TaxTMI 
TaxTMI 
1999 (4) TMI 598
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.... March 10, 1998, the petitioner was informed that the General Manager had conveyed approval of the rates quoted by him. He was called upon to execute an agreement. On March 18, 1998, the agreement was executed. It was, inter alia, provided that "the man-power shall be charged Rs. 84 per day per labour (or)". It appears that the petitioner was periodically submitting the bills. Respondent Nos. 2 and 3 sanctioned the payment after deduction of the income-tax and the sales tax at 2 per cent each. To illustrate for the month of September, 1998, it was found that the petitioner has supplied 260 labourers at Rs. 84 per labourer. The petitioner was entitled to a payment of Rs. 21,840. However, deduction was ordered to be made at 2 per cent on acco....
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.... contractor either in cash or in any other manner, deduct the amount equal to 2 per cent of such sums towards part or as the case may be, full satisfaction of the tax payable under this Act on account of such works contract...". It has also been averred that the Department of Telecommunications has issued comprehensive instructions on September 2, 1998. In pursuance of these instructions, the amount due on account of sales tax was deducted from the payment made to the various contractors including the petitioner. On these premises, the respondents maintain that their action in levying and deducting the sales tax from the payment made to the petitioner is legal and valid. Counsel for the parties have been heard. 5.. The solitary contention....
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.... tax. However, the taxable event is the transfer of property in goods. Unless there is transfer of property in the goods, sales tax cannot be levied. 7.. Mr. Rathee, counsel for the respondents, contended that this position has changed in view of the amendment made vide notification dated July 15, 1997 (Punjab Act No. 7 of 1997). Is it so? 8.. Section 10-C(1) provides as under: "Notwithstanding anything contained in any of the provisions of this Act, every person responsible for making payment to any dealer (hereinafter in this section referred to as the contractor) for discharge of any liability on account of valuable consideration payable for the transfer of property in goods (whether as goods or in any other form) in pursuance of a wo....
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....o makes the payment to the contractor. 10.. That is the position in the present case? The petitioner is merely supplying labour. He is not supplying any goods. No material, commodity or article is transferred in any form. The supply of labour may be a service. However, it does not involve any transfer of property in goods. Thus, no sales tax or purchase tax is leviable. Consequently, none can be deducted. 11.. In the written statement filed on behalf of the respondents, a reference has been made to the instructions issued by the Department of Telecommunications to the different officers. Normally, instructions cannot provide for the levy of a tax. It was not even suggested that these instructions authorise the levy of sales tax. Conseque....