THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION No.25436 of 2002 Dated:16.11.2011 Between: S.Rajeswar Reddy .. Petitioner And The Superintending Engineer, Panchayat Raj Circle, Warangal and others .. Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON'BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION No.25436 of 2002 ORDER: (per Hon’ble Sri Justice V.V.S.Rao) The petitioner is a civil contractor. Under agreement dated 19.02.2000, he was awarded the work relating to Package No.KNP-10 in Karimnagar District, to execute “upgradation of two rural roads in Karimnagar District” at an estimated cost of Rs.25,00,000/- within a period of 12 months. It appears, fourth respondent advised the first respondent to deduct tax at 4% from the final bills payable to the petitioner. Accordingly, the said amount was deducted from the bills. Aggrieved by which, the petitioner filed the instant writ petition. He seeks a writ of mandamus declaring the action of the respondents in deducting the sales tax over and above the rates contemplated under the Andhra Pradesh General Sales Tax Rules, 1957 (the APGST Rules) and for a consequential direction to refund the amounts. The petitioner relies on Ch. Marthanda Rao v Superintending Engineer, Panchayat Raj Circle, Karimnagar (an unreported judgment in W.P.No.21500, dated 19.08.2002). The counter affidavit is filed by the first respondent justifying the deduction. The plea of the petitioner that the respondents are entitled only 2% tax is not denied. However, it is stated that in respect of works involving earth work, gravel course, WBM, B.T. and construction/repairs, cross drainage works (C.D.works), sales tax @ 4% is deductible. Under Section 5-H of the Andhra Pradesh General Sales Tax Act, 1957 the Central Government or the State Government or a local authority shall deduct from out of the amounts payable by a dealer in respect of works contract executed by them at an amount calculated at such rates as may be prescribed by the Rules. Rule 17-I of the APGST Rules initially prescribed deduction of tax at source at 1%, but subsequently, it was amended vide G.O.Ms.No.556, dated 07.08.2000, revising the rates. At relevant time, the said Rule reads as under. 17-I. (1) The tax to be deducted at source under Section 5-H shall be at the rates prescribed below: (i) All the categories of contracts 4% of turnover determined not falling in sub-clause (ii) as per sub-clause (ii) of mentioned below. sub-rule (3) of Rule 6. (ii) Exclusive Civil contracts 2% of turnover determined namely contracts for laying as per sub-clause (ii) of or repairing of roads and sub-rule (3) of Rule 6. contracts for canal digging lining and repairing. A plain reading of the same would show that insofar as exclusive civil contracts for laying or repairing of roads and contracts for canal digging lining and repairing are concerned, the sales tax would be deducted at 2% and in all other categories it is 4%. We have seen the agreement dated 19.02.2000. It leaves no doubt that it is an agreement only for upgradation of rural roads which squarely falls under Rule 17-I (2) of the Rules. In that view of the matter, the deduction of 4% from the final bill of the petitioner is unsustainable. In Ch.Marthana Rao, the Division Bench considered a similar question and directed the Superintendent Engineer to release the excess amounts from the tax collected from the contractor over and above 2% on the works executed by the petitioner. The fact situation therein is similar to the one before us. The writ petition is accordingly allowed and the first respondent is directed to release the excess amount of tax, if already collected from the final bill of the petitioner for the works executed under agreement No.B1/99-2000, dated 19.02.2000. There shall be no order as to costs. _______________ (V.V.S.RAO, J) _____________________ (SANJAY KUMAR, J) 16.11.2011 KH