2020 (1) TMI 266 - SC - VAT and Sales Tax

Jurisdiction - authority to deduct the sales tax at source from their bills - tender conditions offered by Geeta Enterprises/Asansol- Respondent No.1 - HELD THAT - The appellant could not have insisted for production of actual payment receipts of sales tax paid by third party - the seller of the goods, from where the same were procured by the respondent No.1 at first point of sale, after recovering the same from the respondent No.1. In that, the seller is responsible to pay the sales tax amount collected from the respondent No.1. The respondent No.1 had no responsibility in that regard. There are no reason to interfere in this appeal - appeal dismissed.

Summary

Issues:
1. Interpretation of tender conditions regarding sales tax deduction.
2. Verification of proof of payment of sales tax by the respondent.
3. Authority of railways to deduct sales tax at source.
4. Responsibility for payment of sales tax.

Analysis:
1. The appeal challenged a High Court judgment allowing a Writ Petition against the railways for deducting sales tax at source from bills. The dispute centered around tender conditions set by the respondent, Geeta Enterprises, stating no sales tax deduction as they paid it to quarry owners during purchase. The High Court upheld this argument based on the tender clause.

2. The High Court found that the respondent had submitted proof of sales tax payment for blast stone procurement from an independent source. The court noted that the competent authority did not dispute the authenticity of the vouchers provided. Thus, the court held that the railways should have verified with tax authorities before insisting on further proof of payment.

3. The High Court ruled that the railways lacked authority to deduct sales tax as the respondent had already paid it at the first point of sale, as per state government notification. The court emphasized that the railways should not demand additional proof when the original bills and documents were genuine and in compliance with the agreement terms.

4. The judgment clarified the seller's responsibility for sales tax payment, stating that the respondent had fulfilled its obligation by providing necessary documents. The court held that the railways were not entitled to withhold the deducted amount and ordered its release to the respondent with interest. The appeal was dismissed, affirming the High Court's decision.

This detailed analysis covers the interpretation of tender conditions, verification of sales tax payment, authority to deduct sales tax, and the responsibility for payment, providing a comprehensive understanding of the legal judgment.