2023 (10) TMI 1343 - HC - VAT and Sales Tax

Levy of penalty - non deposit of TDS on the amount alleged to have been received by the revisionist for construction of Stadium at Narendra Dev University of Agriculture Technology, Faizabad - HELD THAT - This Court is of the considered view that the Tribunal has rightly imposed penalty upon the revisionist for not deducting TDS on the amounts which were paid to the U.P. Awas Evam Vikas Ltd. as they were given task of constructing Stadium. The Accountant of the revisionist in his statement before the Tribunal has admitted that payments were infact made directly to the Agency on which TDS was to be deducted and deposited with the State authorities. Once it is admitted that payment was made by the revisionist directly to U.P. Awas Evam Vikas Nigam Ltd. then they were mandated to deduct the amount of TDS on such payments. Non deduction of TDS would be deemed to be intentional for which the penalty has rightly been imposed. No interference is required by this Court in the order dated 14.03.2019, passed by the Tribunal - The revisions being devoid of merits are rejected.

Summary

Issues involved: Non-deposit of TDS for construction of Stadium at Narendra Dev University of Agriculture & Technology, imposition of penalty, failure to produce documents supporting non-liability to deduct TDS, admission of non-awareness of legal provisions by the revisionist's Accountant.

Judgment Summary:

Issue 1: Imposition of Penalty for Non-deposit of TDS
The revisionist approached the Commercial Tax Tribunal against the penalty imposed for non-deposit of TDS on the amount received for constructing the Stadium. The Tribunal confirmed the penalty, leading to a previous revision filed before the Court. The Court remanded the matter to the Tribunal to investigate the revisionist's claim that the State Government directly transferred funds to the construction agency, thus negating the need for TDS deduction by the revisionist. However, the revisionist failed to provide supporting documents as directed by the Tribunal, resulting in the rejection of their appeal.

Issue 2: Admission of Non-awareness of Legal Provisions
The revisionist's Accountant admitted before the Tribunal that TDS was not deducted due to ignorance of the relevant legal provisions. The Tribunal noted that payments were made to the construction agency at different stages, with TDS liability attached to each payment. The revisionist's Accountant acknowledged that funds were transferred without TDS deduction due to ignorance, although regular TDS deductions are now in place for similar transactions.

Issue 3: Double Deduction of TDS
The revisionist claimed that the construction agency also deducted TDS from the contractor under the U.P. VAT Act, suggesting potential double deduction. However, the Court clarified that the agency's TDS deduction was on the contractor's payment, not on the amount received from the revisionist, thus dismissing the argument of double deduction.

In conclusion, the Court upheld the Tribunal's decision to impose a penalty on the revisionist for not deducting TDS on payments made to the construction agency. The revisionist's admission of direct payments without TDS deduction deemed the non-deduction intentional, justifying the penalty. Therefore, the Court found no grounds to interfere with the Tribunal's order, leading to the rejection of the revisions for lacking merit.