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2016 (7) TMI 1058 - HC - VAT and Sales TaxTDS under DVAT - works contract - dominant part of the contract - labour/ service or material - Commissioner, VAT rejected the application filed by the Petitioner under Section 36A(2) of the Delhi Value Added Tax Act, 2004 ( DVAT Act ) for a lower deduction certificate. - The Petitioner is undertaking the execution of works contract in respect of two projects one awarded to it by the National Building Construction Corporation Limited ( NBCC ) for construction of a museum at the existing garage of the President Estate i.e. Rashtrapati Bhawan. Held that - The order appears to proceed on the misconception that Section 36A(2) of the DVAT Act permits the entertaining of a prayer for lower deduction of tax only where dominant part of the work is labour and service. The word dominant is not to be found in Section 36A(2) of the DVAT Act. In fact, there is nothing in the said provision which suggests that unless the dominant part of the works contract is labour and service, the lower deduction will not be permissible. Also the Commissioner, VAT does not appear to have examined the estimates placed on record by the Petitioner along with the supporting documents to justify its claim for a lower deduction at 0.87%. The Commissioner, VAT could have, for reasons recorded, either agreed or disagreed with the estimates prepared by the Petitioner or with the calculations of the percentage of deduction based on the documents enclosed with the application. The Commissioner, VAT was obliged to discuss the materials and give reasons for his conclusion. However, the impugned order, as already noticed, is totally bereft of any reasoning. Matter remanded back for fresh decision.
Issues:
Challenge to order rejecting application for lower deduction certificate under Section 36A(2) of the DVAT Act. Analysis: 1. Background of the Case: The petitioner challenged an order passed by the Commissioner, Value Added Tax rejecting their application for a lower deduction certificate under Section 36A(2) of the Delhi Value Added Tax Act, 2004. 2. Works Contracts Description: The petitioner was involved in two works contracts awarded by NBCC and CPWD for construction projects. The contracts involved transfer of property in goods, labor, and services, with significant contract values. 3. Legal Provision: Section 36A(1) of the DVAT Act mandates a deduction of tax at 4% for payments exceeding a specified amount for transfer of property in goods. The petitioner, being a registered contractor, was eligible for this deduction. 4. Application for Lower Deduction: Section 36A(2) allows contractors to apply for a lower deduction certificate. The petitioner submitted an application supported by details of civil materials supplied, VAT computation, and relevant documents. 5. Commissioner's Decision: The Commissioner rejected the application citing that the issue raised would be considered at the time of assessment and not in the current forum. The order lacked detailed reasoning and misinterpreted the requirement of a dominant part of labor and services for lower deduction. 6. Court's Analysis: The Court found the Commissioner's order non-reasoned and set it aside. The Court emphasized the need for detailed reasoning in quasi-judicial functions and noted the absence of proper examination of the petitioner's estimates. 7. Legal Principle: It is established that a statutory authority must provide reasons for their conclusions in the order itself. Reasons cannot be supplied subsequently, and the authority must act independently in quasi-judicial functions. 8. Court's Decision: The Court directed the Commissioner to reconsider the petitioner's application within a specified timeline, without reference to the counter affidavit filed by the Department. The Court emphasized the need for an independent decision by the Commissioner. 9. Conclusion: The petition was disposed of with the order set aside, and directions given for a fresh decision by the Commissioner in accordance with law and the Court's observations. This detailed analysis covers the issues involved in the legal judgment comprehensively, highlighting the key aspects of the case and the Court's decision.
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