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2012 (7) TMI 671 - HC - VAT and Sales TaxDisallowance of the deduction of sub-contractor's turnover - no provision or mechanism under DVAT Rules or DVAT Act and that the petitioner had failed to produce the books as records labour and service charges - assessee contested the absence proper mechanism to compute the taxable turnover after deducting 'turnover of sub contractors' - Held that:- At no stage the petitioner had produced the books of accounts or other records to show the extent of actual labour, services and other like charges. Even in the writ petition the petitioner has sought to give justification for non-production of records relating to labour services and other like charges on the ground that the records would run into 2-3 truckloads. In the absence of any records being produced by the petitioner, the assessing officer had no option but to allow the charges towards labour and services as per the table appended to the proviso to rule 3 (2) of the Delhi VAT Rules, 2005 Whether the absence of mechanism in the Rule viz. not allowing the deduction of the sub-contract turnover in the hands of the main contractor leads to multiple taxation - Held that:- The net tax liability remains the same. Furthermore, once such a tax is paid by the contractor, sub-contractor can always claim that tax stand paid at the hands of the contractor and, therefore, sub-contractor is not liable to make the payment all over again. To ensure this, the contractor like the petitioner while making payment to the sub-contractor can recover the tax from those payments and issue TDS Certificate on the basis of which sub-contractor can always claim credit, thus no point of double taxation. Once it is concluded that there is no basis for apprehension that mechanism provided under the DVAT Act and Rules can lead to double taxation it is advisable to agree with the contention of the learned ASG that the manner in which deduction and exemptions are to be granted is the legislative prerogative - the edifice of the petitioner's case questioning the validity of the impugned provision is built on the so called adverse consequences which may follow in the absence of deduction mechanism of sub-contractor turnover. On the basis of so called difficulties, a particular provision of a statute cannot be invalidated - There is no provision like Section 4 (7) of the Andhra Pradesh VAT Act in Delhi VAT Act also cannot be a ground for declaring statute as arbitrary or ultra vires - it would be for the Legislature to look into this aspect and decide whether to incorporate any such provision or not, Section 5(2) of Delhi VAT Act and Rule 3 of Delhi VAT Rules cannot be declared to be invalid.
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