TDS liability cannot be duplicated when the deductee has already paid tax, though interest and penalty may still survive.

In TDS matters, where the deductee has already discharged tax on the relevant income, the deductor cannot be made to pay the same tax again. However, failure to deduct tax may still attract interest for the period of default and statutory penalty consequences under the TNVAT Act. Because the assessment orders did not record whether, and to what extent, the job workers had already paid tax, the assessments were set aside and remitted for fresh re-computation after issuing fresh show cause notices and giving the assessee an opportunity to respond.

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Issues: Whether the assessee could be fastened with TDS liability where the deductees had already paid the tax, and whether the impugned assessments required to be set aside and reworked accordingly.

Analysis: The governing principle applied was that in TDS matters, once the deductee has discharged the tax liability on the relevant income, the deductor cannot be asked to pay the same tax again. At the same time, the deductor's failure to deduct tax does not disappear for all purposes, and liability for interest for the period of default, as well as the statutory penalty consequences under the TNVAT Act, may still survive. As the assessment orders did not contain findings on the extent of tax, if any, already paid by the job workers, the liability had to be recomputed after giving the petitioner a fresh opportunity.

Conclusion: The impugned assessment orders were set aside and the matter was remitted for fresh assessment and re-computation after issuing fresh show cause notices; tax recovery from the petitioner was not permitted to the extent the deductees had already paid the tax, though interest and penalty consequences were left open in accordance with law.

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