Separate tax deduction obligations mean a contractor still owes interest on delayed payment despite the contractee's default.

The statutory scheme under the Haryana Value Added Tax Act, 2003 keeps the contractor's primary liability to pay tax and interest distinct from the contractee's duty to deduct and deposit tax at source. Delayed deposit by the contractee does not shift that liability to the contractee or extinguish the contractor's obligation to pay interest under Section 14(6). The contractor may receive credit for tax deducted at assessment, while the contractee's failure to deduct or deposit tax attracts an independent penalty under Section 24(6). Liability for interest was therefore treated as recoverable from the contractor despite the contractee's default.

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Issues: Whether interest under the Haryana Value Added Tax Act, 2003 can be levied on the contractor for delayed deposit of tax deducted at source by the contractee, and whether the contractor's liability to pay tax and interest can be shifted to the contractee's default.

Analysis: The statutory scheme places the principal liability to pay tax on the contractor, while Section 24 of the Haryana Value Added Tax Act, 2003 creates a separate mechanism for deduction of tax in advance by the contractee. The contractor remains obliged to file returns and pay the balance tax with interest if payment is delayed under Section 14(6) of the Haryana Value Added Tax Act, 2003. The contractee's default in deduction or deposit attracts an independent penalty under Section 24(6) of the Haryana Value Added Tax Act, 2003. The Court held that the liabilities of the contractor and the contractee are distinct and cannot be set off against each other; credit for tax deducted at source is available to the contractor at assessment, but the contractor cannot avoid interest on delayed tax payment merely because the contractee failed to deposit tax in time.

Conclusion: The question was answered against the assessee. Interest was held recoverable from the contractor despite the contractee's delay in depositing tax deducted at source.

Final Conclusion: The contractor's statutory obligation to pay tax and interest was affirmed, while the contractee's separate default was left to be dealt with independently under the Act and Rules.

Ratio Decidendi: Where the statute creates separate obligations for the contractor to pay tax and for the contractee to deduct and deposit tax at source, the contractor remains liable for interest on delayed tax payment, and the contractee's default does not extinguish or transfer that liability.

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