TDS as tax payment depends on treasury credit; unverified deductions may not discharge the contractor's tax liability.

The note explains that, under the U.P. Trade Tax Act and Rules, appeals against orders of authorities other than the Commissioner are treated as filed by the Commissioner as the person aggrieved, and a memorandum may be signed by an authorised agent. It also states that tax deducted at source counts as tax payment only when the deducted amount is credited to the Government treasury. If the deduction is unverified or not shown as deposited, the assessee contractor cannot claim discharge merely on the basis of a TDS certificate, and recovery may proceed against the contractor while remedies remain against the deductor where the deduction was genuine.

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Issues: (i) Whether the second appeals before the Tribunal were maintainable and whether the memorandum of appeal was duly signed by an authorised person. (ii) Whether, in respect of unverified tax deducted at source amounts not credited to the Government treasury, the assessee contractor could still be held liable for tax under the rectification proceedings.

Issue (i): Whether the second appeals before the Tribunal were maintainable and whether the memorandum of appeal was duly signed by an authorised person.

Analysis: The Explanation to section 10(2) of the U.P. Trade Tax Act, 1948 treats the Commissioner as a person aggrieved for appeals against orders passed by authorities other than the Commissioner, while the State Government is the aggrieved person only in relation to orders passed by the Commissioner. Rule 66(2) of the U.P. Trade Tax Rules, 1948 permits the memorandum of appeal to be signed by the appellant or an authorised agent, and the record showed authorisation empowering Joint Commissioners to sign on behalf of the Commissioner. The objection that only the State could file the appeal against the order of the Joint Commissioner was therefore unsustainable.

Conclusion: The second appeals were maintainable and were validly signed by an authorised person, in favour of Revenue.

Issue (ii): Whether, in respect of unverified tax deducted at source amounts not credited to the Government treasury, the assessee contractor could still be held liable for tax under the rectification proceedings.

Analysis: Under section 8D of the U.P. Trade Tax Act, 1948, deduction at source is treated as payment of tax only when the amount deducted is credited into the Government treasury. Where the deduction is genuine and the amount is in fact deposited, the contractor should not be made to pay the same tax again, and the proper course is action against the deductor under sections 8D(6) and 8D(7). But where the certificate is unverified or the deduction is not shown to have been deposited, the mere issuance of a TDS certificate does not establish payment of tax on behalf of the contractor. Section 8D(9) also preserves other modes of recovery from the contractor, and section 22 could validly be invoked to correct the mistake in assessment.

Conclusion: The assessee was liable for tax to the extent the TDS amounts were unverified or not credited to the State treasury, in favour of Revenue.

Final Conclusion: The revisions succeeded, the Tribunal's orders were set aside, and the Revenue's challenge was accepted on both questions of law.

Ratio Decidendi: A tax deduction at source operates as payment of tax only when the deducted amount is duly credited to the Government treasury; if the deduction is not verified or not deposited, the assessee cannot claim discharge, and the tax may be recovered from the assessee while remedy remains available against the deductor where the deduction itself is genuine.

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