Binding appellate findings prevent forfeiture of TDS on a non-taxable labour and service contract

A subordinate assessment authority could not forfeit TDS deducted from contract bills after the appellate authority had already found the APGENCO contract to be a pure labour and service contract with no transfer of material, no tax liability on the relevant turnover, and no basis to treat the deduction as excess collection. On remand, the authority was bound by those findings and could not reopen or contradict them. The forfeiture order was therefore unsustainable, and refund of the TDS amount followed.

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Issues: Whether the assessment authority could forfeit the tax deducted at source from the petitioner's bills despite the appellate authority having found that the contract was a pure labour and service contract not involving transfer of material and that the amount was refundable.

Analysis: The appellate authority had already recorded findings that the contract executed for APGENCO was purely labour and service oriented, that no tax liability arose on the relevant turnover, and that there was no basis for treating the TDS amount as tax collected in excess of liability. The subsequent order of forfeiture was passed without giving effect to those findings and in disregard of the appellate order. Where a subordinate authority is bound by an appellate determination, it cannot reopen or negate that determination while acting on remand, especially when the earlier findings go to the very basis of liability and refund.

Conclusion: The forfeiture order could not be sustained, and the petitioner was entitled to refund of the TDS amount.

Ratio Decidendi: A remand does not permit a subordinate authority to ignore or contradict binding findings already recorded by the appellate authority, and tax deducted from payments on a contract found to be non-taxable cannot be forfeited as excess collection.

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