Mobilisation advance is not taxable consideration under works contract deduction rules; prior deduction was adjustable without interest.

Tax deduction at source under section 25-B of the Haryana General Sales Tax Act was not exigible on a mobilisation advance, because the statutory liability arises only when payment is made for work actually executed in a works contract involving transfer of property in goods. An advance released under the contract as monetary accommodation for mobilisation and equipment was to be adjusted against running account bills, not treated as consideration for executed work. Any deduction already made on that advance was bona fide and no interest was payable on the deducted amount; it was to be adjusted in accordance with the contract.

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Issues: Whether tax under section 25-B of the Haryana General Sales Tax Act could be deducted at the stage of advance mobilisation payment under the contract, and whether the amount already deducted was liable to interest or immediate refund.

Analysis: The advance payable under clause 60.7 was treated as a monetary accommodation or loan for mobilisation and plant and equipment, with repayment to be made by adjustment against interim running account bills. Section 25-B obliges deduction only when the contractee makes payment or discharges liability on account of valuable consideration payable for execution of a works contract involving transfer of property in goods. That liability arises when payment is made for work executed, not when an advance is released for mobilisation. The deduction already made was held to have been made bona fide, and no interest was warranted on the amount so deducted.

Conclusion: Deduction at the time of mobilisation advance was impermissible. The amount already deducted was to be adjusted against the contractor's running account in accordance with the contract, without interest.

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