Statutory tax deduction overrides contractual exemption; refund cannot justify withholding remittance, and equitable pleas fail.

The concession agreement could not override the later VAT regime, so the concessionaire remained bound to deduct tax at source from running account bills and remit it to the Government. The petitioner's own books, comparative statements, and audit reports showed tax was deducted but only partly remitted, contradicting the plea that no deduction had been made. The refund notification did not permit withholding remittance first and claiming refund later, because refund operated only after lawful payment. Promissory estoppel and legitimate expectation could not defeat the statutory scheme, and the writ was tainted by suppression of material facts and false averments.

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Issues: (i) whether the concession agreement exempted the petitioner from deducting tax at source from the contractor's running account bills after the Andhra Pradesh Value Added Tax Act, 2005 came into force; (ii) whether the petitioner's books and annual reports showed deduction of tax at source and non-remittance to the Government; (iii) whether the petitioner could insist that tax be paid first and refund be claimed later; (iv) whether promissory estoppel and legitimate expectation could defeat the statutory scheme; and (v) whether the writ petition was vitiated by false statements on oath and suppression of facts.

Issue (i): whether the concession agreement exempted the petitioner from deducting tax at source from the contractor's running account bills after the Andhra Pradesh Value Added Tax Act, 2005 came into force;

Analysis: The concession agreement had to be read as a whole. The earlier exemption regime under the Andhra Pradesh General Sales Tax Act stood displaced by the Andhra Pradesh Value Added Tax Act, 2005, which did not empower the Government to grant exemption from tax in the manner available under the repealed regime. The later statute and the agreement's own change-in-law and compliance clauses required the concessionaire to conform to subsequent tax law. The agreement could not override the statutory obligation imposed by the value added tax law to deduct tax at source from payments made for execution of the works contract.

Conclusion: The petitioner remained statutorily bound to deduct tax at source and remit it to the Government.

Issue (ii): whether the petitioner's books and annual reports showed deduction of tax at source and non-remittance to the Government;

Analysis: The ledger entries, comparative statements filed by the petitioner, and the auditors' reports consistently reflected amounts credited towards works contract tax and arrears outstanding over the relevant years. The material showed that tax was deducted from the running account bills of the contractor, while only part of the deducted amount was remitted and the balance remained unpaid. The petitioner's plea that no deduction was made was contradicted by its own accounts and audit disclosures.

Conclusion: The petitioner had deducted tax at source and had not remitted the entire amount to the Government.

Issue (iii): whether the petitioner could insist that tax be paid first and refund be claimed later;

Analysis: Under the refund notification issued under the value added tax regime, refund was available only where tax had first been paid in accordance with law and only within the scope and duration of the notification. The statutory obligation to deduct and remit tax at source was separate from the contractor's entitlement, if any, to seek refund. The petitioner could not convert the refund mechanism into a justification for withholding remittance of tax already deducted.

Conclusion: The petitioner was bound to remit the deducted tax first; refund, if otherwise available, was a matter for the contractor and the statutory notification.

Issue (iv): whether promissory estoppel and legitimate expectation could defeat the statutory scheme;

Analysis: A promise or expectation contrary to law cannot be enforced against the Government. Once the taxing statute changed and the Government no longer had power to exempt in the earlier manner, the doctrine of promissory estoppel could not compel continuance of an unlawful exemption. The agreement itself contemplated change in law, and therefore no enforceable legitimate expectation survived to negate the statutory duty under the value added tax law.

Conclusion: Neither promissory estoppel nor legitimate expectation was available to the petitioner.

Issue (v): whether the writ petition was vitiated by false statements on oath and suppression of facts;

Analysis: The petitioner asserted that no tax had been deducted from the contractor's bills, but its own records, statements, and audit reports disclosed the contrary. The Court found that material facts had been suppressed and false statements had been made to secure interim relief and avoid remittance of tax due.

Conclusion: The writ petition was tainted by suppression of material facts and false averments.

Final Conclusion: The statutory tax deduction and remittance provisions prevailed over the contractual claim of exemption, the petitioner's own records established default, and no equitable doctrine could excuse non-compliance.

Ratio Decidendi: Where a taxing statute imposes a mandatory duty to deduct and remit tax at source, a prior contractual assurance of exemption cannot override the later statutory regime, and refund mechanisms cannot be used to justify withholding remittance of tax already deducted.

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