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2020 (2) TMI 117 - HC - VAT and Sales TaxLevy of works contract tax - requirement of obtaining Exemption Certificate from the sales tax authority as applicable in case works contract tax - HELD THAT - The activity undertaken by the Petitioner attracts central sales tax under the provisions of the Central Sales Tax Act, 1956. The definition of the expression sale in 2 (g) includes works contract . Such sale attract central sales tax under the provisions of the aforesaid Act alone. There is no mechanism provided for any exemption or for payment of such tax liability on reverse charge basis by the recipient under the scheme of the aforesaid Act. Since the work order was placed on the Petitioner s Head Office by the Fourth Respondent, it attracts tax under the provisions of the said Act only. Therefore, tax if any is payable by the Petitioner s Head Office at Hyderabad alone. The work order is outside the purview of the Tamil Nadu VAT Act, 2006 unless supply of goods were made from Tamil Nadu. Therefore, the Third Respondent was justified in refusing to grant certificate to the Petitioner. Fourth Respondent was also not obliged to deduct tax under the provisions of the Tamil Nadu Value Added Tax Act, 2006 and remit the same - petition disposed off.
Issues involved:
1. Quashing of impugned orders by Third and First Respondents 2. Issuance of certificate in Form S to Petitioner 3. Exemption from works contract tax under Tamil Nadu Value Added Tax Act, 2006 Analysis: 1. The Petitioner sought to quash orders by Third and First Respondents and obtain a certificate in Form S. The work order placed on the Petitioner involved a "works contract" where labor was deployed under the control of the Petitioner's Regional Office. The Petitioner was required to obtain an Exemption Certificate if works contract tax did not apply. The Third Respondent previously issued certificates but refused for the succeeding period, stating the contract involved only labor portion, attracting service tax, not value-added tax. 2. The First Respondent rejected the Petitioner's request, citing the receipt of goods from another state as local sales, necessitating tedious collection under the T.N. VAT Act. Consequently, the Fourth Respondent deducted works contract tax from payments to the Petitioner. The Petitioner claimed exemption under the T.N. VAT Act, arguing the Third Respondent should have issued an exemption certificate as per the rules. 3. The Additional Government Pleader defended the Respondents' orders, stating the exemption was granted when the application was made by the local office. However, since the contract was awarded to the Head Office in another state, the grant of an Exemption Certificate under the T.N. VAT Act did not apply. The court found that the activity attracted central sales tax under the Central Sales Tax Act, 1956, and the work order placed on the Head Office attracted tax under this Act, not the T.N. VAT Act. The Fourth Respondent was not obliged to deduct tax under the T.N. VAT Act, but the Petitioner was given liberty to seek a refund for amounts paid in the absence of certificates. In conclusion, the court disposed of the writ petitions, stating that the Petitioner could approach the Commercial Tax Department for a refund of amounts paid by the Fourth Respondent. No costs were awarded, and connected petitions were closed.
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