Sri S.Ravi, learned Senior Counsel appearing on behalf of the petitioner, would submit that once the dealer seeks composition under Section 4(7)(b) of the Act, he is required to pay tax only at 4% on the total value of the contract executed for the Government. He would submit that Rule 31 which prescribes the records to be maintained by a dealer executing works contracts, envisages that every dealer executing works contracts and opting to pay tax by way of composition should keep separate accounts for each contract specifying the particulars of the names and addresses of the persons for whom he has executed the works contract; maintain records relating to payments received from the contractee; the records of entry of Form VAT 200, and the records of tax collection at source or tax deduction at source made from the payments received on the works contracts. Learned Senior Counsel would also refer to Rule 27 (2) of the Rules to submit that the contractee is liable to deduct tax at source and it is only to the extent of the works executed, and the bills paid, is tax required to be paid and the dealer liable to pay tax on the said turnover. He would submit by way of an illustration that in case the works are required to be completed over a period of five years, accepting the reasoning of the assessing authority would mean that, even on composition, the dealer is required to pay tax at 4% on the contract value even before the contractor has commenced execution of the works contract. Learned Senior Counsel would submit that, a reasonable construction of Section 4(7)(b) r/w Rule 31 would require that the total amount received by the contractor, during a particular tax period, must alone be treated as the turnover on which they are liable to pay tax on composition. He would draw attention of this Court to the Certificate of Deduction of the Tax issued by the Executive Engineer, Irrigation and CAD, JLIP Divn. I, Gadwal, wherein the date of contract and the period of execution is mentioned. Learned Senior Counsel would submit that, since these TDS certificates and the profit and loss account were available with the Assessing Authority, even if the petitioner is held not to have replied to the show-cause notice, the assessing authority should not have levied tax on the contract value and should have taken the quantum of works executed as per the TDS
