M/S. B. Engineers & Builders Ltd vs Unknown on 18 August, 2010

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Orissa High Court
M/S. B. Engineers & Builders Ltd vs Unknown on 18 August, 2010
                 V. GOPALA GOWDA, CJ & INDRAJIT MAHANTY, J.

W.P.(C) NO.13653 OF 2010 (Decided on 18.08.2010).

M/S. B. ENGINEERS & BUILDERS LTD.                   ..........       Petitioner

                                  . Vrs .

THE COMMISSIONER OF COMMERCIAL                       ........... Opp.Parties
TAXES & ORS.

ORISSA VAT ACT 2004 (ACT NO. 4 OF 2005 ) - SEC.42, 54.


For Petitioner – M/s. Debendra Kumar Dwibedi, A.N.Mohanty,
S.K.Roychoudhury, G.M.Rath, S.Mishra,
S.S.Padhy & B.Guin.

For Opp.Parties – Standing Counsel (C.T.).

V. GOPAL GOWDA, C.J. The assessee is before this Court questioning the
correctness of the assessment order dated 19.6.2010 passed by the Assessing
Authority, Bhubaneswar-III Circle, Bhubaneswar without availing the alternative
remedy of appeal provided under Section 77 of the Orissa Value Added Tax Act,
2004 (in short ‘OVAT’ Act, 2004).

2. Placing strong reliance on the mandate of Section 54 of the Act, learned counsel
for the petitioner submits that the Assessing Authority has not given effect to the benefit
of Rs.1,31,28,321/-, the amount towards the T.D.S. payment on the ground that the
T.D.S. certificates are not in proper format and some of the T.D.S. certificates are not
submitted in original though as indicated in the order to the extent that the Assessing
Officer had sought for verification of T.D.S. certificates submitted by the Assessee from
various Assistant Commissioners of Commercial Taxes of different circles mentioned in
his letter dated 8.4.2010, Annexure-4, but had not received response therefrom.

3. We have perused the petitioner’s averments, the order of assessment, the
documents produced and the circulars issued by the Commissioner of Commercial
Taxes under Section 52 produced under Anenxure-6 series with regard to the deduction
of tax and deposit of the same. It is contended that after deducting the tax, the deducting
authorities are required to issue T.D.S. certificates and the same is required to be
maintained by them in a register making proper entry. Therefore, it is the duty of the
Assessing Officer, in absence of non-production of T.D.S. certificates, to cross-verify the
claim of the assessee with reference to the register maintained with regard to the T.D.S.
effected by the authorities under different circles, but that has not been done in the
present case, though the Assessing Officer had sought for verification vide Annexure-4
dated 8.4.2010.

4. Learned Standing Counsel for the revenue justifies the assessment order and the
consequential order of demand contending that an assessee, who claims adjustment of
T.D.S. is required to produce the original of the same before the Assessing Officer to get
the benefit of the said deposit while submitting his returns. That has not been done in the
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instant case. Considering the fact that the assessee had not produced the originals as
well as not in proper format, he submits that the order of assessment does not call for
any interference. He further submits that since the Assessing Officer was required to
pass the order of assessment within a period of six months and that period was soon
going to expire, hence the order of assessment had to be passed. Therefore, the action
of the Assessing Officer cannot be said to be illegal and the demand was raised since
the assessee had not discharged his responsibility by producing the T.D.S. certificate in
the prescribed format and the originals. Hence, he has prayed for dismissal of the writ
petition.

5. With reference to the above rival and legal contentions, we have carefully
examined the assessment order. The Assessing Officer has listed the numbers of the
T.D.S. certificates which have not been produced in ‘proper format’ and the ‘original
certificates’ were not produced. He has claimed the benefit of T.D.S. at the time of fixing
the liability under the VAT on the basis of the returns submitted.

6. The claim of the petitioner was examined by the Assessing Officer on the basis
of the documents produced and certain benefits have been granted, but due to non-
production of T.D.S. in the prescribed format of VAT
Act and original certificates, he has rejected the benefit claimed to the extent of
Rs.1,31,28,321/- which is not tenable for the reason that, the Assessing Officer had
written letter to the various Assistant Commissioners of Commercial Taxes for cross-
verification with reference to the claim made by the assessee. He should have got the
said particulars by issuing reminders to them and, thereafter should have passed the
order of assessment. Not doing so, he has proceeded to pass the order of assessment
since the limitation of six months under Section 42 of the OVAT Act was going to expire.
Therefore, the order of assessment is bad. The Assessing Officer could have sought for
another six months by resorting the proviso of the said Section since he was awaiting
verification by the different Assistant Commissioners of Commercial Taxes with regard to
the receipt of T.D.Ss and also certificate produced before Assessing Officers. This
aspect has been overlooked by the Assessing Officer and has raised the tax liability
without awaiting for proper verification from the different Assistant Commissioners of
Commercial Taxes as required under law.

7. It is necessary to make an observation to the effect that Rule-59 of the OVAT
Rules, 2005 read with section 54 of the Act empowers the Commissioner to issue
certificates/instructions to various Assessing Officers for the purpose of passing the
assessment order. The Tax Deducting Authorities are liable to issue certificates in favour
of the contractors from whom tax was deducted at source and to send a copy thereof to
the “Assessing Authority within whose jurisdiction the works contract is executed” and
the said rule also contemplates that the Tax Deducting Authorities are also required to
furnish a consolidated statement of tax deducted during a month in form VAT 605-A on
or before 14th day of the succeeding month to the concerned Assistant Commissioner or
Sales Tax Officer having jurisdiction. In that view of the matter the Assessing Officer is
justified in asking for verification of certificates for the purpose of passing the
assessment order. That has not been done in the present case.

8. In view of the above, the impugned order of assessment Annexure-2 and the
consequent demand is bad in law and is, therefore, quashed. The matter is remitted
back to the Assessing Officer for fresh assessment after getting proper verification and
also the assessee may produce the original T.D.Ss obtained by him. If the originals are
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not available with him, he has to file declaration as required under law. The petitioner is
directed to appear before the Assessing Officer within three weeks from today. The
Assessing Officer shall complete the inquiry within a period of eight weeks thereafter.

The writ application is allowed.

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