2014 (1) TMI 1795 - HC - VAT and Sales Tax

Works contract - composition scheme - benefit denied on the ground that TDS certificates were defective and were not in prescribed form - Held that - it cannot be denied the benefit of proper assessment on the basis of new proper TDS certificates issued - The petitioner was denied the benefit of TDS certificates on a technical ground that they were defective. Therefore after the issuance of proper TDS certificates the petitioner is definitely entitled for their consideration - petition allowed - decided in favor of petitioner.

Summary

Issues: Denial of benefit of TDS certificates on technical grounds; Entitlement of petitioner for consideration based on proper TDS certificates.

Denial of Benefit of TDS Certificates on Technical Grounds:
The petitioner, a works contractor under the Madhya Pradesh Value Added Tax Act, opted for composition under section 11-A, with a tax rate of two percent. The petitioner executed contract works for Indore Municipal Corporation and Bhopal Municipal Corporation, both of which deducted Tax at Source (TDS) and issued certificates. However, the Divisional Deputy Commissioner of Commercial Tax denied the benefit of these TDS certificates in assessment, citing them as defective and not in prescribed form. The petitioner subsequently obtained proper TDS certificates from other sources. The court acknowledged the petitioner's argument that denial based on technical defects was unjust. The court held that post the issuance of correct TDS certificates, the petitioner should be entitled to their consideration by the tax authority.

Entitlement of Petitioner for Consideration Based on Proper TDS Certificates:
The court found merit in the petitioner's claim that the denial of TDS certificates' benefit solely on technical grounds was unfair. The petitioner had rectified the issue by obtaining proper TDS certificates from other entities. Therefore, the court ruled that the petitioner should be entitled to the consideration of these correct TDS certificates by the concerned tax authority. The judgment emphasized the importance of substantive compliance over technicalities in such matters to ensure fair treatment for taxpayers.