TDS credit for sub-contract works must be examined afresh when the deduction certificate is produced.

Tax deducted at source on works contracts executed through a main contractor may be credited to a sub-contractor's tax liability where the relevant deduction certificate is produced. The statutory scheme under Sections 5F and 5H of the Andhra Pradesh General Sales Tax Act, 1957 requires deduction by the contractee, remittance to Government, and corresponding credit in assessment. The departmental circular clarified that, where tax has already been deducted by the contractee, further deduction is not required and the sub-contractor may submit the certificate before the assessing authority. The claim for credit therefore had to be examined afresh, and credit granted if the prescribed certificate was produced.

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Issues: Whether the tax deducted at source in relation to works contracts executed through a main contractor could be given credit to the petitioner sub-contractor on production of the relevant certificate, and whether the assessing authority was required to examine the claim in light of the departmental circular.

Analysis: The statutory scheme under Section 5F of the Andhra Pradesh General Sales Tax Act, 1957 and Section 5H of the Andhra Pradesh General Sales Tax Act, 1957 contemplates deduction of tax at source by the contractee, remittance of the deducted amount to the Government, and grant of credit while determining the dealer's tax liability. The circular issued by the Commissioner, Commercial Taxes clarified that where payment is made through the contractor, the contractor need not deduct tax again if the contractee has already deducted it, and the sub-contractor may file the certificate before the assessing authority. On that basis, the claim for credit could not be rejected without examining whether the petitioner had produced the requisite certificate evidencing deduction in respect of the sub-contracted work.

Conclusion: The petitioner was entitled to have the claim for credit examined afresh, and credit was to be given if the prescribed certificate evidencing deduction was produced in relation to the sub-contracted work.

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