2016 (2) TMI 1352 - HC - VAT and Sales Tax

TDS deducted by this petitioner from the amount paid to the sub contractor, but the same has not been deposited with the respondent no.1 i.e. State of Jharkhand - it is also alleged that after deducting the TDS by this petitioner, the necessary certificates have not been issued - bonafide reason for non-submission of TDS or not - HELD THAT - Notice to the newly joined parties. Notice will be served by the petitioner upon its Directors and upon its Chartered Accountant/Chartered Accountants. They will show cause to the Court that why criminal prosecution should not be initiated upon him and the Chartered Accountants will show cause why his licence/certificate of practice should not be forfeited or suspended and why the complaint should not be made to the Institute of Chartered Accountants - Notice to the Registrar of Companies also, which will be served by this petitioner. Necessary amendment shall be carried out by 2nd March, 2016 - this matter is adjourned on 15th March, 2016.

Issues:
1. Failure to deposit TDS with the State of Jharkhand
2. Complaint by subcontractor regarding non-issuance of necessary certificates
3. Inadvertent or mistaken non-deposit of TDS by the petitioner
4. Direction to join Directors and Chartered Accountants as party respondents
5. Requirement to produce audited balance sheet and Chartered Accountants' report
6. Directing the petitioner to join Registrar of Companies as a party respondent
7. Responsibility of State of Jharkhand officers for not noticing the TDS deductions
8. Allegation of deliberate action and connivance by the petitioner and State officers
9. Requirement for Chartered Accountants to be present in court or engage advocates
10. Involvement of Principal Accountant General (Audit), Jharkhand, Ranchi

Analysis:
The judgment addresses the issue of the petitioner failing to deposit a significant amount of Tax Deducted at Source (TDS) with the State of Jharkhand since 2007-08. It notes a complaint by a subcontractor regarding the non-issuance of necessary certificates after TDS deductions. The petitioner's counsel admits the non-deposit, attributing it to inadvertence, mistake, or ill advice, citing the Letter of Intent clause as justification.

The court directs the petitioner to include its Directors and Chartered Accountants as party respondents, allowing an amendment to that effect. It mandates the newly joined parties to justify why criminal prosecution should not be initiated against them or why the Chartered Accountants' licenses should not be forfeited or suspended.

Furthermore, the petitioner is instructed to submit audited balance sheets and Chartered Accountants' reports from 2007-08 onwards. The Registrar of Companies is also to be joined as a party respondent to verify the submission of these documents. The State of Jharkhand is tasked with identifying the responsible officers who overlooked the substantial TDS deductions each year.

The judgment hints at a potential deliberate pattern of error by the petitioner and connivance by State officers due to repeated mistakes. The Chartered Accountants from 2007-08 are required to be personally present in court or engage advocates for the next hearing. Additionally, the Principal Accountant General (Audit), Jharkhand, Ranchi, is involved in assisting the court regarding the audit duties of the petitioner's Chartered Accountants.

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