2007 (3) TMI 352 - SC - VAT and Sales Tax

Whether every dealer is liable to pay tax under the said Act for each year, on its turnover of transfer of property in goods whether as goods or in some other form, involved in the execution of works contract, at the rate specified therein? Held that Appeal allowed. If a person deducts tax at source in terms of a statutory provision for the benefit of the dealer, the State and/or the assessing officer is not powerless to enforce such statutory duties imposed upon the person concerned. Assessment of tax has nothing to do with the recovery of the amount deducted by a contractor from the running bills of the sub-contractor, which is a separate statutory liability. We hope and trust that respondent No. 5 and/or his nominee shall complete the proceedings in terms of this order at an early date. Till such order is passed, no recovery shall be made from the appellant pursuant to or in furtherance of the assessment order already made.

Issues Involved:
1. Maintainability of the writ petition.
2. Dispute between private parties and its implications.
3. Statutory obligations under the Andhra Pradesh General Sales Tax Act, 1957.
4. Deduction and remittance of tax at source.
5. Role of the assessing officer and appellate authority.
6. Directions for further proceedings.

Detailed Analysis:

1. Maintainability of the Writ Petition:
The court examined whether the writ petition was maintainable, given that the dispute was between private parties. The court upheld the objection raised by the State-respondents, noting that the dispute was between the petitioner (a construction company) and respondents 2 and 3 (contractors), thus falling within the realm of private law. The court concluded that it was not appropriate for a writ court to entertain the petition, as the petitioner had alternative remedies available.

2. Dispute Between Private Parties:
The petitioner, a sub-contractor, claimed that respondents 2 and 3 had deducted sales tax from the running account bills but did not remit the amount to the tax authorities. Respondents 2 and 3 contended that no tax deductions were made, and the amounts retained were due under the contract. The court noted that the central dispute involved the construction of the contract terms between the petitioner and respondents 2 and 3, making it a private law matter.

3. Statutory Obligations Under the APGST Act, 1957:
The petitioner argued that respondents 2 and 3 were responsible for remitting the deducted sales tax under the Andhra Pradesh General Sales Tax Act, 1957. The court highlighted Section 5H of the Act, which outlines the obligations of dealers regarding tax deductions and remittances. The court found that the dispute required an interpretation of the contract terms and the statutory provisions, which was not suitable for resolution through a writ petition.

4. Deduction and Remittance of Tax at Source:
The petitioner alleged that respondents 2 and 3 had deducted tax at source but failed to remit it to the authorities. The assessing officer's findings were disputed by the petitioner, who claimed that the deductions were not accurately reflected in the bills. The court noted that the assessing officer had held a meeting between the parties and concluded that the deductions claimed by the petitioner were incorrect.

5. Role of the Assessing Officer and Appellate Authority:
The assessing officer's decision was challenged, and the appellate authority remitted the matter back to the assessing officer. Despite verifying the deductions, the assessing officer directed the petitioner to deposit the assessed tax amount, rejecting the petitioner's claims. The court observed that the appellate authority had not agreed with the assessing officer's findings, leading to further proceedings.

6. Directions for Further Proceedings:
The Supreme Court directed the Commissioner of Commercial Taxes to examine the issue and pass an appropriate order, either personally or through a nominated Additional Commissioner. The parties were instructed to produce their books of account and other proofs before the authority. The court clarified that the contractor's exemption from tax under Section 5F of the Act did not absolve them from other statutory liabilities under Section 5H. The court emphasized that the State and the assessing officer had the power to enforce statutory duties related to tax deductions. The proceedings were to be completed promptly, and no recovery was to be made from the petitioner until an order was passed.

Conclusion:
The appeal was allowed, and the case was remanded to the Commissioner of Commercial Taxes for further proceedings. The court ensured that the statutory obligations under the APGST Act were clarified and enforced, providing a clear directive for resolving the dispute between the parties.

← Previous Next →