JUDGMENT
Jawahar Lal Gupta, J.
1. The petitioners in these cases are contractors. They complain that the respondents have illegally deducted sales tax at the rate of 2 per cent from the payments made to them. According to the petitioners, the deductions from payments for supply of labour could not have been made.
2. In the reply filed on behalf of the respondents, it has been, inter alia, averred that contracts for laying of underground cables, erection of cabinets, pillars, including preparation of foundation, installation of terminal boxes/strips, etc., had been given to the petitioners. They had to use bricks, cement, saria, concrete, iron plates, hardware, etc. Thus, the sales tax has been validly levied.
3. Mr. Raman Sharma, learned counsel for the petitioners, contends that the respondents were not entitled to mechanically deduct sales tax at 2 per cent from the amounts due to the petitioners without examining the facts. Thus, the deductions made by the respondents are illegal. The claim made on behalf of the petitioners has been controverted by the counsel for the respondents.
4. Admittedly, the bills submitted by the petitioners were for complete execution of the works. The petitioners had provided labour, as also some material like bricks, sand, etc. What was the cost of bricks, etc. ? Was any tax leviable thereon ? Had the petitioners paid it ? These were questions of fact which had to be determined by the authority. Without doing anything, a blanket deduction at 2 per cent from the bills submitted by the contractors cannot be sustained.
5. Mr. Salil Sagar contends that the petitioners had executed works contracts. Thus, the sales tax was leviable on the entire amount. He is, however, unable to refer to any document which may indicate that the concerned authority has examined the facts and found that the petitioners were liable to pay any sales tax.
6. Mr. Sharma contends that the cases are covered by a judgment of this Court in Ashok Kumar Garg v. Union of India, Civil Writ Petition No. 18725 of 1998 decided on April 17, 1999 reported in [2002] 128 STC 442.
7. At this stage, it does not appear to be necessary to examine the matter at length. It is clear that the respondents could not have mechanically made deductions at the rate of 2 per cent from the total bills submitted by the petitioners. They had to examine the facts. If any sales tax was leviable, only then the deductions could have been made. Since nobody has gone into the matter, the deductions already made cannot be sustained.
8. In view of the above, the writ petitions are disposed of with the direction that the respondent-authorities shall refund the amount deducted from the petitioners’ bills and deposited with the respondent-State. The needful shall be done within one month from today. In case of failure to make the refund, the petitioners shall be entitled to the amount along with interest at the rate of 9 per cent from the date of deposit till the date of payment. This will not, however, preclude the competent authority from examining the facts and raising a demand. If any tax is found due from the petitioners, it shall be levied and recovered. If the competent authority passes orders of assessment after examination of the evidence, within one month, then the amount found due from the petitioners may be deducted out of the amount already laying deposited. However, no tax shall be leviable on the supply of labour by the petitioners as there is no transfer of property in the goods when labour force is provided.
9. In the circumstances of the case, there shall be no order as to costs.