2007 (9) TMI 590

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....eement with Fiat Engineering, New Delhi. It appears that the opposite party had made some advance payment to the contractor during the year under consideration and deducted one per cent from the payment and deposited the same with the Government Treasury. The assessing authority levied the penalty under section 8D(6) of the Act on the ground that under section 8D(1) the opposite party should have deducted four per cent and not one per cent. Being aggrieved by the order of the assessing officer, the dealer filed an appeal before the Deputy Commissioner (Appeals), Noida which was allowed and the penalty was set aside. The Commissioner, Trade Tax, filed appeal before the Tribunal which has been dismissed by the impugned order. The Tribunal ....

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....n any other form) in pursuance of a works contract, not being a building contract of such class or value as may be notified by the State Government in public interest in this behalf, shall, at the time of making such payment to the contractor, either in cash or in any other manner, deduct an amount equal to four per cent of such sum towards part or, as the case may be, full satisfaction of the tax payable under this Act on account of such works contract: Provided that the Commissioner of Sales Tax may, if satisfied, that it is expedient in the public interest so to do and for reasons to be recorded in writing order that in any case or class of cases no such deduction shall be made or, as the case may be, such deduction shall be made at a....

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.... of making such payment to the contractor deduct amount equal to four per cent. Section 8D(1) does not apply to all payments but applies to only those payments, which are for the discharge of any liability on account of valuable consideration payable for transfer of property in goods. If there was no transfer of property in goods and the payment is not towards the discharge of any liability towards valuable consideration payable for the transfer of property in goods provisions of section 8D(1) do not apply. In the present case, admittedly payment was in the nature of advance payment and it was not towards the discharge of any liability on account of valuable consideration for transfer of property in goods, in as much as goods had not been t....