Earthwork excavation contract without outside earth could not attract tax deduction at source under sales tax law.

A contract confined to earthwork excavation and formation of an embankment, where no earth was brought from an outside source, did not justify deduction of tax at source under the Andhra Pradesh General Sales Tax Act, 1957. The court applied the earlier binding view that tax at source is not collectible in such a case because the work involved only excavation and depositing excavated earth on either side, with no taxable transfer of property from an external source. On those facts, the proposed deduction from the contractor's bills was held unlawful.

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Issues: Whether tax at source could be deducted from the bills payable for a contract consisting only of earthwork excavation and formation of embankment, where no earth was brought from outside source.

Analysis: The contract was found to be confined to excavation of earth for canal work and depositing the excavated earth on either side. The respondents did not dispute that the work awarded was only earthwork excavation. Following the earlier binding view that where no earth is brought from an outside source no tax shall be collected at source, the deduction sought under sections 5F and 5H of the Andhra Pradesh General Sales Tax Act, 1957 was not justified on the facts of the case.

Conclusion: Tax at source could not be deducted from the petitioner's bills; the action of the respondents was illegal.

Final Conclusion: The writ petition succeeded and the petitioner was held not liable to tax deduction at source on the earthwork contract.

Ratio Decidendi: A contract limited to earthwork excavation, without bringing earth from an outside source and without a taxable transfer of property, does not justify collection of tax at source under the sales tax provisions invoked.

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