9911796707
TMI Blog2020 (11) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... f any statutory remedy under the Act, be it appeal, revision or any other. Thus, resort to Section 84 by the petitioner is not misconceived and rejection of Section 84 application by the Assessing Officer solely on the ground that only an appeal should have been filed is erroneous. This issue is answered in favour of the petitioner. Whether the impugned order is vitiated by violation of the principles of natural justice? - HELD THAT:- There are no disputes in the facts and all facts as are necessary for the adjudication of the issues on merits are available on record having been filed both by the petitioner as well as by the Department before me. Thus, while accepting the argument that the impugned order is contrary to the principles of natural justice, I refrain from setting aside the order and granting the limited relief of remand and proceed to adjudicate the legal issues raised, on merits. What is the proper scheme of tax deduction under the provisions of the TNVAT Act and whether the scheme has been followed/applied properly in the present case? - HELD THAT:- The impugned assessment and demand made upon the petitioner relates to the period 2016-17, wherein the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... called SBIOA Unity Enclave exclusively for members of the Union at Kancheepuram. It had, for this purpose, engaged Simplex Infrastructure Limited/R3 (suo motu impleaded by me on 03.02.2020) for construction of the project. There was no profit motive and the project was undertaken on cost basis wherein the cost of the residential unit purchased by a member would be borne in full by that member. The documentation entered into by the petitioner with R3 provided for the terms of payment which, as per the prevailing norms in the industry, were to be made slab-wise, based upon the progress of the contract. 3. The provisions of the Tamil Nadu Value Added Tax Act, 2006 (in short TNVAT Act ) provide for the deduction of tax at source on remittances effected to payees including contractors at stipulated rates in terms of Section 13 of the TNVAT Act. Exceptions are carved out wherein remittances can be effected without deduction of tax and in such situations, the payee/contractor has the responsibility of producing a certificate in Form S on the strength of which remittances will be made by the payer without effecting the statutory deduction of tax or deducting tax at a rate lower than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no serious contest to the position that once a challenge under Article 226 of the Constitution of India is rejected and the petitioner/assessee relegated to statutory remedy, it is at liberty to avail of any statutory remedy under the Act, be it appeal, revision or any other. Thus, resort to Section 84 by the petitioner is not misconceived and rejection of Section 84 application by the Assessing Officer solely on the ground that only an appeal should have been filed is erroneous. This issue is answered in favour of the petitioner. 10. (ii) Whether the impugned order is vitiated by violation of the principles of natural justice? As far as the issue of violation of principles of natural justice is concerned, evidently, no opportunity had been granted by the Officer prior to passing of the impugned order. This submission is well founded. However, in the course of the hearing I find that there are no disputes in the facts and all facts as are necessary for the adjudication of the issues on merits are available on record having been filed both by the petitioner as well as by the Department before me. Thus, while accepting the argument that the impugned order is contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be prescribed from the assessing authority concerned that he has no liability to pay or has paid the tax under section 5: Provided further that no such deduction shall be made under this section, where the amount or the aggregate of the amount paid or credited or likely to be paid or credited, during the year, by such person to the dealer for execution of the works contract including civil works contract does not or is not likely to, exceed rupees one lakh. Explanation.-For the purpose of this Section (a) the term person shall include (i) the Central or a State Government; (ii) a local authority; (iii)a corporation or body established by or under a Central or State Act; (iv) a company incorporated under the Companies Act, 1956 including a Central or State Government undertaking; (v) a society including a co-operative society; (vi) an educational institution; or (vii) a trust; (b) the term civil works contract shall have the same meaning as in the Explanation to Section 6 (2) Any person making such deduction shall deposit the sum so deducted to such authority, in such manner and within such time, as may be prescribed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of pure labour (ii) the transfer of property in goods was in the course of interstate trade or commerce or in the course of export (iii) the dealer produces a certificate to the effect that he has no liability to pay or has paid tax under Section 5 or (iv) his turnover is below the threshold of rupees one lakh. 14. In the case of point (iii), that the dealer has no liability to, or has paid the tax, a certificate of nil-deduction is to be obtained by the contractor to this effect from its assessing officer and furnished to the payer, upon the strength of which the payer will not deduct tax at source. For this, the contractor normally files an application before its jurisdictional Assessing Officer setting forth an estimate of its taxable turnover for the forthcoming assessment period. Upon consideration of the application and being convinced that the tax liability on such anticipated taxable turnover would be met by that dealer in full measure, the Assessing Authority is at liberty to issue a certificate in Form S setting out a) the anticipated turnover for the year in question, b) the tax liability thereupon, c) the amount for which no deduction need be effected by the payer/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erials mentioned in the enclosed Detailed Computation of Net VAT Liability for the said Work has been arrived at based on our experience in the execution of similar works in the past and is correct to the best of our knowledge. As per the Assessment Order dated 18.07.2014 passed under Section 27 of the TNVAT Act for the year 2012-13, excess Tax of a sum of ₹ 71,41,335/- (Rupees Seventyone Lakh Fortyone Thousand Three Hundred Thirtyfive only) has been paid by us consequent to tax deducted at source by the Contractees under Section 13 of the TNVAT Act. Even though excess Tax has been paid by us for the year 2013-2014 as well consequent to tax deducted at source by the Contractees under Section 13 of the TNVAT Act, we will be making payment of a sum of ₹ 49,17,430/- (Rupees Fortynine Lakh Seventeen Thousand Four Hundred Thirty only) towards the Net VAT Liability for the above said Work as detailed hereunder: Net VAT Liability for the said Work as per the Rs. Detailed Calculation enclosed herewith 1,20,58,765 Less: E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential Township consisting 21 Towers, Club House, Commercial Building and Basements including finishes, MEP Works and External Development at Mambakkam, Chennai. (c) Duration of works contract (date of commencement and date fixed for completion of works contract) Thirty Months i.e. Form 25.06.2014 to 24.12.2016 (d) Address of work site Village Mambakkam, Mambakkam Medavakkam Main Road, Chennai-600 127. (e) Value of Contract ₹ 550,66,54,537/- (Rupees Five Hundred Fifty Crore Sixty Six Lakh Fifty Four Thousand Five Hundred Thirty seven only) I have examined the Contract/Purchase Bills/Returns filed in all deals and to the best of my knowledge and belief. I hereby certify that the Dealer has already paid the Tax relating to this Contract under Section 5 of the Tamil Nadu Value Added Tax Act 2006. This Certificate is issued as contemplated in Clause (c) of the First Proviso to Sub-section (1) of Section 13 of the Tamil Nadu Value Added Tax Act, 2006. This Certificate is val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) Address of work site Village Mambakkam, Mambakkam Medavakkam Main Road, Chennai-600 127. (e) Value of Contract Total Contract Value :₹ 550,66,54,537/- LESS: Value of Work executed upto 31st March 2015:₹ 26,80,30,178/- Balance Value of Work to be executed as on 01st April 2015 :₹ 523,86,24,359/- (Rupees Five Hundred Twenty Three Crore Eighty six Lakh Twenty four Thousand three Hundred fifty nine only) I have examined the Contract/Purchase Bills/Returns filed in all deals and to the best of my knowledge and belief. I hereby certify that the Dealer has already paid the Tax relating to this Contract under Section 5 of the Tamil Nadu Value Added Tax Act 2006. This Certificate is issued as contemplated in Clause (c) of the First Proviso to Sub-section (1) of Section 13 of the Tamil Nadu Value Added Tax Act, 2006. This Certificate is valid till 31st March 2016 and is subject to revalidation thereafter. 18. The second Form S dated 06.05.2015 relates to the period 01.04.2015 to 31.03.2016. The Assessing Authority, in column (e) setting out the value of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract Letter of Award- SBIDA/UNITY ENCLAVE/CONS/LOA/01/2014-15 dated 25.06.2014. (b) Description of the Contract Construction of Proposed Unity Enclave Residential Township consisting 21 Towers, Club House, Commercial Building and Basements including finishes, MEP Works and External Development at Mambakkam, Chennai. (c) Duration of works contract (date of commencement and date fixed for completion of works contract) Thirty three Months i.e. Form 25.06.2014 to 31.03.2017 (d) Address of work site Village Mambakkam, Mambakkam Medavakkam Main Road, Chennai-600 127. (e) Value of Contract Total Contract Value :₹ 550,88,54,637/- LESS: Value of Work executed Upto 31st March 2015:₹ 187,75,27,174/- Balance Value of Work to be Executed as on 01st April 2015 :₹ 362,91,27,363/- (Rupees Three Hundred Sixty Two Crores Ninety One Lakh Twenty seven Thousand three Hundred sixty three only) I have examined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, on the basis that Form S furnished by R3 to the petitioner is for a sum of ₹ 187,75,27,174/-, brings to tax the entirety of the contract value of ₹ 547,88,09,797/- at the rate of 5% raising a demand of ₹ 27,39,40,490/-. In doing so, the computation is set out as under: Turnover on contract ₹ 547,88,09,797.00 Turnover on Material purchases (Deemed Sales Value) ₹ 6,43,50,978.00 Total and Taxable turnover ₹ 554,31,60,775.00 Turnover Rate of Tax Tax due Turnover covered Form S ₹ 187,75,27,174.00 5% ₹ 9,38,76,359.00 Turnover not covered payment details ₹ 360,12,82,623.00 5% ₹ 18,00,64,131.00 Deemed sales Value ₹ 643,50,978.00 14.5% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rns have been accepted by R2. However, this acceptance is only deemed as on date, insofar as admittedly the returns have not been taken up for assessment and orders passed thereupon. The veracity or otherwise of the returns of R3 in respect of the contract in issue is still at large and in any event is not the subject matter of this Writ Petition. 25. As far as the petitioner is concerned, the order of assessment leading to the impugned order under Section 84 relates to the period 2016-17. R1 brings to tax the entire contract value in the hands of the petitioner as an assessee in default on a complete mis-appreciation of the scheme of Section 13 and ignoring the three certificates in Form S that have been furnished by the petitioner. 26. Initially R1 has filed a counter affidavit on behalf of herself as well as R2. The counter substantially proceeds on the question of maintainability of Writ Petition and apart from a general averment to the effect that the impugned order did not call for interference, the only other submission made is that the Form S furnished by the petitioner is only for a value of ₹ 188.00 crores as against the total project cost of ₹ 548.00 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 23.01.2020. 29. The Income Tax Act, 1961 (in short IT Act ) has provisions analogous to Section 13 of the TNVAT Act in Section 201(1) and (1A) thereof. These provisions have been inserted as a measure for advance collection of tax in the case of several classes of payers including contractors. Advance collection is to facilitate certainty as well as ease in tax payment as the remittance would be spread over a period. However, one of the exceptions for tax deduction is a situation where the payee has discharged the liability or has obtained the requisite certificate from its assessing officer for nil deduction. 30. The Central Board of Direct Taxes has issued a circular clarifying this position that has been taken note of by the Hon ble Supreme Court in the case of Hindustan Cocacola Beverages V. CIT (293 ITR 226). After considering the scope of the provisions of TDS and those imposing penalty for non-deduction by the payer, the Hon ble Supreme Court has held that in a case where the payee has discharged its liability in full, there would remain no further burden upon the payer to deduct tax at source. The Income Tax Act contains the provisions of Section 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed under Section 27 of the Act. This submission has however been noticed and appreciated in the context of whether an opportunity of hearing was mandatorily to be granted to the petitioner, and not as to what would be the appropriate provision under which such order could have been passed. 34. The following statutory provisions are relevant to decide this issue. Section 2(15) defines a dealer as any person, who carries on the business of buying, selling, supplying or distributing goods directly or otherwise whether for cash, deferred payment or valuable consideration including nine (9) enumerated categories of persons, and reads as follows: (15) dealer means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, and includes- (i) a local authority, company, Hindu undivided family, firm or other association of persons which carries on such business; (ii) a casual trader; (iii) a factor, a broker, a commission agent or arhati, a del credere agent or an auctioneer, or any other mercantile ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority barring Deputy Commissioner (Assessment) under Sections 22, 24, 26, 27(1)(2)(3) and (4), 28, 29, 34 and 40(2). Section 52 deals with an appeal to be filed before the Appellate Joint Commissioner by any person objecting to an order passed by the Deputy Commissioner (assessment) under Sections 22, 24, 26, 27(1)(2)(3) and (4), 28, 29, 34 and 40(2). Section 54 is a residuary provision which provides for a revision by the Joint Commissioner of any order or proceeding recorded under the Act for which no appeal is provided for under Sections 51 or 52. 37. The term person though not defined in the general definition section, has been defined in the Explanation to Section 13 to include the following entities for the purposes of the provision: 13. deduction of tax at source in works contract .--. (1) ......... Explanation.-For the purpose of this Section (a) the term person shall include (i) the Central or a State Government; (ii) a local authority; (iii) a corporation or body established by or under a Central or State Act; (iv) a company incorporated under the Companies Act, 1956 including a Central or State Government undertaking; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed under the provisions of Section 13(4) itself. 42. A Division Bench of this Court in MI Steel Processing India Pvt. Ltd. V. The Assistant Commissioner (CT), Kancheepuram (2016-VIL-60-MAD) considered a challenge to an order of assessment and consequential recovery. The assessee in that matter had preferred an appeal under Section 51 along with an application for stay. The appeal had been filed with the statutory pre-deposit. While hearing the appeal, the Appellate Authority dismissed the same on the sole ground that the issue involved therein related to tax deduction at source under Section 13 of the Act, which could not be the subject matter of assessment under Section 27 of the Act amenable to appeal under Section 51 of the Act. The appeal was dismissed as not maintainable. 43. A Writ Petition was filed by that assessee challenging the order of the Appellate Authority that was disposed by the learned single Judge directing the appeals papers to be returned to the petitioner and permitting the petitioner to file a revision as against the order of assessment. Since the learned single Judge had not directed the Appellate Authority to return the pre-deposit and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
