The Madras High Court held the Chennai Metro Rail liable for TDS deduction on machinery and not the work contractors.
The petitioner had applied for Form S on 23.03.2011 proviso to Section 13(1) of the Tamil Nadu Value Added Tax Act, 2006 ( hereinafter referred to as TNVAT Act, 2006 ) read with Rule 9(2) of the Tamil Nadu Value Added Tax Rules, 2007 ( TNVAT Rules, 2007 ).
In the written submission filed by the Government Advocate for the first and third respondents, it is submitted that the first respondent has jurisdiction to issue Impugned Notices to the petitioner as no certificate was issued to the petitioner in Form S to claim exemption under proviso to Sub Clause (c) to Section 13(1) of the TNVAT Act, 2006 read with Rule 9 of the TNVAT Rules, 2007.
It was submitted that FORMS R and FORM T submitted by the petitioner in Contract No.( UAA-05 ) is for the assessment year 2012-2013, whereas the AG Audit Slip No.12 dated 24.08.2016 notified transactions with regards to Contract No.( UAA-01 ) for the assessment year 2012-2013 and that in respect of Contract No.( UAA-05 ) for the assessment year 2013-2014, there are discrepancies in the Form S as per the records maintained by the first respondent and the Form S submitted by the petitioner in their typed set.
It was pointed out that the petitioner was requested to furnish any proof / documentary evidences vide Show Cause Notice dated 13.01.2020 in respect of its claim for issuing Form S for Rs.25,97,80,50,000/-. Instead of furnishing the proof the petitioner had approached this Court to quash the Show Cause Notice.
Section 13(1) of TNVAT Act, 2006 contemplates deduction of tax by the person responsible ( namely employer ) for paying any amount to a dealer whose service is engaged for executing a works contract for civil contract work and / or civil maintenance works contract for the former.
A Single Bench of Justice C Saravanan observed that “It is quite possible that the petitioner had opted to pay tax under Section 5 of the TNVAT Act, 2006 and therefore had obtained Form S Certificate of no tax liability under proviso to Section 13(1) of the TNVAT Act, 2006 read with TNVAT Rules, 2007 but had failed to pay the tax. This would require a fresh determination.”
“Therefore, if CMRL had failed to deduct the amounts under Section 13(1) of the TNVAT Act, 2006, machinery under Section 13(8) of the TNVAT Act, 2006, is to be directed only against CMRL. Therefore, to that extent the Impugned Notices are without jurisdiction. The 2% demand proposed in the Impugned Notices is to be directed only against CMRL and not on the petitioner” the Bench noted.
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