TRIVENI ENGICONS PVT. LTD. Vs. STATE OF JHARKHAND

JUDGEMENT

(1.) The Petitioner has filed this writ petition seeking for a direction upon the respondents to make deductions of TDS from the payment of valuable consideration made to the petitioner for execution of various works contracts for the State after deducting the amount therefrom towards labour and service charges including earth work in terms of Section 44 of the Jharkhand Value Added Tax 2005 read with Rule 23 of the Jharkhand Value Added Tax Rules 2006 and for quashing the memo No.318 dated 11.3.2013, whereby a direction was issued for deduction of TDS from the value of the entire bill of the petitioner and to refund the excess amount of TDS deducted from the petitioner's bills.

(2.) The Petitioner is a Company registered under the provisions of the Companies Act and a Civil Contractor. It takes contracts for earth works, construction of minor and major bridges, construction of roads etc. The petitioner is also registered under the Jharkhand Value Added Tax Act 2005 (JVAT Act) as Works Contractor having TIN No.20891001002. The petitioner entered into various agreements with the State of Jharkhand for execution of contracts and the present dispute pertains to following two agreements entered into by the petitioner with the Executive Engineer, Baraj Division, Galudih:-

(3.) Case of the petitioner is that as per the provision of Section 44 of JVAT Act and Rule 23 of JVAT Rules, TDS is required to be deducted from the valuable consideration paid to the petitioner after deducting the amount of labour and service charges. Grievance of the petitioner is that in contravention of the said provision, TDS at a specified rate is being deducted by the State of Jharkhand from the entire bill of the petitioner, including labour and service charges. A letter no.521 dated 11.10.2011 was sent by the Deputy Commissioner of Commercial Taxes (respondent no.5) to the 7th respondent and the same was forwarded to the petitioner by the 7th respondent by letter dated 18.10.2011. In response to the said letter, the petitioner filed representation before the 7th respondent stating that the deduction of tax at source are required to be made pertaining to the works contract involving transfer of property in goods and not in respect of the payments made towards earth work involving labour and service charges. Pursuant to the representation filed by the petitioner, 7th respondent wrote a letter dated 12.12.2012 (Annexure 6) to the Joint Commissioner of Commercial Taxes seeking clarification on the issue relating to deduction of TDS from the petitioner's bills. The Joint Commissioner of Commercial Taxes sent a reply dated 14.12.2012 (Annexure 7) informing that the deduction of TDS is to be made only in respect of such bills which pertains to execution of works contract where transfer of property in goods is involved. Case of the petitioner is that inspite of such direction issued by the Joint Commissioner, 5th respondent, in order to enhance the revenue collection in his Division, directed the 7th respondent to deduct TDS on the entire value of consideration of the bill amount paid to the petitioner. Being aggrieved and alleging that the respondents are trying to misinterpret the provisions of JVAT Act and Rules, the petitioner has filed the writ petition.