The Delhi High Court also directed to issue the certificate of NIL deduction of tax at source (TDS).
The division bench of Delhi High Court in VPSSR Facilities vs Commissioner of Value Added &Anr held that, mere storage of Goods in Contractee’s property does not attract Tax.
The petitioner was awarded a contract by the Northern Railways in relation to the management, cleaning, washing, housekeeping, waste management, etc. at Diesel Shed Shakurbasti and at Training School Shakurbasti.
The petitioner VPSSR facilities has approached the Court against the order dated 30.06.2014 passed by the Commissioner Valued Added Tax contending that the chemicals/Solvents used in the process of cleaning, amounted to sale of goods and the moment the chemicals were poured on the property of the Contractee, even though used for the purposes of cleaning, amounted to delivery of the same and thus the same was exigible to Tax.
The issues before the Court were the following. Firstly, whether the consumable chemicals/solvents used in the process of cleaning amounts to transfer of property in the goods between the contractor and the Contractee and is thus exigible to tax. Secondly, whether the Commissioner was liable to grant a certificate for NIL deduction of Tax Deducted at Source, is dependent on the answer to the above question.
Allowing the petition, the division bench comprising of Justice SanjeevSachdeva and BadarDurrez Ahmed observed that, the property in the consumable chemicals used in the process of cleaning does not transfer to the Contractee/Railways and accordingly the said goods are not exigible to tax.
The Petitioners and the Railways have contended that the said soaps/detergent/chemical/solvent are deposited with the Railways and issued from their store to ensure that adequate quantity is used by the petitioner for the execution of the awarded work.
The Court also observed that, “Since the said goods are not exigible to tax, the Contractee/Railways is not liable to deduct Tax at Source and the Commissioner VAT is liable to grant a certificate for NIL deduction of Tax Deducted at Source”.
While setting aside the order of Commissioner of VAT, the Court also directed to issue the certificate of NIL deduction of tax at source.
Read the full text of the Judgment below.
