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2017 (1) TMI 868 - HC - VAT and Sales TaxWorks contract - Deduction of tax by Chennai Metro Rail Limited (CMRL) - short deduction - Held that - the petitioner has rightly contended that liability under Section 13 of the Act would fall on CMRL and not on the petitioner. Therefore, consequences, if any, that flow from shortfall in the collection of withholding tax can only be visited upon, if at all, on CMRL - assessments to be redone after giving due opportunity to the petitioner - petition allowed - matter on remand.
Issues:
Assailing three separate orders passed by respondent No.1 regarding tax and interest for different Assessment Years (AYs) under the Tamil Nadu Value Added Tax Act, 2006. Analysis: The petitioner challenged the orders passed by respondent No.1 for AYs 2013-2014, 2014-2015, and 2015-2016, claiming misdirection in law and facts. The petitioner argued that liability for short collection of withholding tax lies with Chennai Metro Rail Limited (CMRL) and not with the petitioner. Respondent No.1 was accused of invoking the wrong provision of the Act, Section 27(1)(a) instead of Section 27(1)(b), which deals with turnover escaped assessment. The petitioner contended that despite the short collection by CMRL, the entire taxable turnover was disclosed, and requisite taxes were paid. The Government Advocate representing the respondents argued that the facts presented in a communication received after the order for AY 2015-2016 was passed needed further investigation. It was suggested that if the taxes were indeed paid as claimed by the petitioner, then no tax liability should exist. The matter was deemed to require re-examination by respondent No.1. The court held that the liability for withholding tax shortfall rests with CMRL and not the petitioner. It was concluded that respondent No.1 erred in his approach and misdirected himself in law. The court directed respondent No.1 to redo the assessments after providing the petitioner with a written notice and a personal hearing through their authorized representative. The assessment orders were set aside, and the writ petitions were closed with no order as to costs.
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