Inter-State sale and VAT liability: tax deducted under Bihar's advance recovery rule could not be retained after Central sales tax payment.

Where goods supplied under an inter-State sale had already suffered Central sales tax, the Bihar Value Added Tax Act, 2005 did not permit retention of tax deducted under the advance recovery mechanism in section 41. The Court applied section 41(2)(c), which recognises an exception where the assessee has no liability under section 6, and relied on the prior view that no VAT is payable on inter-State sales. The objection that supporting material had not been produced before the Railway raised a disputed question of fact unsuitable for writ adjudication. The deduction could not be retained, and refund with consequential relief followed.

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Issues: Whether tax deducted by the Railway under section 41 of the Bihar Value Added Tax Act, 2005 was refundable where the supplier had already paid Central sales tax on the goods supplied and was not liable to pay value added tax in Bihar.

Analysis: Section 41 of the Bihar Value Added Tax Act, 2005 permits advance recovery in works contract matters, but clause (c) of sub-section (2) recognizes a certificate-based exception where the assessee has no liability to pay tax under section 6. The Court noted that section 6 excludes tax on inter-State sales, and the earlier decision in Abdul Majeed Khan had already held that no tax is payable under the Act of 2005 on inter-State sales. The respondent's objection that the supplier had not produced the relevant material before the Railway was treated as a disputed question of fact, not capable of resolution in writ jurisdiction. It was also not disputed before the Court that Central sales tax had been paid and that Bihar value added tax was not payable.

Conclusion: The deduction of four per cent under section 41 could not be retained against a supplier who had already paid Central sales tax and had no Bihar value added tax liability. The Railway was required to refund the amount recovered.

Final Conclusion: The writ petition succeeded and the petitioner obtained refund-oriented relief with consequential directions regarding statement, verification, and interest on delayed payment.

Ratio Decidendi: Where the underlying sale is an inter-State sale on which Central sales tax has been paid, tax cannot be retained under the Bihar Value Added Tax Act, 2005 merely by invoking advance recovery provisions.

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