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2016 (7) TMI 1058 - DELHI HIGH COURT

2016 (7) TMI 1058 - DELHI HIGH COURT - TMI - TDS under DVAT - works contract - dominant part of the contract - labour/ service or material - Commissioner, VAT rejected the application filed by the Petitioner under Section 36A(2) of the Delhi Value Added Tax Act, 2004 (“DVAT Act”) for a lower deduction certificate. - The Petitioner is undertaking the execution of works contract in respect of two projects one awarded to it by the National Building Construction Corporation Limited (“NBCC”) for cons .....

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ks 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 with the calculations of the percentage of deduction based on the documents enclosed .....

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Mahajan, Advocate for UOI/R-2 ORDER 1. The challenge in this petition is to an order dated 5th June 2015 passed by the Commissioner, Value Added Tax rejecting the application filed by the Petitioner under Section 36A(2) of the Delhi Value Added Tax Act, 2004 ( DVAT Act ) for a lower deduction certificate. 2. The Petitioner is undertaking the execution of works contract in respect of two projects one awarded to it by the National Building Construction Corporation Limited ( NBCC ) for constructio .....

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ices. 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. Admittedl .....

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satisfied that any works contract involves both transfer of property in goods and labour and service, or involves only labour and service and accordingly, justifies deduction of tax on a part of the sum in respect of the works contract or, as the case may be, justifies no deduction of tax, he shall, after giving the contractor a reasonable opportunity of being heard, grant him such certificate and for such period as may be appropriate: Provided that nothing in the said certificate shall affect .....

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on of both contracts was in progress. The Petitioner also enclosed with the application a computation of VAT which worked 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 .....

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educted at 4% from the bills of the Petitioner. 7. It is the submission of Mr. V. Lakshmikumaran, learned counsel for the Petitioner that as of date there is already a sum of ₹ 8.76 crores that has been deducted from the bills submitted by the Petitioner under both works contract whereas, according to the Petitioner in its estimation, even after assessment the ultimate amount that would be payable as VAT would be only about ₹ 4.65 crores. 8. The Petitioner's application was consi .....

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he time of assessment and not in this forum." Thereafter the Commissioner, VAT has observed as under: I have heard the arguments put forth from both the sides and gone through the documents on record. I agree with the views of the D.R., the issue raised by the applicant shall be considered at the time of assessment and not 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 Res .....

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r 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. 12. 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 cl .....

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