TMI Blog2016 (7) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 36A(2) of the DVAT Act permits the entertaining of a prayer for lower deduction of tax only where “dominant part of the work is labour and service.” The word “dominant” is not to be found in Section 36A(2) of the DVAT Act. In fact, there is nothing in the said provision which suggests that unless the dominant part of the works contract is labour and service, the lower deduction will not be permissible. Also the Commissioner, VAT does not appear to have examined the estimates placed on record by the Petitioner along with the supporting documents to justify its claim for a lower deduction at 0.87%. The Commissioner, VAT could have, for reasons recorded, either agreed or disagreed with the estimates prepared by the Petitioner or wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edly, both the works contract involved transfer of property in goods as well as provisions of labour and services. 3. In terms of Section 36A(1) of the DVAT Act for discharge of any liability on account of full consideration payable for transfer of property in goods whether in cash or in some other form in pursuance of a contract for value exceeding ₹ 20,000, the entity making the payment to the dealer undertaking the works contract is required to deduct tax @ 4% at the time of credit of sum to the account of the contractor or at the time of payment thereof in cash or by any other mode. Admittedly, the Petitioner is a contractor who is registered under the DVAT Act and, therefore, the proviso to Section 36A(1) of the Act which prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rked out to ₹ 4.65 crores i.e. 0.87% of the contract value towards VAT liability after adjustment of input tax credit since all the materials are to be procured with the State of Delhi after paying VAT. The Petitioner also enclosed with the application the following documents: (i) Copy of Agreement between the Company and Awarders. (ii) Letter of Acceptance (iii) Extracts of the terms and condition for the Scope of the work of Contract. (iv) Memorandum Articles of Association of the Company. (v) DVAT and CST Registration Certificate. 6. It was pointed out by the Petitioner that if the certificate of lower deduction of tax is not issued, the Petitioner will suffer an irreparable loss and injury ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot in this forum. 9. This Court has heard the submissions of Mr. Lakshmikumaran, learned counsel for the Petitioner and Mr. Satyakam, Additional Standing Counsel for the Respondent No.1. 10. The impugned order is essentially a non-reasoned one. The Commissioner, VAT appears to have taken the easy route of simply agreeing with the submissions of one of the parties. He has abdicated his duty of giving detailed reasons for the conclusion arrived at in his order. This by itself is sufficient for the impugned order to be set aside. 11. The order also appears to proceed on the misconception that Section 36A(2) of the DVAT Act permits the entertaining of a prayer for lower deduction of tax only where dominant part of the work is labou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat challenges the order. Consequently, the Court does not consider it appropriate to examine the counter affidavit in order to find out what reasons weighed with the Commissioner, VAT for rejecting the Petitioner's application under Section 36 A (2) of the DVAT Act. In fact, the Commissioner, VAT while discharging a quasi judicial function under Section 36A(2) of the DVAT Act is expected to act independently and not under instructions of the Department. 15. For all of the above reasons, the Court sets aside the impugned order dated 5th June 2015. The Commissioner, VAT is directed to decide the application filed by the Petitioner afresh in accordance with law and in light of the above observations of this Court. Considering that cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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