TMI Blog2012 (3) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... evy of interest, penalty, recovery or any other statutory provisions and will not in any manner affect the statutory rights for levy and collection of taxes. Thus do not consider necessary to deal with any other questions raised in the writ petition as the said questions can be adjudicated by the statutory authorities in accordance with law. The tax already deducted will be liable to be adjusted in the order of final assessment. - W.P. (C) No. 56 of 2011 - - - Dated:- 6-3-2012 - GOEL A.K. C.J. AND SAHA U.B., J. For the Appellant : Somik Deb For the Respondents : P.K. Biswas, Assistant Solicitor General and N.C. Pal, Government Advocate, JUDGMENT:- The judgment of the court was delivered by A.K. GOEL C.J.- This petition seeks quashing of deduction of value added tax at four per cent (annexure P4) from the due payment of the petitioner and also declaring that the provisions contained in the Tripura Value Added Tax Act, 2004 and the Rules framed thereunder to be unconstitutional to the extent of requiring flat rate deductions without reference of tax liability. The petitioner also seeks injunction against the deduction of tax from the bills of the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory authorities, is the deduction of tax at source from the bills of the petitioner without reference to the petitioner's liability towards payment of tax under the VAT Act. It has been laid down by the honourable Supreme Court in various judgment, including the Steel Authority of India Ltd. v. State of Orissa [2000] 118 STC 297 (SC); AIR 2000 SC 946, that recovery of tax out of nontaxable turnover could not be provided for by the State. The relevant observation in the judgment of the honourable Supreme Court in the said judgment are (pages 304 and 305 in 118 STC): 13. There can be no doubt, upon a plain interpretation of section 13AA, that it is enacted for the purposes of deduction at source of the State sales tax that is payable by a contractor on the value of a works contract. For the purposes of the deduction neither the owner nor the Commissioner who issues to the contractor a certificate under section 13AA(5) is entitled to take into account the fact that the works contract involves transfer of property in goods consequent upon of an inter-State sale, an outside sale or a sale in the course of import. The owner is required by section 13AA(1) to deposit towards t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the transactions on all works contracts on the valuable consideration payable for the transfer of property in goods involved in the execution of the works contract, the effect of the provision is that, irrespective of whether the sales are inter-State sales or outside sales or export sales which are outside the purview of the State Act and those transactions in respect of which no tax can be levied even in terms of the enactment itself, such deductions have to be made in the bills or invoices of the contractors. To say that if a person is not liable for payment of tax inasmuch as on completion of the assessment refund can be obtained at a later stage is no solace, as noticed in Bhawani Cotton Mills Ltd. v. State of Punjab [1967] 20 STC 290 (SC); [1967] 3 SCR 577. Further, there is no provision for certification of the extent of the deduction that can be made by the authority. Therefore, we must hold that arbitrary and uncanalised powers have been conferred on the concerned person to deduct up to four per cent from the sum payable to the works contractor irrespective whether ultimately the transaction is liable for payment to any sales tax at all. In that view of the matter, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of M. P. [2007] 6 VST 1 (MP) [FB] Holding that section 35 of the Madhya Pradesh Commercial Tax Act, 1994 which was identical to the impugned provision was ultra vires the Constitution. (v) Larsen and Toubro Limited v. State of Jharkhand [2005] 140 STC 134 (Jharkh) Holding that section 25A of the Bihar Finance Act, 1981 was unconstitutional. (vi) Larsen Toubro Ltd. v. Commissioner of Sales Tax, Gujarat [2001] 124 STC 162 (Guj) Holding that section 57A of the Gujarat Sales Tax Act, 1969 was ultra vires the Constitution. (vii) Larsen Toubro Limited v. State of Karnataka [2003] 129 STC 401 (Karn) Holding that section 19A of the Karna-taka Sales Tax Act, 1957 was ultra vires the Constitution. (viii) Larsen and Toubro Limited v. State of Haryana [2011] 37 VST 428 (P H), (CWP No. 14797 of 2010) Holding that under Punjab and Har-yana VAT law, reduction of tax at flat rate without reference to tax liability was not valid. In view of the above, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and turnover of inter State sales or sales outside the State or sales in the course of import. For this purpose, the State may lay down a mechanism and till such a mechanism was laid down, the deduction may be limited to the declaration of taxable turnover by the petitioner to the contractor with a copy to the concerned Assessing Authority subject to statutory pro visions including those dealing with the assessment, interest, penalty and recovery. In respect of cases from the State of Punjab, it was submitted that pending working out of appropriate mechanism by the State, either the provisions may be declared unconstitutional or similar arrangement as suggested in the case of the State of Haryana may be directed to be adopted. 16. After due consideration of the rival stands, we find that the proposal made on behalf of the petitioners as an alternative to striking down statutory provisions being in consonance with the judgments of the honourable Supreme Court has to be accepted. This is so as the States propose to do their duty of providing an appropriate mechanism to give effect to the law laid down by the honourable Supreme Court. Accordingly, we hold that the impugned provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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