FICE OF SMT VIRAIN SANDHU, EXCISE & TAXATION OFFICER-CU ‘DESIGNATED OFFICER, MOHALI [Link] of the Firm 2 Mis, V&A Ventures LLP a 2. Address of the firm + # 1225, Phase-11, Mohali (SAS Nagar) IS 3. Tin No. 03672115594 x 4. Nature of Business Work Contractor 5. Accounting year + AY 2014.15 6. Disposal No. eo lolizhs ASSESSMENT U/S 29 2) OF THE PUNJAB VAT ACT 2005 AND U/S 92) OF (CENTRAL SALES TAX ACT 1956 PART-A (Under Punjab Value Added Tax Act 2005) The firm is a dealer registered under the PVAT Act / CST Act at Mohali and was engaged in evelopment of telecommunication infrastructure during the year. The dealer bas filed all the quarterly and annual returns. The taxable person had applied for a refund for the year 2014-15- wis 39 of the PVAT Act, 2005 thv Rulle 52 ofthe PVAT Rules, 2005 - of Rs. 2,11,56,645. The taxable person has filed al the periodical retums in time, The book version (VAT 20) is given as under: Gross Tumover 320200984 | Gross Purchases 0 Labour Deductions( amount paid | 329203984 | Inter-State Purchases to sub-contracors) ‘Tanable Sales "Tax Purchases 0 “Foial Output VAT 0 | TC Purchases 0 Claim against TDS Cerficaiss | 2,11,36,645 | Refund Claimed B11 36,645 In pursuant tothe applica Yor refind and to sas that the retus fr the aforesaid tax pesiod() i comet and complete and io adja afr and just amount of Refund claimed the suceesting yea, a otc for amin Assessment under section 29(2) of The Pus Value Added “Tax Aet, 205 ead with Roe 47 ofthe PVAT Rles, 2005 and under section 92) of The Central Sale Tx Ac, 1956 ead with soto 29 of The Pusub Value Added Tax Act, 2008 forthe year 201415 was ised for 05-11-2018 (n.011/2018 in response to he nt, Sh. JP Dhiman, advocate appearelon behalf of the fim, He hasbeen confonted wih he fc ofthe case He has submited a trading acount of the fim Further, he stated tat ring the year, the table person received contacts from Mis Hiachal Fuurisie Communication Limited: Mobali and received payments worth Rs s29202984urng the year. The amount included tac contmct amount of 32:92,02584 and against the payment during the year, the cSntacte Ms Himachal Futuristic Communication2 Limited Mohali deducted and deposited into sate treasury, ¢ Tax Dedocton at Source (TPS) Amount of Rs 2,11,56,645)-. The same contact was further assigned by the taxable person tO various sub-contractors on back to back basis during the year. The payments made to various contractors amounted to Rs 269157648 against which a TDS of Rst6149481_ was deducted and deposited in sate teasuy by the table person. He also stated that no goods have been passed fiom the taxable person ie, Mls VA Ventures LLP tothe contracts inthe excution of works contrat He hasbeen directed to frnsh al the original TDScerifcts issued by the contactee MM/S HFCL during the year as well as TDS deducted and deposited by the taxable person along with he ledger. On request, he casei adjourned to 2.112018, (On 22.11.2018, 1 P Dian, advocate appeared again on bebaf oft TDS cenifcates along with details amounting to Rs 211,56,645 issued by M/s Himachal Futuristic Communication Limited Mohali and_detils of TDS deducted and deposited by MS ‘VA Ventures LLP, The sid TDS issued bythe contracte having been deposited inthe sti, ‘SRC, Mota, who is directed to verify the said amount. Te ease is adjourned to 10.12.2018 ‘On-40:122018, Sh. JP Dhiman, advocate appeared again on behalf ofthe frm. Further, ‘SRC Mohali has verified the TDS amount of Rs 2,11 56,645 deposited by M/s Himachal Furrisic “Rimusiction Limited Motall and Rs 16149481 deposit by Mis V&A Ventures LLP during the year. Al the TDS certificates are placed on record. Further, as pe the TOC: dat there is ni ‘transaction reflected during the year. Further, he was confronted against deduction of TDS by M/s Himachal Futuristic Communication Limited Mobali when no work was executed by M/s VE&A “shigatures LLP and that-completeexeciton of work was further re-asigned to various sub- ‘conractrs during the year On the question of TDS deduction bythe conractee when the, Sh JP Dhiman hs refeed to judgment given by the onble Supreme Court of Inia in Ms Larsen and Toubro Ltd ys Additional Deputy Commissioner of Commercial Taxes and Others . The relevant portion of the said judgment is reproduced hereunder, the frm, He has submitted 118) What 1s signifeant 1 that tol amoxnt paid or payable t0 the dealer as 2 consideratén for "ransfer of property in goods’ which is involved in execution of the works contrac ist be treated as total turnover This Rule thus, specifically restricts the total urnover TEE eopect of tase goods, alone, whore the property has been transferred. Thus, transfer of property in goods, Becomes necessary event and nless there is a ransfer of property, the amount pald isnot to be included inthe total turnover. ‘The amount patd tothe sub-contractor is not for transfer of property in goods. When matter is “themed from this angle, the ratio lad down by tis Court inthe Andhra Pradesh jcgment clearly applies inasmuch at in that case also the Court noticed that Section 4(7) of the Andhra ‘Pradesh Act indicated that the taxable event is the transfer of property in goods involved in the ‘execution of a works contract and the said transfer of property n such goods takes place when the_S0eds are incorporated in the works. The Court held tha the value ofthe goods which constitute The measure forthe lry of taxis the value of goods atthe tine ofthe incorporation ofthe goods in the works, The Court further found that same was the postion contained tn Rule 17()(a) of the Andra Pradesh Value Added Tax Rules, 2005. 19) It is not in dispute that the facts and the issue involved were identical, ie, the assessee had assigned parts of the consiruction work to sub-contractors who were registered dealers. These sub-contractors had purchased goods and chatels like bricks, cement and steel and, where necessary, supply ane erect equpmens such a if, hoists, ee. The materials were brought tothe site and they remain the property of the sub-contractor. The site was occupied by the sub- Contractor ‘ard the materials were erected by the sub-contractor. In this backdrop, after taking note of some provisions of the Andra Pradesh Act, the Court explained the legal position in the ning manmer. “16, By virme of Article 366(29-A)(B) ofthe Constitution, ance the work is assigned by the contractor (L&T), the only transfer of property in goods i by the sub- Bm contractor(sywho isa registered dealer inthis case and who claims to have paid taxes under the Act on the goods involved in the execution of the works. Once the work is assigned by LAT to its sub-contractor(s), L&T ceases to execute the works contract in the sense contemplated by Article 366(29-A)(b) because property passes by accretion and there Is mo property in goods with the contractor hich is capable of are transfer, whether as goods or in some other form, 17, The question which is raised before us is whether the turnover of the sub- coniraciors (whose names are also given inthe original writ petition) isto be added to the ‘turnover of L&T. In other words, the question which we are required to answer is whether the goods employed by the sub-contractors occur in the form ofa single deemed sale or multiple deemed sales. In our view, the principle of law inthis regard is clarified by ths, Court in Builders Assn. of India as under: (SCC p. 673, para 36) “36 .. Ordinarily unless there isa contract to the contrary tn the case of a works ‘contract, the property in the goods used in the construction of a building passes to the ‘owner of te land on which the building is constructed, when the goods or materials used are incorporated inthe building.” (emphasis supplied by us) ss 18, As stated above, according to the Department, there are two deemed sales, one _from the main contractor to the contractee and the other from sub-contractor(s) o the main contractor, in the event of the contractee not having any privity of contract with the sub- contractor). 0wy) 19, If one keeps in mind the above quoted observation of this Court in Builders’ Assn. of India the postion becomes clear, namely, that even i there is no privity of contract between the contractee and the sub-contractor, that would not do away with the principle of transfer of property by the sub-contractor by employing the same on the property belonging {to the contractee. This reasoning is based on the principle of accretion of property in goods. 1 is subject 10 the contract to the contrary. Thus, in our view, in such a case, the work «executed by a sub-contractor, result in a single transaction and not as multiple transactions. ‘This reasoning is also borne out by Section 4(7) which refers to the value of goods at the ‘ime of incorporation in the works executed, In our view, ifthe argument of the Department 4s w be accepted, it would result in plurality of deemed sales which would be contrary to Aricle 366(29-A)(t) of the Constiuion as held by the impugned judgment of the High Court. Moreover, it may result in double taxation which may make the said 2005 Act faim vulnerable to challenge as violative of Articles 14, 19(1)(g) and 263 of the Constitution of India as held by the High Court in its impugned judgment.” This raison dere shall apply, in ful force, while answering the question even in the context of the __Karmataka det" Similar reference is also drawn by him to an order of worthy Excise and Taxation Commissioner, Punjab Patiate under Section 85 of the Act ibid dated 23.11.2009 and regarding TDS in case of works contract on the application of M/s Omaxe Ltd. The relevant portion of the Order is also “"eeproduced here, "Since no goods have passed from Omaxe Lid to PWD authorities in the execution of works contract, there is no question of deducting WCT from Omax Lad. Therefore, the questions are decided as below: 1. WCT cannot be deducted from Oma Lid, as no direct payment has been made to it but ts to be deducted from payments made to OICPL by PHD (B&R) Authorities. -<[Link] of the judgment and clarification order cited above, it is beyond doubt that tax has to be deducted at only one taxable event/stage, However TIS was deducted by both the contractee as well asthe taxable person atthe time of releasing the payments. Also it is crystal clear that there was no transfer of property in goods between the taxable person and the contractee viz, Mis HFC. ‘Ther sno taxable event and hence the TDS deducted thus becomes liable for earying forward to the next assessment year as claimed in the annual VAT 20 retum. Concomitantly, the claim of TDS deducted on beef ofthe sub-contractors need tobe sted individually by assessing the Habilty of each of the sub-contractor, On the basis of accounts booksdocuments produced?pe oe. | OB ‘Quarterly/Annually returns filed by the dealer, the assessment for the year 2014-15 is framed here under:- sGross Tumover 32920298 | VAT 4 Tess amount paid osib-Sonanors w per dels placed onrevord | 32920298 4 VAT Liability 0 Bi (0) Gross Prchases oO] _¥re TTC against TDS deducted 21156645 “Total ITC available Garng the year 21156615 4 7 4 i ie ) _[Bamand ws 6 friar pans ea ine 10000 Boo nla) Tiss Issues copy of assesment onde ee of cost ote deer Announced. a Wea 10.12.2018" ~ _ Place : Mohali ‘(Virain Sandhu) ‘ETO-Cum-Designated Officer Mohal ae PARTB 4 Under CST Act. 1956 . lo ver under the Central Sales Tax Act, 1956, Hence, the case is assessed as NIL. ‘No turnover under ee ETO-Cum reins Omicer