEEN:

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M/s. URC Construction (Private) Limited, TIN:29160144551,

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No.158/K-21, Narayana Shastry Road, Mysuru 570 024. (by N. Balasubramanian, Sr. General Manager, 68 years). …PETITIONER (By Shri Keshava Murthy T.N., Advocate)

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AND:

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The Assistant Commissioner of Commercial Taxes, VAT Audit-2, Seshadri House, Mysuru 570 024.

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The Commissioner of Commercial Taxes, Vanijya Therige Karyalaya, Gandhi Nagar, Bengaluru 560 009.

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The State of Karnataka by its Principal Secretary to Government, Finance Department, Vidhana Soudha, Bengaluru 560 001.

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…RESPONDENTS (By Shri S.V.Giri Kumar, Additional Government Advocate)

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These Writ Petitions filed under Article 226 of the Constitution of India praying to quash the impugned endorsement dated 28.9.2015 as in Annexure-A issued by the first respondent as opposed to law and the binding judgments of the Hon’ble Apex Court in the case of State of Andhra Pradesh vs. L and T Limited (2008) (65) Kar. L.J.252 SC) and the

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Division Bench of this Hon’ble Court in the case of Warsaw Engineers vs. Additional CCT 2008 (64) Kar.L.J.113 Kar.DB) in so far as the petitioner is concerned and etc;

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IN W.P.Nos.56085-56086 AND 57259-68 OF 2015

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BETWEEN:

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M/s. Bharath Construction Company, No.36/16, 4^th Cross, Shakthi Kuteera, AECS Layout, Kundalahalli, Bangalore 560 037. (represented by its Proprietor Sri. B. Baburao).

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…PETITIONER

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(By Shri Atul K Alur, Advocate)

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AND:

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The State of Karnataka, Represented by its Finance Secretary, Government of Karnataka, Vidhana Soudha, Bangalore 560 001.

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The Commissioner of Commercial Taxes Karnataka, Vanijya Therige Karyalaya-1, Gandhinagar, Bangalore 560 009.

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The Deputy Commissioner of Commercial Taxes (Audit) 5.2 DVO-5, 5^th Floor, Vanijya Therige Karyalaya-2, Koramangala, Bangalore 560 047.

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…RESPONDENTS

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(By Shri S.V.Giri Kumar, Additional Government Advocate)

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These Writ Petitions filed under Articles 226 and 227 of the Constitution of India praying to quash the endorsement issued by the third respondent dated 8.7.2015 vide Annexure-D in so far as the petitioner is concerned and etc;

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These Writ Petitions coming on for Orders this day, the court made the following:

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O R D E R

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These petitions are considered for final disposal having

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regard to the point of law that is involved having been settled

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by a division bench judgment of this court in Warsaw Engineers, Bangalore vs. The Additional Commissioner of Commercial Taxes, 2008(64) KLJ 1134.

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The point for consideration is whether the

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respondents are justified in not adjusting the tax already

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deducted by the Principal Contractor, and once again seeking to tax the petitioners in respect of the same amount which has been deducted by the principal contractor.

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This question has been directly addressed in a division

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bench judgment in Warsaw Engineers , supra, wherein it has been held that the amounts paid to the sub contractor by the principal contractor had already suffered tax in the hands of the principal contractors and that therefore the turn over once again could not be subjected to tax in the hands of the subcontractor and if it is done, it would be a case of double taxation.

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The said judgment would squarely apply to the present cases on hand. The petitions are accordingly disposed of holding that the petitioners could not be subjected to tax on the amounts which were already deducted by the principal contractor and of which tax had been collected.

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Though the learned Government Advocate would submit

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that the division bench judgment in Warsaw Engineers, supra, being subject matter of challenge before the Supreme Court, since the law as it stands, is what is being followed by this bench, there is no difficulty in allowing these petitions notwithstanding the division bench judgment cited above is subject matter of challenge before the Supreme Court. The respondents are directed to adjust the tax already collected from the principal contractors in respect of the liability sought to be fastened on the petitioners, respectively.

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The learned Government Advocate is permitted to file his memo of appearance within two weeks in the respective petitions.

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Sd/JUDGE

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M/S Bharath Construction v. the State of Karnataka

Case brief

What is this about?

What did the court decide?

M/S Bharath Construction v. the State of Karnataka

Case brief

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What did the court decide?

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