JUDGMENT
Amitava Roy, J.
1. The grievance expressed, is against the deduction of tax under the Assam Value Added Tax Act, 2003 (hereinafter referred to as, “the Act”), from the petitioners’ bills for the works executed for the Indian Oil Corporation Ltd., Digboi (hereinafter referred to as, “the IOC”), without complying with the provision of Section 47(1)(b)(i) thereof.
2. I have heard Mr. Nath, learned Counsel for the petitioners and Mr. D. Saikia, learned Standing Counsel, Finance Department.
3. The pleaded case of the petitioners in short, is that petitioner No. 1 is a proprietorship firm. The petitioner No. 2 is the proprietor thereof. They were settled with the work of (1) upkeeping and general maintenance of DCU at Digboi Refinery and (2) general cleaning and miscellaneous job in the plant area, etc., for which separate work orders had been issued. On due completion of the works, the petitioners submitted their bills therefor, but while making payment thereof, tax under the Act was deducted at source computed on the gross value of the bills. As the said value included charges for transactions and works on which the tax under the Act was not exactable, the petitioners on June 5, 2006 submitted an application before the concerned authorities of oil for issuing a certificate of tax exemption in terms of Section 47(1)(b)(i). The application remained unresponded and the deduction of tax at source continued unabated from the bills of the petitioners.
4. Mr. Nath, has argued that as the works executed by the petitioners wholly do not comprehend an element of sale under the Act, they are, under Section 47(1)(b)(i) of the Act, entitled to sales tax exemption as contemplated therein and, therefore, the impugned action is unsustainable in law. He placed reliance on the decision of this court in Alied Traders v. State of Assam [2002] 1 GLT 482 Reported as Arunodoi Construction Co. (P) Ltd. v. State of Assam [2002] 127 STC 561 (Gauhati). The learned Standing Counsel, Finance Department, has submitted that the ratio of the above reported decision applies to the facts of the instant case.
5. The rival submissions have been considered. The vires of Section 27 of the Assam General Sales Tax Act, 1993 (also referred to as “the 1993 Act”), was assailed in Alied Traders [2002] 1 GLT 482 Reported as Arunodoi Construction Co. (P) Ltd. v. State of Assam [2002] 127 STC 561 (Gauhati) inter alia, on the ground that it was beyond the legislative competence of the State Legislature besides being confiscatory in nature, purporting to realise tax on the turnover not taxable thereunder. On a survey of the reported decision relatable to the issue, this court while negating the assailment, held that under the above provision, the liability to pay tax at source was limited to the sale or supply of goods whether under direct supply or works contract exigible to tax under the said statute. Reading down the said provision, it was held as hereunder:
Following the majority decision in the case of 20th Century Finance Corporation Ltd. v. State of Maharashtra we hold that the provision of Section 27 of the Act should be upheld by reading it down as below:
(1) The words “sale or supply of goods liable to tax under this Act” appearing in Section 27 of the Act cover the supply of goods in works contract also and only those goods which are liable to tax or which are included in the taxable turnover will be subject to deduction of tax at source,
(2) Section 27 of the Act will have to be read together with charging sections, namely, Sections 7, 8 of the Act and deductions and exemptions provided under Sections 7 and 8 of the Act as regards the inter-State trade, declared goods, exempted goods, etc., etc., shall also be applicable in case of deduction of tax at source under Section 27 of the Act.
6. Under Section 47(1)(b)(i) of the Act, if on an application being made by any contractor, the authority prescribed is satisfied that any works contract involved is divisible and involves transfer of property in goods as well as labour and services or involves only labour and services, justifying deduction of tax on a part of the sum payable in respect of such works contract or justifies no deduction of tax at all, he would after giving the contractor a reasonable opportunity of being heard, grant him such certificate as may be appropriate.
7. In view of the judicial opinion expressed in Alied Traders [2002] 1 GLT 482 Reported as Arunodoi Construction Co. (P) Ltd. v. State of Assam [2002] 127 STC 561(Gauhati) and legislative dictum in Section 47(1)(b)(i) of the Act, I am of the considered opinion that the concerned authorities of the IOC ought to have taken a decision on the petitioners’ application under the aforementioned provision of the Act before resorting to the deduction of tax thereunder on the gross value of their bills.
8. In the above view of the matter, this petition is closed with a direction to the respondent-IOC to take an appropriate decision on the petitioners’ application under Section 47(b)(i) of the Act taking note of the decision rendered in Alied Traders [2002] 1 GLT 482 Reported as Arunodoi Construction Co. (P) Ltd. v. State of Assam [2002] 127 STC 561 (Gauhati) and the prescription of Section 47(1)(b)(i) of the Act and, thereafter compute and realise the tax realisable, if any in law. The petition stands disposed of with the above observation. No costs.