THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.9955 of 2000 June 06, 2011 Between: T.Ch.Bhupathi, S/o.Rama Rao And others … Petitioners And The General Manager, Telecom District, Visakhapatnam And others ... Respondents THE HON'BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION No.9955 of 2000 ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) The petitioners assail the letter dated 07.6.2000 of the second respondent. By the said letter, the petitioners were informed that turnover tax at 4% on 70% of the turnover from the cable contractor bills would be deducted by the Department of Telecommunications (now, Bharat Sanchar Nigam Limited). There is no dispute of the fact that the petitioners are underground cable laying contractors. During 1999-2000, the labour contract was awarded to them to dig trenches for laying underground cables. When they submitted bills, the second respondent imposed condition of deduction of 4% of turnover tax for honouring the bills. The learned Standing Counsel for BSNL, Mr.B.Devanand, brought to our notice unreported judgment of the Division Bench of this Court in B.Chandra Shekar v General Manager, Telecom District, West Godavari[1]. In the said judgment, the validity of a similar communication of the Chief Engineer was considered. Relying on another unreported common judgment in Venigalla Narayana Rao v Engineer-in-Chief, R&B, A&E, A.P., Hyderabad[2], this Court held that deduction of tax at source at higher rates would not be permissible and the writ petition was disposed of with certain clarifications and directions, which are as below. 1) If the works contract awarded to the petitioner involves only earth work, no tax need be deducted at source on the value of the earth work. 2) If the works contract awarded to the petitioner involves erection or construction of structures, the respondents are at liberty to deduct tax at source at the rate of 4%. 3) If the works contract awarded to the petitioner involves laying of roads, repairs to roads, canal digging, canal lining and repairs to canals, the respondents are at liberty to deduct tax at source at the rate of 2%. Following the judgment in B.Chandra Sekhar, we dispose of the writ petition observing that deduction of turnover tax on the value of the earth work is not permissible but if the works contract was awarded for construction of building it shall be open to the respondents to deduct turnover tax. There shall be no order as to costs. _______________ (V.V.S.RAO, J) _______________________________ (RAMESH RANGANATHAN, J) June 06, 2011 YS [1] W.P.No.11019 of 2001, dated 12.6.2001 [2] W.P.No.5148 of 2008 and batch, dated 26.6.2000