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TMI Blog2012 (11) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Mathadi Board (in short Mathadi Board). In the opinion of the A.O, payment made to said Mathadi Board was covered under section 194C(1) of the Act and as the assessee has not deducted the tax at source (TDS), the same was disallowable under section 40(a)(ia) of the Act. After examining the scheme of Maharashtra Mathadi Hamal and other Workers (Regulation of Employment and Welfare) Act, 1969 as well as Mathadi Board constituted under the said Act, the A.O. came to the conclusion that the Mathadi Board is acting as an intermediary between the businessmen and registered workers and there is a contract between the Mathadi Board and assessee firm in respect of the supply of the labourers and hence, assessee should have deducted a tax from the payment made to the Mathadi Board, Sangli under section 194C(1) of the Act. The A.O also referred to the Exemption Certificate obtained by the Kolhapur District Mathadi and Labour Board under section 197 r.w.s. 194C of the Act and finally concluded that as the assessee failed to make TDS in respect of amount paid to Mathadi Board, the same was not allowable in view of under section 40(a)(ia) of the Act. The said assessee carried the issue before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd villages, or for both; or (g) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; or (h) any trust; or (i) any university established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a university under section 3 of the University Grants Commission Act, 1956 (3 of 1956); or (j) any firm, or (k) any individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, other than those falling under any of the preceding clauses, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the contractor, shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to - (i) One per cent in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected workers, and the registration of unprotected workers and employers, including the maintenance of registers, removal, either temporarily or permanently, of names from the registers, and the imposition of fees for registration; (d) for regulating the employment of registered unprotected workers, and the terms and conditions of such employment, including rates of wages, hours of work, maternity benefit, overtime payment, leave with wages, provision for gratuity and conditions as to weekly and other holidays and pay in respect thereof; (d-i) for providing the time within which registered employers should remit to the Board the amount of wages payable to the registered workers for the work done by such workers; for requiring such employer who, in the opinion of the Board, make default in remitting the amount of wages in time as aforesaid, to deposit with the Board, an amount equal to the monthly average of the wages to be remitted as aforesaid; if at any time the amount of such deposit falls short of such average, for requiring the employer to make good the amount of such average, and for requiring such employers who persistently make default in making such remittance in time to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vention of any provision thereof shall be punished with imprisonment for such term as may be specified (but in no case exceeding three months in respect of a first contravention or six months in respect of any subsequent contravention) or with fine which may extend to such amount as may be specified (but in no case exceeding five hundred rupees in respect of the first contravention, or one thousand rupees in respect of any subsequent contravention) or with both imprisonment and fine and if the contravention is continued after conviction, with a further fine which may extend to one hundred rupees for each day on which the contravention is so continued." As per section 6 of the Act, the State Government may by notification in the official gazette establish a board to be known by such name as may be specified in the notification of any scheduled employment in any area. Sub-section (2) provide that the Board shall be a body corporate having perpetual succession and common seal with power to acquire, hold and dispose of property. 8. Section 4 of the Maharashtra Mathadi Act provide that after consultation of the Advisory Committee, State Government may make one or more Schemes for any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the unprotected workers in the scheduled employment. At the end of the Act, schedule is appended in which the class or category of the employment are mentioned to which the provisions of the Maharashtra Mathadi Act is applicable vis-à-vis, also the scheme framed by the Government u/s 4 of the Act. We need not go into entire scheme of the Maharashtra Mathadi Act as the only limited issue before us is when the labours or workers are employed by these assessees through the Mathadi Board constituted under the Maharashtra Mathadi Act, can it be said that there is a relationship of the Principal and contractor between the assessee and the Mathadi Board within the meaning of section 194C of the Act? 9. The Government of Maharashtra has notified the Scheme dated 13.7.1984 which is published in the Government Notification of the same date as provided under section 4(1) of the Act. As per notified Scheme, same is applicable to the employment in the grocery market or shops, or market established under the Maharashtra Agricultural Produce Marketing (Regulation) Act 1963 and more particularly, to the manual workers engaged in loading, unloading, sacking, carrying, weighing, measuring, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed employer to employ manual workers in the scheduled employment other than the registered workers who are allotted to him by the Secretary in accordance with the provisions of Clause 9(e) of the Scheme. The penalty include the imprisonment for the term which may extent to six months or with fine which may extend to Rs. 1000/- or with both. 11. In sum and substance, the person who is carrying on his business in the notified area and also carrying on the scheduled employment, it is mandatory for him to get registered under the Maharashtra Mathadi Scheme and also to employ only the registered workers allotted by the Board. Severe penalties are provided for contravention for not complying with the Scheme. The Board is not the labour supplier but a body corporate for implementing the Scheme framed by the Government under the Maharashtra Mathadi Act. The assessee is registered under the Maharashtra Mathadi Act as per provisions of the scheme framed and both the assessees are under obligation to engage the labourers or workers for carrying out work in their business through the Board only, which they are legally bound to do. 12. The mandate of section 194C is that the relationship of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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