In the Budget Proposal for the F.Y.2004-05, the Hon. Finance Minister has announced to enlarge the list of ‘construction contracts’ under Works Contract (Re-enacted) Act, 1989.  The list was earlier notified on 8.3.2000. The Hon. Finance Minister further announced to give effect to the revised lists of ‘construction contracts’ from 1.5.1998.  In pursuance to the aforesaid budget announcement, the Government has issued a notification dated 8.7.2004.

            Background:-
             The brief background is as under :       
            The term ‘construction contracts’ has not been defined in the Works Contract (Re-enacted) Act, 1989.  The Government by Act I of 2000 inserted an explanation in Section 6A (1) to give powers to the State Government to specify the contracts which will be treated as ‘construction contracts’.  Accordingly, the Government of Maharashtra had issued Notification dated 8^th March 2000, specifying the different types of contracts as mentioned therein as ‘construction contracts’. Initially, 16 different types of contracts were notified as ‘construction contracts’ by Notification dated 8^th March 2000.  After the Budget announcement of 2004-05, Government revised the earlier list and a new list of 17 different types of contracts have been notified by the Government w.e.f 8^th July 2004.

3.                  Since for the earlier period prior to 1.4.2001, there was a difference in the composition rate in respect of ‘construction contracts’ and ‘non-construction contracts,’ a number of litigations cropped up on the point as to whether a particular contract be treated as ‘construction contract’ or a ‘non-construction contract’.  These litigations were continued till 8^th March 2000, when for the first time, the Government notified the list of ‘construction contracts’.

4.         In order to resolve the above issue, it was announced in the budget speech of the Hon’ble Finance Minister to give effect to this revised list of “Construction Contracts” from 1.5.98 onwards.  In pursuance of this Budget Announcement, the Government Resolution of Finance Department No. ___________________________________ is issued on 1.2.2005.

The gist of the Govt. Resolution are as follows: -

(i) The list of ‘construction contracts’ as notified by the Government by Notification dated 8.7.2004 shall be treated as ‘construction contracts’ for the period from 1.5.1998 to 7.7.2004.  The rate of tax in respect of such contracts for the period from 1.5.1998 to 7.7.2004 shall be the rate applicable to the  ‘construction contracts’.

(ii) For the period from 1.5.1998 to 7.7.2004 in respect of the above contracts, no tax shall be recovered administratively, in excess of rate of tax applicable for ‘construction contracts’ from time to time.  The interest and penalty on the above tax shall also be not recovered and shall be treated as administrative relief for the above period.  However, all those cases wherein tax, interest or penalty has already been collected by the dealer entirely or paid by the dealer in excess of the rate applicable to the “Construction Contracts”, shall not be refunded.

5.        The Conditions and procedure for availing of the benefit of administrative relief is as given below.

(i) The cases wherein the contract is a ‘construction contract’ as notified by the Government, the administrative relief would be eligible for all the relevant assessment periods.

(ii) All the cases wherein assessment proceedings are pending in appeal, the proceedings shall be finalised as per the notification dated 8.7.2004.

(iii) However, if any contract other than the following types of contract is treated as a ‘construction contract’ by the assessing authority or by the appellate authority, then  all such cases shall be reopened and be finalised as per the notification dated 8.7.2004.

(a)   The 17 types of contracts as per the notification dated 8.7.2004.

(b)   The contracts which are held as ‘construction contract’ as per the determination order, or as per the judgment of M.S.T.Tribunal.

(c)    The contracts which are clarified as a ‘construction contract’ in any Trade Circular issued by the Commissioner of Sales Tax.

(iv) The powers for grant of administrative relief are hereby delegated to the respective assessing officers.  The application for administrative relief shall be made by the dealer in the enclosed proforma to the assessing authority in charge of the respective case(s).

(v) In the application, the dealer should clearly mention the amount of tax, interest and penalty for each period separately, for which administrative relief is sought.  On receipt of the said application, the assessing authority should scrutinise the same, and if it is found to be in consonance with the aforesaid Government Resolution, he shall pass an order within 15 days.

             If any dealer has any doubts in the matter, he may refer the same to this office on e. mail address acadm12@yahoo.co.in for further clarification.

8.            You are requested to bring the contents of this Circular to the notice of the members of your Association.  

Name of the dealer

Address

Works Contract Tax Act R.C.No.

B.S.T. R.C.No.

To

…………………………………

…………………………………

………………………………….

Sir,

            I……………………………………………………Proprietor/Partner/Director/ Authorized Signatory of M/s……………………………………………………………..
……………………………………………………………………………………………….
………………………………………………………………………………………………..

            Holder of Works Contract Act R.C. No…………………………B.S.T. R.C.No…………………………………………….liable to pay tax under the Works Contract Tax Act, 1989on mandap decorators  hereby apply for availing the benefit of administrative relief.
My Works Contract Act assessment is completed upto………………………………….
I had filed returns upto………………………………………………………….

1)      Position of balance dues in respect of assessment periods.

.

Place

                                                 Acknowledgement

Received application for administrative relief in case of M/s……………………….
………………………………………………………………………..holder of Works Contract Tax Act R.C.No…………………………………….for the period from……………………….
On…………………………………………….

Date

Place

                                                                     Signature & Stamp of Receiving Authority.