TaxTMI 
TaxTMI 
2024 (5) TMI 540
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....,000/- deducted as Income Tax @ 2% from the bills raised by the Petitioner towards supply of materials to the Respondent JBVNL so as to enable the Petitioner to get the tax credit of the said amount under Income Tax laws; or in alternative. ii. In the alternative to prayer (i), for the issuance of an appropriate writ/order/direction or a writ in the nature of mandamus directing the Respondent JBVNL to forthwith release the amount of Rs. 2,92,32,000/- so deducted from the bills of the Petitioner towards supply of materials by the Petitioner to the Respondent JBVNL as despite various requests made by the Petitioner, the Respondent JBVNL has neither released the aforesaid amount till date nor TDS certificate under Income Tax law has been issued by the Respondent JBVNL in order to entitle the Petitioner to take TDS credit of the aforesaid amount. iii. For the issuance of any other appropriate writ (s) or direction(s) or order(s) as this Hon'ble Court may deem fit and proper in view of the facts and circumstances of the case for doing conscionable justice to the Petitioner. 2. The petitioner-Firm is registered under the Companies Act, 1956 and engaged in the business of providing c....
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....d submitted with regard to the statements made in the paragraph-1 to the writ petition under reply that the writ application, in which the petitioner prays for relieves in Point Nos. I. ii, iii and iv, are not acceptable in light of the following facts cited hereunder: Initially JBVNL was not deduction TDS on I. Tax on payments made against Supply of Materials. On dated 10.08.17, Income Tax Department conducted a survey at JBVNL and issued a notice under section 201 of I. Tax act, 1961 vide ref no. DCIT/RAN/TDS/2017-18/177 Dt 04.09.17. In the said notice department opined that the contract is for all works including supply of materials which cannot be considered as mere supply of materials being a separate contract is there for supply portion. Rather the contractor is purchasing the materials for using it for the contract. They considered it as a composite contract. After hearing, the department issued a demand notice vide their memo no. 607 Dt 10.10.17 to deposit amount of TDS alongwith interest for Rs. 36,63,51,685.00. Later on after submission of request the said demand was revised to Rs. 9,79,04,575/- only. This amount includes fine with a penal interest for non-deduction o....
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....Income Tax Act provide as under: 201. Consequences of failure to deduct or pay.-(1) Where any person, including the principal officer of a company,- (a) who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in sub-section (1-A) of Section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income under Section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the ....
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....l year in which payment is made or credit is given. (4) The provisions of sub-clause (ii) of sub-section (3) of Section 153 and of Explanation 1 to Section 153 shall, so far as may, apply to the time limit prescribed in sub-section (3). Explanation.-For the purposes of this section, the expression "accountant" shall have the meaning assigned to it in the Explanations to sub-section (2) of Section 288. "203. Certificate for tax - (1) Every person deducting tax in accordance with the foregoing provisions of this Chapter shall, within such period as may be prescribed from the time of credit or payment of the sum, or, as the case may be, from the time of issue of a cheque or warrant for payment of any dividend to a shareholder, furnish to the person to whose account such credit is given or to whom such payment is made or the cheque or warrant is issued, a certificate to the effect that tax has been deducted, and specifying the amount so deducted, the rate at which the tax has been deducted and such other particulars as may be prescribed. (2) Every person, being an employer, referred to in sub-section (1A) of section 192 shall, within such period, as may be prescribed, furnish t....
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....te for furnishing the statement of tax deducted at source under rule 31A. 9. Section 271-C of the Income Tax Act provides that if any person fails to deduct the whole or any part of the tax at source, he shall be liable to pay a penalty. And, section 276-B makes punishable the failure to make payment to the credit of the Central Government the tax deducted at source. The provisions under sections 271-C and 276-B lay down as under: 271-C. Penalty for failure to deduct tax at source.-(1) If any person fails to- (a) deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B; or (b) pay or ensure payment of, the whole] or any part of the tax as required by or under,- (i) sub-section (2) of Section 115-O; * * * (ii) the * * * proviso to Section 194-B; (iii) the first proviso to sub-section (1) of Section 194-R; or (iv) the proviso to sub-section (1) of Section 194-S; or (v) sub-section (2) of Section 194-BA, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay or ensure payment of, as aforesaid. (2) Any penalty imposable under sub-section (1) shal....
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....de by JBVNL: "13. That it is stated and submitted that with regard to the statement made in the paragraph 20 to the writ petition under the reply that the amount as demanded by I. Tax department through demand notice raised as a result of survey was not reflecting in the 26AS of the petitioner which will be deposited with the department with proper return of TDS after outcome of the appeal more fully described in paragraph 1 of this counter affidavit." 12. In our opinion, the demand notice issued to the JBVNL that it committed default in not making TDS deductions cannot cloak the JBVNL with any authority or even an excuse to withhold a certain amount from the running bills of the Contractor. This is quite curious that the JBVNL seeks to take a stand before the CIT (Appeal) that it was not under an obligation to deduct 2% TDS from the running bills of the Contractor raised towards the supply of materials and, on the other hand, it has retained Rs. 2,90,32,000/- towards payment of 2% TDS deductions on that count. This is also relevant that the deductions by the JBVNL starting from the financial year 2016-17 have accumulated to Rs. 2,90,32,000/- but it did not deposit the said amou....
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....ong with subsequent variation if any), by the Employer on the supplies made by the Contractor but limited to the tax liability on the transaction between the Employer and the Contractor. In respect of bought-out finished items, which shall be dispatched directly from the sub-vendor's works to the Project site (sale-in-transit), the EXW price is inclusive of all cost as well as duties and taxes (viz., custom duties & levies, duties, sales tax/VAT etc.) paid or payable and any such taxes, duties levies additionally payable will be to Contractor's account and no separate claim on this behalf will be entertained by the Employer. The requisite Sales Tax declaration forms shall be issued as under: a) JBVNL for contracts in their jurisdiction shall issue the necessary form to the contractor Further, the EXW price of (i) bought-out finished Equipments/items as 'Off the Self' items or dispatched directly from the Contractor's works are exclusive of all cost as well as duties and taxes (viz., custom duties & levies, duties sales tax/VAT etc.) paid or payable and no separate claim on this behalf will be entertained by the Employer. Employer shall, however, issue requisite sales tax decl....
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....retation or application of any Tax occurs in the course of the performance of the Contract, which was or will be assessed on the Contractor in connection with performance of the Contract, an equitable adjustment of the Contract price shall be made to fully take into account any such change by addition to the Contract price or deduction therefrom, as the case may be, in accordance with GCC Clause 31 (Changes in Laws and Regulations) hereof. However, these adjustments would be restricted to direct transactions between the Employer and the Contractor for which the taxes and duties are reimbursable by the Employer as per the Contract. These adjustments shall not be applicable on procurement of raw materials, intermediary components etc. by the Contractor and also not applicable on the bought out items dispatched directly from sub-vendor's works to site. In respect of raw materials, intermediary components etc. and bought out items, neither the Employer nor the Contractor shall be entitled to any claim arising due to increase or decrease in the rate of Tax, introduction of a new Tax or abolition of an existing Tax in the course of the performance of the Contract. 15. Clause 10.1 of t....
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....as been entered. 17. Any unjust retention of money or property of another shall be against the fundamental principles of justice, equity and good conscience. The unauthorized deductions from the running bills of the petitioner-Firm are patently illegal. Such deductions caused loses to the petitioner-Firm which filed its Income Tax returns but was deprived of Rs. 2,90,32,000/- and thereby suffered business or alteast interest losses. On the other hand, the JBVNL was unjustly enriched and need to restitute the petitioner-Firm. The refund of Rs. 2,90,32,000/- must therefore carry interest as a matter of course. In "Indian Council for Enviro-Legal Action v. Union of India" (2011) 8 SCC 161, the Hon'ble Supreme Court held that this is the bounden duty of the Court to neutralize unjust enrichment by imposing compound interest and punitive costs. In paragraph No. 178 of the reported judgment, the Hon'ble Supreme Court held as under: "178. To do complete justice, prevent wrongs, remove incentive for wrongdoing or delay, and to implement in practical terms the concepts of time value of money, restitution and unjust enrichment noted above-or to simply levelise-a convenient approach is cal....
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....t to deposit the amount of Rs. 2,90,32,000/- deducted from the running bills of the petitioner. 4. For that purpose, this matter shall be posted on 21st March 2024." 20. In response thereof, a supplementary counter-affidavit has been filed stating that in terms of Clauses 10.1 and 10.7 of the General Conditions of Contract whereunder the Contractor is solely and entirely responsible for any taxes including income tax, the JBVNL is empowered to adjust such amount from the price/bills released to the Contractor. The JBVNL has further stated that in case the appeal filed by it fails it shall be required to deposit the entire amount with interest and penalties and then the TDS return shall be filed and certificate i.e. Form-16A for the same shall be generated and issued to the Contractor. In the circumstances of the case, we hold that the stand taken by the JBVNL lacks bona fide; short to saying actuated with oblique motive. 21. The imposition of cost on the party which started litigation without any just cause or took false and frivolous defences is necessary to discourage the dishonest litigant. To this end, the Court is required to impose such cost that would make the litigant t....