Works contract TDS under Meghalaya VAT must be limited to taxable turnover, with no double deduction for ascertainable labour charges.

Tax deducted at source on works contracts under the Meghalaya Value Added Tax Act must be confined to taxable turnover computed under Section 5(2), because the deduction mechanism in Section 106 is only a machinery provision and cannot extend beyond the charging provision. Labour, service and similar charges are excluded where they are ascertainable from the contract, and Schedule IV-A applies only when such amounts are not ascertainable under Section 5(2)(c). Double deduction is not permitted, so the tax deduction and settlement of final bills must reflect only the taxable turnover once the statutory exclusions are applied.

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Issues: Whether tax deducted at source under Section 106 of the Meghalaya Value Added Tax Act, 2003 in respect of works contracts is to be confined to the taxable turnover after the deductions contemplated by Section 5(2), and how the deduction mechanism is to be harmonised with Schedule IV-A and Section 5(2)(c).

Analysis: The charging provision under Section 5 levies VAT only on taxable turnover, which requires deduction of exempt sales, inter-State sales, outside sales, import and export sales, and, in relation to works contracts, labour, services and other like charges, subject to the statutory mode of ascertainment. Section 106, being only a machinery provision for deduction at source, cannot operate beyond the charging provision. The prior decision had already read down Section 106 to bring it into conformity with Section 5(2) by confining deduction to the taxable turnover. The only further clarification required was that deduction under Schedule IV-A is not to be duplicated where labour and service charges are actually ascertainable from the contract, because Schedule IV-A applies only when such charges are not ascertainable.

Conclusion: Deduction at source under Section 106 must be made only on taxable turnover as worked out under Section 5(2), with Schedule IV-A applied only in the circumstances contemplated by Section 5(2)(c); no double deduction is permissible, and the final bills were directed to be settled accordingly.

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