GAMMON INDIA LTD Vs. STATE OF ASSAM

JUDGEMENT

(1.) This order will dispose of W. P. (C) No. 519 of 2012, W. P. (C) No. 1028 of 2011, W. P. (C) No. 514 of 2012, W. P. (C) No. 3770 of 2010, W. P. (C) No. 3648 of 2009, W. P. (C) No. 3649 of 2009 and W. P. (C) No, 3650 of 2009 as all the writ petitions involve common question of law relating to the legality of deduction of tax at source out of the payments to be made to the petitioner-dealers for the Works executed by them. In W. P. (C) No. 519 of 2012; the petitioner is a dealer registered under the provisions of the Assam Value Added Tax Act, 2003 (in short, "the Act") and is executing works at the instance of railway authorities (respondent Nos. 7 to 10) including the work of construction of diversion between station Gogamukh and Dhemaji. The work includes earthwork in excavation, embankment and cutting, mechanical compaction, reinforced cement concrete, supply and placing of boulders hand packed of approved quantity, casting and supplying of pre-stressed concrete slabs/pre-cast RCC ballast retainer, supplying, fabricating and providing high tensile steel strands, construction of RCC cast in situ bored vertical piles, supply of TMT reinforcement bars, supply of cement of 43/53 grade and other ancillary works, etc. According to the petitioner, the said work involves mostly labour component and use of construction material on which VAT has already been paid. However, respondent Nos. 7 to 10 started making deduction at source on the gross value bill of the petitioner at the rate of 12.5 per cent under section 47 of the Act which provides for deduction of tax at prescribed percentage of "taxable turnover". The "taxable turnover" under section 11 of the Act was very wide so as to include charges towards labour, services and other charges and sale in the course of inter-State trade and outside the State or in the course of export or import. Deduction of tax at source has to have the reference to the tax liability and cannot be de hors thereof. There was no machinery for determination of even the approximate turnover in absence of which deduction of tax at source from the total value of the works contract under section 47 of the Act was illegal. Facts in W. P. (C) No. 1028 of 2011 and W. P. (C) No. 514 of 2012 are identical.

(2.) In W. P. (C) No. 3648 of 2009, the petitioner is executing works like construction of flyover bridge, laying of pipeline for various Government Departments and is registered with the sales tax. authorities as a dealer. It is also executing work of construction of new Brahmaputra bridge at Guwahati at the instance of respondent No. 4, the national highway authority. The said work involves huge amount of labour and services apart from use of goods. In accordance with the provisions of the Act and the Rules, the petitioner applied in form 30 to get benefit of lower deduction in accordance with section 47(1)(b)(i) read with rule 28(2)(a) and such a certificate dated December 10, 2008 in 'form 31 was duly issued to the petitioner, according to which, the probable tax liability of the petitioner was equal to 2.42 per cent of the contract value. Accordingly, the petitioner sought for deduction of tax at source at that rate: However, vide notice dated July 6, 2009 lower deduction certificate dated December 10, 2008 was cancelled. According to the petitioner, rule 28,- as-, amended on February 22, 2010, modifies the existing provision to seek certificate of deduction of tax at lower amount or "no deduction of tax" only when a running bill for a completed portion of the work becomes due for payment. According to the petitioner, such a limitation was, not valid and such certificate should be available even before the running bill becomes due. In absence thereof, a dealer ma) be liable to deduction of tax to much higher extent than its liability, which was not permissible. Mere fact that refund could be subsequently claimed was no justification for excess recover, as held in Bhawani Cotton Mills Ltd. v. State of Punjab, 1967 20 STC 290 (SC). In W. P. (C) No. 3770 of 2010, W. P. (C) No. 3649 of 2009 and W. P. (C) No. 3650 of 2009 facts are similar.

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