TaxTMI 
TaxTMI 
2020 (11) TMI 393
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....st 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 deduction are complied with fastidiously by pay....
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....ction 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 under the provisions of the TNVAT Act and whether the scheme has been foll....
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....or 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 each deduction separately, and send a copy of the certificate of deduction to the assessing authority, having jurisdiction over the said dealer together with such documents, as may be prescribed. (4) On furnishing....
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....x, 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 respect of which no tax need be deducted by the payer/contractee, and upon such estimation, a certificate in Form S is furnished by the officer to the contractor/payee indicating the amount in respect of which no deduction need by effected by the payer/contractee. Ther....
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....n 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 for the abovesaid Work. We shall be very much obliged if the Certificate is issued at the earliest. Thanking you, Yours faithfully, for SIMPLEX INFRASTRUCTURE LIMITED (J.S.RAGHAVAN) MANAGEMENT ADVISOR' Upon consideration thereof, R2 issues certificate dated 28.08.2014, valid for the period 01.04.2014 to 31.03.2015, on the basis of which the petitioner can proceed t....
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....on 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 Office of the Assistant Commissioner of Commercial Taxes, Egmore Assessment Circle, No.88, V.R.Ramanathan Road, Chetpet, Cheenai 600 031. DATE: 06.05.2015. FORMS (See Rule 9(2)) No Liability Certificate in respect of Works Contractor 1 Name and address of the dealer Tvl.S....
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....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: 33110540224/2016-2017 Office of the Assistant Commissioner of Commercial Taxes, Egmore Assessment Circle, No.88, V.R.Ramanathan Road, Chetpet, Cheenai 600 031. DATE: 24.06.2016. FORMS (See Rule 9(2)) No Liability Certificate in respect of Works Contractor 1 Name and address of the dealer Tvl.Simplex Infrastructures Limited, 48, Cass Major Road, Egmore, Chennai. 2 Registration Certificate Number 33110540224/2016-2017 3 Status Public Limited Company 4 Date of filing of application by the dealer for issuance of this Certificate 06.06.2016 5 Authority by whom works contract was assigned to the d....
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....rein 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 would show that Simplex has the benefit of Form S certificates for the entirety of the contract value. 22. The order of assessment dated 28.05.2019 has been passed for the period 2016-17. The Officer refers to the appointment of R3 as a building contractor for the residential township called Unity Enclave comprising of 21 towers with 2100 residential flats at a total construction cost of Rs. 547,88,09,797/-. The contract period spans 25.6.2014 to 31.03.2017. Reference is made to the surprise visit of the Enforcement officials in the premises of the petitioner. The officer, on the basis that Form S furnished by R3 to the petitioner is for a sum of Rs. 187,75,27,174/-, brings to tax the entirety of the contract value of Rs. 547,88,09,797/- at the rate of ....
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....nder 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 R3 in respect of the contract in issue is still at large and in any event is not the subject matter of this Writ Petition. 25. As far as the petitioner is concerned, the order of assessment leading to the impugned order under Section 84 relates to the period 2016-17. R1 brings to tax the entire contract value in the hands of the petitioner as an assessee in default on a complete mis-appreciation of the scheme of Section 13 and ignoring the three certificates in Form S that have been furnished by the petitioner. 26. Initially R1 has filed a counter affidavit on behalf of herself as well as R2. The counter substantially proceeds on the question of maintainability of Writ Petition and apart from a general averment to the effect that the impugned order did not call for interference, the only other submission made is that the Form S....
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....der 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 for advance collection of tax in the case of several classes of payers including contractors. Advance collection is to facilitate certainty as well as ease in tax payment as the remittance would be spread over a period. However, one of the exceptions for tax deduction is a situation where the payee has discharged the liability or has obtained the requisite certificate from its assessing officer for nil deduction. 30. The Central Board of Direct Taxes has issued a circular clarifying this position that has been taken note of by the Hon'ble Supreme Court in the case of Hindustan Cocacola Beverages V. CIT (293 ITR 226). After considering the scope of the provisions of TDS and those imposing penalty for non-deduction by the payer, the Hon'ble Supreme Court has held that in a case where the payee has discharged its liability in full, there would remain no further burden upon the payer to deduct tax at....
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....nue 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 appropriate provision under which such order could have been passed. 34. The following statutory provisions are relevant to decide this issue. Section 2(15) defines a 'dealer' as any person, who carries on the business of buying, selling, supplying or distributing goods directly or otherwise whether for cash, deferred payment or valuable consideration including nine (9) enumerated categories of persons, and reads as follows: (15) "dealer" means any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment, or for commission, remuneration or other valuable consideration, and includes- (i) a local authority, company, Hindu undivided family, firm or other association of persons which carries on such business; (ii) a casual trader; (iii) a factor, a broker, a commission agent or arhati, a del credere agent or an auctione....
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....priate 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 Joint Commissioner by any person objecting to an order passed by the Deputy Commissioner (assessment) under Sections 22, 24, 26, 27(1)(2)(3) and (4), 28, 29, 34 and 40(2). Section 54 is a residuary provision which provides for a revision by the Joint Commissioner of any order or proceeding recorded under the Act for which no appeal is provided for under Sections 51 or 52. 37. The term 'person' though not defined in the general definition section, has been defined in the Explanation to Section 13 to include the following entities for the purposes of the provision: 13. deduction of tax at source in works contract .--. (1) ......... 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 in....
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....13(4) itself. 42. A Division Bench of this Court in MI Steel Processing India Pvt. Ltd. V. The Assistant Commissioner (CT), Kancheepuram (2016-VIL-60-MAD) considered a challenge to an order of assessment and consequential recovery. The assessee in that matter had preferred an appeal under Section 51 along with an application for stay. The appeal had been filed with the statutory pre-deposit. While hearing the appeal, the Appellate Authority dismissed the same on the sole ground that the issue involved therein related to tax deduction at source under Section 13 of the Act, which could not be the subject matter of assessment under Section 27 of the Act amenable to appeal under Section 51 of the Act. The appeal was dismissed as not maintainable. 43. A Writ Petition was filed by that assessee challenging the order of the Appellate Authority that was disposed by the learned single Judge directing the appeals papers to be returned to the petitioner and permitting the petitioner to file a revision as against the order of assessment. Since the learned single Judge had not directed the Appellate Authority to return the pre-deposit and the amount paid thereafter in compliance with the co....