C.W.P. No. 19579 of 2002 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No. 19579 of 2002 Date of decision:- 13.08.2008 1) M/s Keshob Plants ...Petitioner Versus Bharat Sanchar Nigam Limited & Ors. ...Respondents 2) C.W.P. No. 1358 of 2003 M/s S. Kumar Construction & anr. ...Petitioner Versus Bharat Sanchar Nigam Limited & Ors. ...Respondents 3) C.W.P. No. 1691 of 2003 Pardeep Kumar & others ...Petitioners Versus Bharat Sachar Nigam Limited & Ors. ...Respondents 4) C.W.P. No. 2538 of 2003 M/s A. K. Electricals ...Petitioner Versus Bharat Sachar Nigam Limited & Ors. ...Respondents 5) C.WP. No. 3131 of 2003 M/s Garg Construction Company ...Petitioner Versus Municipal Corporation, Ludhiana & Ors. ...Respondents 6) C.W.P. No. 11902 of 2004 Teknow Consultants and Engineers(P) Ltd. ...Petitioner Versus State of Punjab and others ...Respondents C.W.P. No. 19579 of 2002 2 7) C.W.P. No. 13852 of 2004 Smt. Maya Devi Sahdev Educational Society ...Petitioner Versus State of Punjab and others ...Respondents 8) C.W.P. No. 15198 of 2004 M/s Sahil Builders ...Petitioner Versus Bharat Sanchar Nigam Limited and others .Respondents 9) C.W.P. No. 17607 of 2005 M/s Cobra Instalaciones Y Services, S.A. ...Petitioner Versus State of Punjab and others ..Respondents 10) C.W.P. No. 17611 of 2005 M/s Cobra Instalaciones Y Services, S.A. ...Petitioner Versus State of Punjab and others ..Respondents 11) C.W.P. No. 17614 of 2005 M/s Cobra Instalaciones Y Services, S.A. ...Petitioner Versus State of Punjab and others ..Respondents 12) C.W.P. No. 17616 of 2005 M/s Cobra Instalaciones Y Services, S.A. ...Petitioner Versus State of Punjab and others ..Respondents 13) CW.P. No. 17617 of 2005 M/s Cobra Instalaciones Y Services, S.A. ...Petitioner Versus State of Punjab and others ..Respondents C.W.P. No. 19579 of 2002 3 CORAM: Hon'ble Mr. Justice Rajesh Bindal Present: Mr. G. R. Sethi, Advocate, for the petitioners (in CWP Nos. 13852 of 2004, 17607, 17611, 17614, 17616 and 17617 of 2005) Mr. K. L. Goyal and Mr. Sandeep Goyal, Advocates, for the petitioner (in CWP No. 11902 of 2004) Mr. Raman Sharma, Advocate, for the petitioners (in CWP Nos. 19579 of 2002, 1358, 1691, 2538 and 3131 of 2003) Mr. Puneet Kansal, Advocate, for the petitioners. (in CWP No. 15198 of 2004) Mr. Vijay Kumar Chaudhary, Assistant Advocate General, Punjab. Mr. Anil Rathee, Advocate, for the respondents. (in CWP Nos. 19579 of 2002, 1691 of 2003 and 2538 of 2003) RAJESH BINDAL J. 1. This order will dispose of bunch of thirteen petitions bearing CWP Nos. 19579 of 2002, 1358, 1691, 2538 and 3131 of 2003, 11902, 13852 and 15198 of 2004, 17607, 17611, 17614, 17616 and 17617 of 2005. The primary challenge in the bunch of petitions is to the vires of Section 10C of the Punjab General Sales Tax Act 1948 (for short, the ‘Act’). FACTS: C.W.P. No. 19579 of 2002 : 2. The petitioner here is contractor working for various activities with Bharat Sanchar Nigam Limited. The petitioner besides filing the present petition challenging the vires of Section 10C of the Act, also filed appeal before the appellate authority, who while accepting appeal remanded the case back to the assessing officer where the same is still pending. The prayer is for declaring Section 10C of the Act as ultravires to the Constitution of India and restraining the contractee from deducting the tax at source and for refund of the amount of tax already deducted from the bills of the petitioner. C.W.P. No. 19579 of 2002 4 C.W.P. No. 1358 of 2003: 3. The petitioners here are contractors working for various activities with Bharat Sanchar Nigam Limited. The petitioner besides filing the present petition challenging the vires of Section 10C of the Act also filed appeal before the appellate authority, who while accepting appeal remanded the case back to the assessing officer where the same is still pending. The prayer is for declaring Section 10C of the Act as ultravires to the Constitution of India and restraining the contractee from deducting the tax at source and for refund of the amount of tax already deducted from the bills of the petitioners. C.W.P. No. 1691 of 2003 : 4. The petitioners here are contractors working for various activities with Bharat Sanchar Nigam Limited. The petitioners besides filing the present petition challenging the vires of Section 10C of the Act also filed appeal before the appellate authority, who while accepting appeal remanded the case back to the assessing officer where the same is still pending. The prayer is for declaring Section 10C of the Act as ultravires to the Constitution of India and restraining the contractee from deducting the tax at source and for refund of the amount of tax already deducted from the bills of the petitioners. C.W.P. No. 2538 of 2003: 5. The petitioner here is contractor working for various activities with Bharat Sanchar Nigam Limited. The petitioner besides filing the present petition challenging the vires of Section 10C of the Act also filed appeal before the appellate authority, who while accepting appeal remanded the case back to the assessing officer where the same is still pending. The prayer is for declaring Section 10C of the Act as ultravires to the Constitution of India and restraining the contractee from deducting the tax at source and for refund of the amount of tax already deducted from the bills of the petitioner. C.WP. No. 3131 of 2003: 6. The petitioner here is a Contractor who was awarded various contracts by Municipal Corporation, Ludhiana, Punjab Urban Development Authority, Ludhiana, Improvement Trust, Ludhiana and Executive Engineer, Punjab PWD, B&R, Ludhiana. The petitioner besides filing the C.W.P. No. 19579 of 2002 5 present petition challenging the vires of Section 10C of the Act also filed appeal before the appellate authority, who while accepting appeal remanded the case back to the assessing officer where the same is still pending. C.W.P. No. 11902 of 2004 : 7. The petitioner is engaged in the execution of works contracts of civil nature. It is registered dealer under the provisions of the Act. On 7.5.2004, the petitioner was awarded a sub-contract by Bharat Heavy Electricals Limited for doing the work for M/s Power Grid Corporation of India Limited. The prayer is for declaring Section 10C of the Act as ultravires to the Constitution of India and restraining the contractee from deducting the tax at source and for refund of the amount of tax already deducted from the bills of the petitioner. C.W.P. No. 13852 of 2004: 8. The petitioner is a society set up with the object of establishing schools, colleges, libraries, reading rooms for providing education to the children. It is running school in the name of Victoria International Public School at village Mauli, Tehsil Phagwara District Kapurthala. During the year 1999-2000 and 2000-2001 certain construction activity of class rooms etc. was undertaken by the petitioner in the school. A contractor in the name of M/s Builtech Jalandhar was engaged, as the petitioner failed to deduct tax at source on the payments made to the contractor, notice under Section 10C of the Act was issued to the petitioner. Rejecting the replies filed by the petitioner, assessment for the years 1999-2000 and 2000-2001 was framed vide orders dated 15.4.2004, raising a demand of tax at the rate of 2% of the amount. Besides this penalty under Section 10C(5) of the Act and interest under Section 10C(6) of the Act also levied. The petitioner besides filing the present petition challenging the vires of Section 10C of the Act also filed appeal before the appellate authority, who while accepting appeal remanded the case back to the assessing officer where the same is still pending. C.W.P. No. 15198 of 2004: 9. The petitioner here is contractor working for various activities with Bharat Sanchar Nigam Limited. The petitioner besides filing the present petition challenging the vires of Section 10C of the Act also filed appeal before the appellate authority, who while accepting appeal remanded C.W.P. No. 19579 of 2002 6 the case back to the assessing officer where the same is still pending. The prayer is for declaring Section 10C of the Act as ultravires to the Constitution of India and restraining the contractee from deducting the tax at source and for refund of the amount of tax already deducted from the bills of the petitioner. C.W.P. No. 17607 of 2005 : 10. The petitioner company was awarded two contracts bearing nos. 331 and 333 by M/s Power Grid Corporation of India Limited for supply of electric transmission towers in knocked down condition. Another set of contracts bearing nos. 332 and 334 were awarded for survey, optimization, design and construction of two 800 KV single circuit transmission lines from Kishanpura to Moga. The first set of contracts bearing nos. 331 and 333 were purely for sale of material, the tower parts were manufactured and supplied by M/s. Kalpataru Power Transmission Limited, Gandhi Nagar, Ahemdabad and M/s Transpower Engineering Limited, Mumbai, whereas the second set of contracts bearing nos. 332 and 334 were works contract, described as ‘Erection Contracts’. The same were got executed through the sub contractor M/s Mukand Engineering Limited. The dispute raised in the writ petition is pertaining to the assessment year 1997-98. M/s Power Grid Corporation of India Limited for whom the petitioner was working deducted tax at source from the bills raised by the petitioner qua the works contracts and deposited the same with the State. During the year in question a sum of Rs. 27,00,933/- was deducted at source. As the petitioner had also got the job executed through a sub- contractor, a deduction of 2% from the payment made to the sub-contractor was made and deposited with the Sales Tax Department. The certificates given to the petitioner by the Power Grid Corporation of India Limited on account of deduction at source on its behalf were submitted alongwith returns, however, at the time of framing of assessment on 24.4.2002 the credit thereof was not given to the petitioner. In the assessment order the taxable turnover was determined as nil. The credit for the amount of tax deducted at source on behalf of the petitioner was not granted by the assessing authority. Aggrieved against the order of assessment the petitioner filed appeal before the Deputy Excise and Taxation Commissioner (Appeals), who vide order dated 16.9.2004 while accepting C.W.P. No. 19579 of 2002 7 the appeal, remanded the case back to the assessing authority for verification of the TDS certificates and passing a self speaking order within 90 days from the receipt of remand order and in case refund is due the same be granted to the petitioner. As the remand order was not passed within the period prescribed, the petitioner took the matter to the Sales Tax Tribunal Punjab, who vide order dated 27.4.2005 directed the assessing authority to decide the case within a period of one month. Though at the time of filing of the petition the proceedings were still pending before the assessing authority, however, during the pendency thereof vide order dated 20.2.2006 assessement was framed. By virtue of it a sum of Rs. 27,00,933/- was found to be refundable to the petitioner. The prayer in the petition is for strucking down provision of Section 10C of the Act and also for grant of interest on the amount of tax retained by the official respondents without authority of law. C.W.P. No. 17611 of 2005: 11. The petitioner company was awarded two contracts bearing nos. 331 and 333 by M/s Power Grid Corporation of India Limited for supply of electric transmission towers in knocked down condition. Another set of contracts bearing nos. 332 and 334 were awarded for survey, optimization, design and construction of two 800 KV single circuit transmission lines from Kishanpura to Moga. The first set of contracts bearing nos. 331 and 333 were purely for sale of material, the tower parts were manufactured and supplied by M/s. Kalpataru Power Transmission Limited, Gandhi Nagar, Ahemdabad and M/s Transpower Engineering Limited, Mumbai, whereas the second set of contracts bearing nos. 332 and 334 were works contract, described as ‘Erection Contracts’. The same were got executed through the sub contractor M/s Mukand Engineering Limited. The dispute raised in the writ petition is pertaining to the assessment year 2000-2001. M/s Power Grid Corporation of India Limited for whom the petitioner was working deducted tax at source from the bills raised by the petitioner qua the works contracts and deposited the same with the State. During the year in question a sum of Rs. 12,80,387/- was deducted at source. As the petitioner had also got the job executed through a sub- contractor, a deduction of 2% from the payment made to the sub-contractor was made and deposited with the Sales Tax Department. The certificates C.W.P. No. 19579 of 2002 8 given to the petitioner by the M/s. Power Grid Corporation of India Limited on account of deduction at source on its behalf were submitted alongwith returns, however, at the time of framing of assessment on 28.5.2002 the credit thereof was not given to the petitioner. In the assessment order the taxable turnover was determined as nil. The credit for the amount of tax deducted at source on behalf of the petitioner was not granted by the assessing authority. Aggrieved against the order of assessment the petitioner filed appeal before the Deputy Excise and Taxation Commissioner (Appeals), who vide order dated 16.9.2004 while accepting the appeal, remanded the case back to the assessing authority for verification of the TDS certificates and passing a self speaking order within 90 days from the receipt of remand order and in case refund is due the same be granted to the petitioner. As the remand order was not passed within the period prescribed, the petitioner took the matter to the Sales Tax Tribunal Punjab, who vide order dated 27.4.2005 directed the assessing authority to decide the case within a period of one month. Though at the time of filing of the petition the proceedings were still pending before the assessing authority, however, during the pendency thereof vide order dated 20.2.2006 assessement was framed. By virtue of it a sum of Rs. 12,80,387/- was found to be refundable to the petitioner. The prayer in the petition is for strucking down provision of Section 10C of the Act and also for grant of interest on the amount of tax retained by the official respondents without authority of law. C.W.P. No. 17614 of 2005: 12. The petitioner company was awarded two contracts bearing nos. 331 and 333 by M/s Power Grid Corporation of India Limited for supply of electric transmission towers in knocked down condition. Another set of contracts bearing nos. 332 and 334 were awarded for survey, optimization, design and construction of two 800 KV single circuit transmission lines from Kishanpura to Moga. The first set of contracts bearing nos. 331 and 333 were purely for sale of material, the tower parts were manufactured and supplied by M/s. Kalpataru Power Transmission Limited, Gandhi Nagar, Ahemdabad and M/s Transpower Engineering Limited, Mumbai, whereas the second set of contracts bearing nos. 332 and 334 were works contract, described as ‘Erection Contracts’. The same were got executed through the sub contractor M/s Mukand Engineering Limited. C.W.P. No. 19579 of 2002 9 The dispute raised in the writ petition is pertaining to the assessment year 2001-2002. M/s Power Grid Corporation of India Limited for whom the petitioner was working deducted tax at source from the bills raised by the petitioner qua the works contracts and deposited the same with the State. During the year in question a sum of Rs. 2,55,308/- was deducted at source. As the petitioner had also got the job executed through a sub-contractor, a deduction of 2% from the payment made to the sub-contractor was made and deposited with the Sales Tax Department. The certificates given to the petitioner by the Power Grid Corporation of India Limited on account of deduction at source on its behalf were submitted alongwith returns, however, at the time of framing of assessment on 5.5.2003 the credit thereof was not given to the petitioner. In the assessment order the taxable turnover was determined as nil. The credit for the amount of tax deducted at source on behalf of the petitioner was not granted by the assessing authority. Aggrieved against the order of assessment the petitioner filed appeal before the Deputy Excise and Taxation Commissioner (Appeals), who vide order dated 16.9.2004 while accepting the appeal, remanded the case back to the assessing authority for verification of the TDS certificates and passing a self speaking order within 90 days from the receipt of remand order and in case refund is due the same be granted to the petitioner. As the remand order was not passed within the period prescribed, the petitioner took the matter to the Sales Tax Tribunal Punjab, who vide order dated 27.4.2005 directed the assessing authority to decide the case within a period of one month. Though at the time of filing of the petition the proceedings were still pending before the assessing authority, however, during the pendency thereof vide order dated 20.2.2006 assessement was framed. By virtue of it a sum of Rs. 2,55,308/- was found to be refundable to the petitioner. The prayer in the petition is for strucking down provision of Section 10C of the Act and also for grant of interest on the amount of tax retained by the official respondents without authority of law. C.W.P. No. 17616 of 2005: 13. The petitioner company was awarded two contracts bearing nos. 331 and 333 by M/s Power Grid Corporation of India Limited for supply of electric transmission towers in knocked down condition. Another set of contracts bearing nos. 332 and 334 were awarded for survey, C.W.P. No. 19579 of 2002 10 optimization, design and construction of two 800 KV single circuit transmission lines from Kishanpura to Moga. The first set of contracts bearing nos. 331 and 333 were purely for sale of material, the tower parts were manufactured and supplied by M/s. Kalpataru Power Transmission Limited, Gandhi Nagar, Ahemdabad and M/s Transpower Engineering Limited, Mumbai, whereas the second set of contracts bearing nos. 332 and 334 were works contract, described as ‘Erection Contracts’. The same were got executed through the sub contractor M/s Mukand Engineering Limited. The dispute raised in the writ petition is pertaining to the assessment year 1999-2000. M/s Power Grid Corporation of India Limited for whom the petitioner was working deducted tax at source from the bills raised by the petitioner qua the works contracts and deposited the same with the State. During the year in question a sum of Rs. 12,60,813/- was deducted at source. As the petitioner had also got the job executed through a sub- contractor, a deduction of 2% from the payment made to the sub-contractor was made and deposited with the Sales Tax Department. The certificates given to the petitioner by the Power Grid Corporation of India Limited on account of deduction at source on its behalf were submitted alongwith returns, however, at the time of framing of assessment on 28.5.2002 the credit thereof was not given to the petitioner. In the assessment order the taxable turnover was determined as nil. The credit for the amount of tax deducted at source on behalf of the petitioner was not granted by the assessing authority. Aggrieved against the order of assessment the petitioner filed appeal before the Deputy Excise and Taxation Commissioner (Appeals), who vide order dated 16.9.2004 while accepting the appeal, remanded the case back to the assessing authority for verification of the TDS certificates and passing a self speaking order within 90 days from the receipt of remand order and in case refund is due the same be granted to the petitioner. As the remand order was not passed within the period prescribed, the petitioner took the matter to the Sales Tax Tribunal Punjab, who vide order dated 27.4.2005 directed the assessing authority to decide the case within a period of one month. Though at the time of filing of the petition the proceedings were still pending before the assessing authority, however, during the pendency thereof vide order dated 20.2.2006 assessement was framed. By virtue of it a sum of Rs. 12,60,813/- was found C.W.P. No. 19579 of 2002 11 to be refundable to the petitioner. The prayer in the petition is for strucking down provision of Section 10C of the Act and also for grant of interest on the amount of tax retained by the official respondents without authority of law. CW.P. No. 17617 of 2005 : 14. The petitioner company was awarded two contracts bearing nos. 331 and 333 by M/s Power Grid Corporation of India Limited for supply of electric transmission towers in knocked down condition. Another set of contracts bearing nos. 332 and 334 were awarded for survey, optimization, design and construction of two 800 KV single circuit transmission lines from Kishanpura to Moga. The first set of contracts bearing nos. 331 and 333 were purely for sale of material, the tower parts were manufactured and supplied by M/s. Kalpataru Power Transmission Limited, Gandhi Nagar, Ahemdabad and M/s Transpower Engineering Limited, Mumbai, whereas the second set of contracts bearing nos. 332 and 334 were works contract, described as ‘Erection Contracts’. The same were got executed through the sub contractor M/s Mukand Engineering Limited. The dispute raised in the writ petition is pertaining to the assessment year 1998-1999. M/s Power Grid Corporation of India Limited for whom the petitioner was working deducted tax at source from the bills raised by the petitioner qua the works contracts and deposited the same with the State. During the year in question a sum of Rs. 8,75,897/- was deducted at source. As the petitioner had also got the job executed through a sub-contractor, a deduction of 2% from the payment made to the sub-contractor was made and deposited with the Sales Tax Department. The certificates given to the petitioner by the Power Grid Corporation of India Limited on account of deduction at source on its behalf were submitted alongwith returns, however, at the time of framing of assessment on 24.4.2002 the credit thereof was not given to the petitioner. In the assessment order the taxable turnover was determined as nil. The credit for the amount of tax deducted at source on behalf of the petitioner was not granted by the assessing authority. Aggrieved against the order of assessment the petitioner filed appeal before the Deputy Excise and Taxation Commissioner (Appeals), who vide order dated 16.9.2004 while accepting the appeal, remanded the case back to the assessing authority for verification of the TDS certificates C.W.P. No. 19579 of 2002 12 and passing a self speaking order within 90 days from the receipt of remand order and in case refund is due the same be granted to the petitioner. As the remand order was not passed within the period prescribed, the petitioner took the matter to the Sales Tax Tribunal Punjab, who vide order dated 27.4.2005 directed the assessing authority to decide the case within a period of one month. Though at the time of filing of the petition the proceedings were still pending before the assessing authority, however, during the pendency thereof vide order dated 20.2.2006 assessement was framed. By virtue of it a sum of Rs. 8,75,897/- was found to be refundable to the petitioner. The prayer in the petition is for strucking down provision of Section 10C of the Act and also for grant of interest on the amount of tax retained by the official respondents without authority of law. Legal Provisions : 15. Article 286 of the Constitution of India contains provisions relating to the restrictions on the power of the State Legislature to impose taxes on the sale and purchase of goods. The same is reproduced hereunder:- “286. Restrictions as to imposition of tax on the sale or purchase of goods.-- (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such