TaxTMI 
TaxTMI 
2013 (3) TMI 60
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....company incorporated in Malaysia and having a local project office in Delhi and Punj Lloyd Ltd., a company incorporated in India under the Companies Act, 1956. Both these companies are registered with the sales tax department of the Government of NCT of Delhi separately under the WC Act and the DST Act. The Malaysian company and the Indian company were separately awarded contracts by the Delhi Metro Rail Corporation (DMRC) for execution of certain works. The Malaysian company was awarded the contract for reinforced and pre-stressing steel, pre-cast concrete work for the superstructure and the Indian company was to execute the work in connection with the survey, temporary barricades, pile foundations, etc. Under a memorandum of understanding executed on 10.10.2003 these two companies came together as a joint venture. Under the MOU, each member of the joint venture had to raise its own independent bill for the work executed and the payment was to be received by the joint venture from DMRC to be distributed by the joint venture between its two members in terms of their separate bills. The petitioner, which is the joint venture, was also registered as a dealer under the WC Act w.....
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.... no tax shall be payable on the turnover of sales pertaining to declared goods, if such goods have suffered tax earlier under the Delhi Sales Tax Act and transferred from the contractor to the contractee in the same form in which they were purchased by the contractor. (3) No tax shall be levied on the turnover of sale on transfer of property in goods, specified in the Third Schedule to the Delhi Sales Tax Act, involved in the execution of works contract, if such goods are transferred from the contractor to the contractee in the same form in which they were purchased by the contractor. (4) No such tax shall be leviable on the turnover of sales on transfer of property in goods, whether as goods or in some other form involved in the execution of works contract, if such transfer from the contractor to the contractee constitutes a sales in the course of inter-State trade or commerce under section 3 or a sale outside the State under section 4 or a sale in the course of import or export under section 5 of the Central Sales Tax Act, 1956. (5) No tax shall be payable under this section on the turnover of sales relating to the amount paid to a sub-contractor as consideration for the....
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....m such certification as may be appropriate: Provided that nothing in the said certificate shall affect the assessment of the sales tax liability of the contractor under this Act: Provided further that where any deduction has been made by a contractor from the payments made to his sub-contractor in accordance with sub-section (3) the amounts of such payments shall be deducted from the amount on which deduction is to be made under this sub-section subject to production of a certificate as prescribed in sub-section (5) of this section." (3) Any contractor responsible for making any payment or discharge of any liability to any sub-contractor, in pursuance of a contract with the sub-contractor, for the transfer of property in goods (whether as goods or in some other form) involved in the execution, whether wholly or in a part, of the works contract undertaken by the contractor, shall, at the time of such payment or discharge, in cash or by cheque or draft or any other mode, deduct an amount equal to two per cent. of such payment or discharge, purporting to be part or full amount of the tax payable under this Act. (3A) (i) A contractor with respect to the contracts other than....
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....f deducted, not so deposited into the Government treasury.] (8) Without prejudice to the provisions of sub-section (7), if any person fails to make deduction, or, after deducting, fails to deposit the amount so deducted, he shall be liable to pay simple interest at the rate of two per cent. per month on the amount deductible under this section but not so deducted and, if deducted, not so deposited from the date on which such amount was deductible to the date on which such payment is actually deposited. (9) Where the amount has not been, deposited after deduction, such amount together with interest and penalty referred to in sub- section (7) and sub-section (8) shall be a charge upon all the assets of the person concerned and recoverable as arrears of land revenue. [(10) Every person responsible for making deduction of tax under this section shall apply to the Commissioner for a Tax Deduction Account Number within the prescribed time and in the prescribed form and shall also furnish an annual return in the prescribed form within the prescribed period. Explanation.--Nothing contained in this section shall apply to works contract executed in the course of inter-State trade....
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....egistration No............ The details of the Sub- Contract are as under:- 1. Description & particulars of works contracts undertaken:............... 2. Total value of the works contract undertaken from .......... to ...........Rs........... 3. Turnover of Taxable sales in respect of period from.......... to .......... Rs. ............. Declared Goods Other than Declared Goods Turnover of Taxable Sales Tax paid 4. Amount of sales tax paid on the turnover referred to at Sl. No.3: ........... 5. Particulars of payment: Period Challan No. Date Amountof tax Total Place: Signature Date Status 6. It will be seen from the assessment order that a refund of Rs. 85,06,203/- was determined as payable to the petitioner. DMRC paid Rs. 29,32,34,912/- to the petitioner in respect of the tax period 2003-04 out of which tax of Rs. 86,97,203/- was deducted. Since the petitioner was only a joint vent....
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.... WC/62/213000534/1003 4. Periodof Assessment 2003-04 (13-1- 2004 to 31-3-2004) 5. Section & Sub-section under which assessment made 24 ASSESSMENT ORDER In response to notice ST-15 read with WCC Act, 1999 issued for 4.07.2005. Shri Rajneesh Goel, Advocate with POA appeared on 8.8.2005 and finally on 8.5.2006. Filed sale summary, written submissions dated 13.9.2005 challenging reassessment dated 8.5.2006, affidavit dated 31.03.2006, photocopies of returns, 4 Forms VI (received from two of its sub contractors), chart reflecting amount receipt from DMRC (distributed among subcontractors) with TDS, WCT and other details), Two Form-IX 26(6) proceedings have been taken separately. Dealer submitted No. books of accounts are maintained. Only Form IX and Form VI & returns is the basis of assessment. The receipt of payment which are further distributed among two of his associates sub contractors, who have issued Form VI for executing works contracts and has thus claimed refund of TDS - Since dealer has not executed any job work and is claimed 100% exemptions only on account of sub contract. Filed affidavit dated 31.03.2006 stating the assessee dealer named....
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....ce enclosed. Assessing Authority W-62" 8. This order does not bear any date but it was clarified in the course of the hearing that it was passed on 08.06.2006. The reassessment order refers to the fact that DMRC had deducted Rs. 85,07,203/- as per Form IX issued by it to the petitioner from the payment made it and that the amount became refundable to the petitioner. There is further reference to the fact that the taxable turnover in the hands of the joint venture is nil. The reassessment order further refers to a detailed letter dated 31.03.2006 sent to DMRC for verification and that the said letter was part of the assessment. In addition, the reassessment order notes the fact that the petitioner did not deduct tax when the amounts were paid to the sub-contractors i.e. the two member-companies and accordingly was liable to pay a penalty of Rs. 10,000/-. Ultimately no tax demand was raised against the petitioner in the reassessment because the amount of Rs. 29,32,34,912/- received from the DMRC was paid to the sub-contractors fully. Thus except for reiterating the petitioner‟s claim for refund and stating that it would be granted after verification and imposing a p....
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....e sense that one of the contentions in the present writ petition is that the refunds determined have been wrongly sought to be nullified by reassessment orders passed on 11.05.2009. 11. Coming to the present writ petition, after the orders determining the refunds were passed by the assessing authority for both the assessment years, the petitioner applied for the refunds by separate applications dated 23.06.2006. These applications sought rectification of the mistake allegedly committed by the assessing authority while passing the orders determining the refund and mentioning that the letters have been issued to DMRC for verification of the tax deducted at source by them from the payments made to the petitioner. The letters have been filed as Annexure P-III to the writ petition. We consider it necessary to reproduce one of these letters: - "Rajnish Goyal & Associates ADVOCATES & ATTORNEYS E-mail: The D.V.A.T.O. Ward No.62 New Delhi Resi.:22371556, 22376332 Mob.: 9811078700 I-1/16, Shanti Mohan House (Behind Shiv Mandir) Ansari Road, Darya Ganj New Delhi - 110002.Dated: 23.06.2006 Sub: M/S PERSYS PUNJLLOYD JOINT VENTURE ¼, Sunder Vih....
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....ction 48 of the DST Act in relation to the issuance of refunds for the assessment years 2003-04 and 2004-05. Even after receipt of the aforesaid letters, the petitioner kept writing to the respondents in the matter of issuing the refunds. It was repeated that the refunds had already been determined in the assessment orders subject to verification with DMRC, that these orders were passed in the year 2006, that the TDS certificate in Form- IX issued by DMRC and the payment which was duly certified by the DMRC were also submitted by the petitioner and were part of the record and that the verification part should not take such a long and unreasonable time and in these circumstances it was prayed that the refunds may be issued as early as possible. Formal applications for refund in the prescribed form (Form ST-21 prescribed by Rule 29) were also submitted on 13.01.2008 seeking refund of Rs. 85,07,203/- for the assessment year 2003-04 and Rs. 2,20,60,306/- for the assessment year 2004-05. Despite these applications and reminders, the assessing authority did not refund the amounts. Instead of refunding the amounts, the assessing authority in fact started reassessment proceedings which cul....
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....issued on 17.04.2009 was for the alleged failure of the petitioner to comply with the provisions of Section 7(3) of the WC Act; the petitioner was asked to show cause as to why the penalty for such failure cannot be imposed under Section 7(7). 16. It would appear that the petitioner submitted a detailed reply dated 29.04.2009 to the assessing authority, pointing out that even as per the earlier assessment/re-assessment orders, the petitioner had submitted Form No. VI issued by the sub-contractors and that in those forms, the sub-contractors i.e. the member-companies of the joint venture have certified that they have undertaken the work from the petitioner and that the sales tax on the turnover in executing the contract was paid by them. It was pointed out that all the particulars relating to the total value of the works contract undertaken by the sub-contractors, the turnover of sales, and the details of payments of tax such as challan number, date, relevant period etc. were furnished in those forms which were part of the record. It was thus pointed out, inter alia, that there was no such failure on the part of the petitioner as would attract the penalty provisions of Section 7(....
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.... Certificate: WC/62/213000534/1003 Assessment Period: 2003-04 (13.01.2004 to 31.03.2004) Re-Assessment Order The above named dealer is regd. Under WCT Act 1999 w.e.f. 13.01.2003 and he was liable to deduct TDS from the payment made to M/s Persys SDM BHD and M/s Punj Lloyd Ltd. as per section 7(3) of DST on work contract Act, 1999. But he failed to deduct the TDS @2% on payment of Rs. 242553806/-made to above sub-contractors. The dealer was asked to explain the reason for sales tax on Contract Act, 1999 vide notice no. 13425-13426 dated 17.04.2009. In this connection the reply received from the dealer on 29.04.2009 is not found satisfactory. Thereafter ST 15 was issued to dealer on 27.04.2009 for 11.05.2009 but no body has appeared on behalf of the dealer. Therefore, the Re-assessment Order is framed as under:- GTO/Receipts : 242553806.00 Tax/TDS @ 2% : 4851076.00 Penalty : 9702152.00 Interest : 5821291.00 Total Tax Due : 20374519.00 The dealer is directed to deposit tax Rs. 20374519/-. Copy to the dealer" Sd/- AA WARD 21. The following chart sets out the relevant details with regard to all the three writ petitions....
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....rders for the same period. 24. The preliminary objection of the respondents that writ petitions against the re-assessment orders passed on 11th May, 2009 are not maintainable since those orders were appealable need not detain us since it is well settled that where the action of an executive authority acting without jurisdiction is likely to subject a person to dilatory proceedings and undue harassment, the High Courts will issue appropriate writs to prevent such consequences. The following observations of the Supreme Court in the case of Calcutta Discount Co. Ltd. vs. Income Tax Officer and Anr. reported in (1961) 41 ITR 191 are relevant: - "Mr. Sastri next pointed out that at the stage when the Income Tax Officer issued the notices he was not acting judicially or quasi-judicially and so a writ of certiorari or prohibition cannot issue. It is well settled howsoever that though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is like....
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....ined that if the alternative remedy is an appeal from "Caesar to Caesar's wife" the existence of such a remedy would be a mirage and an exercise in futility. In Godrej Sara Lee Limited vs. Asst.Commissioner and Anr. (2009) 14 SCC 338 the Supreme Court observed as under: - "........the question as to whether the said Notification could have a retrospective effect or retro-active operation being a jurisdictional fact, should have been determined by the High Court in exercise of its writ jurisdiction under Article 226 of the Constitution of India as it is well known that when an order of a statutory authority is questioned on the ground that the same suffers from lack of jurisdiction, alternative remedy may not be a bar. (See: Whirlpool Corporation v. Registrar Trade Marks and Mumtaz Post Graduate Decgree College vs. Vice Chancellor)." In the light of the above observations of the Supreme Court, we overrule the preliminary objection of the respondents. In the case on hand, apart from being appeals from "Caesar to Caesar", the petitioner would be likely to be asked to make pre-deposit of the disputed tax, interest and penalty u/s. 43(5) of the DST Act. This is likely to affect....
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....dealer in respect of such turnover, and the provisions of this Act shall, so far as may be, apply accordingly." 28. In order that proceedings can be taken under Section 24, the first condition is that the Commissioner should have reason to believe that the whole or any part of the turnover of the dealer has escaped assessment to tax or has been under-assessed or has been assessed at a rate lower than the appropriate rate or any deduction was wrongly made from the turnover. 29. In the reason mentioned at the bottom of Form ST-15 which is the notice of re-assessment, what has been stated by the respondents is that the petitioner was required to deduct tax at the rate of 2% from the payments made to the sub- contractors, but failed to do so. The question is whether this can hold good as the reason to believe that taxable turnover had escaped assessment. It must be remembered that the petitioner does not effect any sales to its sub-contractors; all it does - and this fact has also been accepted by the respondents - is to pass on the monies received from DMRC to the sub-contractors, acting as a conduit. The question of turnover in the hands of petitioner would arise only if it ind....
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....alleged failure on the part of the petitioner to deduct tax from the payments made to the sub-contractors. Even assuming for the sake of argument that there was such a failure, it does not amount to turnover escaping assessment in the petitioner‟s hands. The reassessment notices appear to us to have been issued without any application of mind and without having regard to any of the statutory provisions. This becomes more pronounced if one looks at the cryptic manner in which the reassessment orders have been framed. Moreover, even the penalty which is to be imposed, if at all, is under Section 7(7) of the WC Act and that too after providing reasonable opportunity to the petitioner of being heard as envisaged under that section, but strangely it has been imposed in the reassessment orders. No reasonable opportunity was given to the petitioner of being heard nor was a separate order imposing the penalty passed. The petitioner filed the returns for the assessment years 2003-04 and 2004-05 and had also furnished Form-VI with all the relevant particulars showing the payment of tax by the sub- contractors. It seems to us that the respondent No.2 (VATO) chose to adopt a rather un....