TaxTMI 
TaxTMI 
2020 (11) TMI 393
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....motive and the project was undertaken on cost basis wherein the cost of the residential unit purchased by a member would be borne in full by that member. The documentation entered into by the petitioner with R3 provided for the terms of payment which, as per the prevailing norms in the industry, were to be made slab-wise, based upon the progress of the contract. 3. The provisions of the Tamil Nadu Value Added Tax Act, 2006 (in short 'TNVAT Act') provide for the deduction of tax at source on remittances effected to payees including contractors at stipulated rates in terms of Section 13 of the TNVAT Act. Exceptions are carved out wherein remittances can be effected without deduction of tax and in such situations, the payee/contractor has the responsibility of producing a certificate in Form S on the strength of which remittances will be made by the payer without effecting the statutory deduction of tax or deducting tax at a rate lower than that stipulated. There are serious consequences of non-deduction wherein the entire tax liability in respect of the amount that was subject to deduction would be mulcted upon the payer/contractee. This is to ensure that the provisions of tax ....
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....der the Act, be it appeal, revision or any other. Thus, resort to Section 84 by the petitioner is not misconceived and rejection of Section 84 application by the Assessing Officer solely on the ground that only an appeal should have been filed is erroneous. This issue is answered in favour of the petitioner. 10. (ii) Whether the impugned order is vitiated by violation of the principles of natural justice? As far as the issue of violation of principles of natural justice is concerned, evidently, no opportunity had been granted by the Officer prior to passing of the impugned order. This submission is well founded. However, in the course of the hearing I find that there are no disputes in the facts and all facts as are necessary for the adjudication of the issues on merits are available on record having been filed both by the petitioner as well as by the Department before me. Thus, while accepting the argument that the impugned order is contrary to the principles of natural justice, I refrain from setting aside the order and granting the limited relief of remand and proceed to adjudicate the legal issues raised, on merits. 11. (iii) What is the proper scheme of tax deduction ....
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....he amount or the aggregate of the amount paid or credited or likely to be paid or credited, during the year, by such person to the dealer for execution of the works contract including civil works contract does not or is not likely to, exceed rupees one lakh. Explanation.-For the purpose of this Section - (a) the term ' person' shall include - (i) the Central or a State Government; (ii) a local authority; (iii)a corporation or body established by or under a Central or State Act; (iv) a company incorporated under the Companies Act, 1956 including a Central or State Government undertaking; (v) a society including a co-operative society; (vi) an educational institution; or (vii) a trust; (b) the term "civil works contract" shall have the same meaning as in the Explanation to Section 6 (2) Any person making such deduction shall deposit the sum so deducted to such authority, in such manner and within such time, as may be prescribed. (3) Any person who makes the deduction and deposit, shall within fifteen days of such deposit, issue to the said dealer a certificate in the prescribed form for....
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....dealer produces a certificate to the effect that he has no liability to pay or has paid tax under Section 5 or (iv) his turnover is below the threshold of rupees one lakh. 14. In the case of point (iii), that the dealer has no liability to, or has paid the tax, a certificate of nil-deduction is to be obtained by the contractor to this effect from its assessing officer and furnished to the payer, upon the strength of which the payer will not deduct tax at source. For this, the contractor normally files an application before its jurisdictional Assessing Officer setting forth an estimate of its taxable turnover for the forthcoming assessment period. Upon consideration of the application and being convinced that the tax liability on such anticipated taxable turnover would be met by that dealer in full measure, the Assessing Authority is at liberty to issue a certificate in Form S setting out a) the anticipated turnover for the year in question, b) the tax liability thereupon, c) the amount for which no deduction need be effected by the payer/contractee. 15. As regards point (c) above, discretion vests in the Assessing Officer to estimate the proportion of total turnover in respec....
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.... based on our experience in the execution of similar works in the past and is correct to the best of our knowledge. As per the Assessment Order dated 18.07.2014 passed under Section 27 of the TNVAT Act for the year 2012-13, excess Tax of a sum of Rs. 71,41,335/- (Rupees Seventyone Lakh Fortyone Thousand Three Hundred Thirtyfive only) has been paid by us consequent to tax deducted at source by the Contractees under Section 13 of the TNVAT Act. Even though excess Tax has been paid by us for the year 2013-2014 as well consequent to tax deducted at source by the Contractees under Section 13 of the TNVAT Act, we will be making payment of a sum of Rs. 49,17,430/- (Rupees Fortynine Lakh Seventeen Thousand Four Hundred Thirty only) towards the Net VAT Liability for the above said Work as detailed hereunder: Net VAT Liability for the said Work as per the Rs. Detailed Calculation enclosed herewith 1,20,58,765 Less: Excess Tax Paid for the Financial Year 2012-2013 as per the Assessment Order dated 18.07.2014 71,41,335 Balance Amount Payable 49,17,430 We therefore request you to issue the VAT TDS Exemption Certificate in Form S fo....
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.... 25.06.2014 to 24.12.2016 (d) Address of work site Village Mambakkam, Mambakkam -Medavakkam Main Road, Chennai-600 127. (e) Value of Contract Rs. 550,66,54,537/- (Rupees Five Hundred Fifty Crore Sixty Six Lakh Fifty Four Thousand Five Hundred Thirty seven only) I have examined the Contract/Purchase Bills/Returns filed in all deals and to the best of my knowledge and belief. I hereby certify that the Dealer has already paid the Tax relating to this Contract under Section 5 of the Tamil Nadu Value Added Tax Act 2006. This Certificate is issued as contemplated in Clause (c) of the First Proviso to Sub-section (1) of Section 13 of the Tamil Nadu Value Added Tax Act, 2006. This Certificate is valid till 31st march 2015 and is subject to revalidation thereafter. Place : Chennai 600 031 Signature of the Assessing Officer, Date: 28.08.2014 Name: E.KUPPAMMAL Designation: ASSISTANT COMMISIONER (COMMERCIAL TAXES) , EGMORE II ASSESSMENT CIRCLE. 17. The Second Form S for the period 2015-2016 is extracted below: TIN: 33110540224/2015-2018 &nbs....
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....n Clause (c) of the First Proviso to Sub-section (1) of Section 13 of the Tamil Nadu Value Added Tax Act, 2006. This Certificate is valid till 31st March 2016 and is subject to revalidation thereafter. 18. The second Form S dated 06.05.2015 relates to the period 01.04.2015 to 31.03.2016. The Assessing Authority, in column (e) setting out the value of contract commences with the total contract value in respect of which the application for issuance of Form S was filed by Simplex, reduces therefrom, the quantum of annual work carried out by the Simplex for the period 01.04.2014 to 31.03.2015, which was a sum of Rs. 26,80,30,178/- and arrives at the balance of quantum work to be executed as on 01.04.2015, at a figure of Rs. 523,86,24,359/-. This certificate thus permits the petitioner to make remittances of upto a sum of Rs. 523,86,24,359/- without deduction of tax at source. 19. The Third Form S for the period 2015-2016 is as under: Place : Chennai 600 031 Signature of the Assessing Officer, Date: 06.05.2015 Name: J.KUMARI REMY Designation: ASSISTANT COMMISIONER (COMMERCIAL TAXES), EGMORE ASSESSMENT CIRCLE. TIN: 33110540224/2016-201....
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....thereafter. Place : Chennai 600 031 Signature of the Assessing Officer, Date: 24.06.2014 Name: V.RAJA Designation: ASSISTANT COMMISIONER (COMMERCIAL TAXES) (FAC), EGMORE ASSESSMENT CIRCLE. 20. The third and last certificate dated 24.06.2016 is valid for the period 01.04.2016 to 31.03.2017. In column (e) setting out the value of contract, the Officer commences with total contract value, being a sum of Rs. 550,88,54,637/- and reduces therefrom a sum of Rs. 187,75,27,174/-, which is the total quantum of work that was executed by Simplex till 31.03.2015. He arrives at a balance of Rs. 362,91,27,363/-, to which the Form S relates. 21. The impugned assessment and demand made upon the petitioner relates to the period 2016-17, wherein the Assessing Officer proceeds on the basis that no Form S has been received by the petitioner and hence all remittances made ought to have been subject to tax deduction at source. However, in the light of the three Forms as extracted above and explained in the preceding paragraphs, I am of the view that the Officer has entirely lost sight of the scheme of tax deduction under Section 13 as the three certificates issued by R2 ....
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.... seeking the benefit of receipt of remittances without TDS for the period 2015-16. Upon consideration of the second application, R2, taking note of the quantum and value of contract and remittances upto 31.03.2015 issued Form S for the remainder of the contract value, valid till 31.03.2016. A third application was thereafter filed on 06.06.2016, which came to be considered by R2 and Form S issued for the remainder of the contract value valid till 31.03.2017. 24. R3 states that work under the contract continued even after 01.07.2017 after coming into force of Central Goods and Services Tax Act, 2017. Returns under Section 5 of the TNVAT Act have been filed till 30.06.2017 and no certificate in Form has been filed for the period 01.04.2017 to 30.06.2017. There is a categorical assertion that R3 has discharged its VAT liability under Section 5 of the Act in the monthly returns filed by it for the period 2014-15 to 30.06.2017. R3 would also state that its returns have been accepted by R2. However, this acceptance is only deemed as on date, insofar as admittedly the returns have not been taken up for assessment and orders passed thereupon. The veracity or otherwise of the returns of ....
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....mitted that the contractor being 3rd Respondent (TIN : 33110540224) has filed monthly returns under TNVAT Act 2006 showing the transactions of works contract executed with payment of tax. 10. With regard to averments made in Para 26 of the affidavit, it is submitted that the dealers have filed monthly returns under TNVAT Act 2006 for the years from 2013-14, 2014-15, 2015-16 & 2016-2017. This is thus the factual position to be noted as regards the returns filed by Simplex and the tax remitted with respect to the turnover for the contract in question. 28. The impugned order cannot, in my view be holistically appreciated without noticing the totality of facts involved, which also includes the order of assessment dated 28.05.2019. In the light of the three certificates in Form S dated 28.08.2014, 06.05.2015 and 24.06.2016, there is no justification whatsoever for R1 to have passed order of assessment dated 28.05.2019 for the period 2016-17 or the impugned order dated 23.01.2020. 29. The Income Tax Act, 1961 (in short 'IT Act') has provisions analogous to Section 13 of the TNVAT Act in Section 201(1) and (1A) thereof. These provisions have been inserted as a measure....
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....uestion as to whether the order is one of assessment under Section 27 or an order of nil deduction under Section 13. According to the petitioner, it is an order under Section 13 amenable to revision under Section 54 of the TNVAT Act, whereas according to the revenue, Section 13 is not a charging provision or a provision that is amenable to the passing of a separate order. The effect of deduction or consequences of non-deduction are reflected in the computational methodology which forms part of assessment only. Thus, according to the revenue, it is an order under Section 27 of the Act. 33. My attention is also drawn to the decision of the learned single Judge dated 01.08.2019 in W.P.No.22634 of 2019 and the order passed in Writ Appeal dated 06.12.2019 in W.A.No.4073 of 2019. The learned single Judge in order dated 01.08.2019 has recorded the rival contentions in this regard, specifically the submissions of the revenue to the effect that the order has been passed under Section 27 of the Act. This submission has however been noticed and appreciated in the context of whether an opportunity of hearing was mandatorily to be granted to the petitioner, and not as to what would be the ap....
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....union registered under the Trade Union Act, 1926 and undisputedly not registered as a dealer under the Act or satisfying the definition of a' dealer' under Section 2(15). The provisions of Section 20, dealing with assessment of tax, Section 21, relating to the requirement of a dealer who is liable to pay tax under the Act to file a return, Section 22 dealing with assessments and procedure thereof and Section 27 dealing with the assessment of a dealer in case of escaped turnover and wrong availment of ITC would not apply to the petitioner before me. Thus, there is no necessity for the petitioner to file a return as on date and consequently no requirement for an assessment. Order dated 28.05.2019 is thus not one that is passed under Section 27. 36. The remedial measures provided for in respect of various orders/proceedings under the Act are also different. Section 51 deals with an appeal to be filed before the first appellate authority by any person objecting to an order passed by the appropriate authority barring Deputy Commissioner (Assessment) under Sections 22, 24, 26, 27(1)(2)(3) and (4), 28, 29, 34 and 40(2). Section 52 deals with an appeal to be filed before the Appellate J....
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....a more restricted term that need not encompass all 'persons'. Thus, while an 'assessment' may be made in the case of a person who is also a dealer as defined under the Act, there can be other orders or proceedings passed under the Act that may relate to those 'persons' who are not 'dealers'. The latter category of orders/proceedings would be amenable to revision under Section 54. 40. An assessment will contain a holistic computation of tax liability of a 'dealer' that would include giving credit to tax deducted at source or fastening liability under Section 13(4) where the assessee/dealer has not deducted tax at source as required. In such cases, issues relating to TDS would form part of the total computation of tax liability and be reckoned for the purposes of determining final liability of tax. 41. However, in the case of a non-dealer, who has no liability to file a return of tax, the question of assessment does not arise. In such cases, the order will be restricted only to the consequences of non-deduction and would thus be passed under the provisions of Section 13(4) itself. 42. A Division Bench of this Court in MI Steel Processing India Pvt. Ltd. V. The Assistant Comm....