Rahul Construction vs Municipal Board, Chhoti Sadari and Others

Sangeet Lodha, J.—By way of this writ petition, the petitioner is seeking direction to the first respondent-Municipal Board, Chhoti Sadri to issue Form VAT-41 prescribed under the Rajasthan Value Added Tax Rules, 2006 (''VAT Rules''), mentioning the details of the amount deducted in lieu of the tax during the period from 2006-07 to 2009-10 and 2011-12. That apart, the petitioner is also seeking directions to the first respondent to correct the PAN Card number of the petitioner mentioned in Form 16-A issued under Rule 31 of the Income Tax Rules, 1962 (''IT Rules''), certifying the amount deducted at source as per the mandate of provisions of Section 194C of the Income Tax Act, 1961 during the year 2008-09.

The relevant facts are that the petitioner was awarded various contracts by the first respondent-Municipal Board, Chhoti Sadri. As per the mandate of provisions of Rule 40(2) of the VAT Rules, the awarder of the contract, the first respondent, was under an obligation to issue a certificate of the deduction of tax at source to the contractor. The case of the petitioner is that the despite representations being made time and again, the first respondent has not cared to issue the certificate of deduction of amount in lieu of the tax in the prescribed Form VAT-41 and for this reason, the petitioner has not been extended the adjustment of the tax deducted at source during the period from 2006-07 to 2009-10 and 2011-12. That apart, the grievance of the petitioner is that in the certificate of deduction of tax at source under Section 203 of the Act of 1961, issued by the first respondent in prescribed Form 16A, the PAN number was wrongly mentioned and therefore, the amount of tax deducted at source has not been credited to the account of Department of Income Tax by the concerned Bank and the same is lying in suspense account.

Learned counsel submitted that as per the mandate of Rule 40(2) of the VAT Rules, the first respondent is under an obligation to issue the certificate of deduction of tax in Form VAT-41. Learned counsel submitted that on account of inaction on the part of the first respondent in not correcting the PAN number in Form 16A issued in terms of provisions of Rule 31 of the IT Rules, the amount is not credited to the account of Department of Income Tax and therefore, the adjustment of the tax deposited is not extended to the petitioner. Learned counsel submitted that the first respondent is not clarifying whether the tax deducted has been deposited in the government account as per the provisions of Rule 40(5) of the Rules or not.

On the other hand, it is not disputed by the first respondent that the amount in lieu of the tax payable under the VAT Act was deducted at the time of making payment to the awardee of the contract, the petitioner herein, however, the certificate as per the mandate of Rule 40(2) of the VAT Rules in Form VAT-41 certifying the deduction made for the period in question has not been issued to the petitioner. Learned counsel appearing for the first respondent submitted that the office record of the Municipal Board of the period from 1.4.09 to 31.3.10 is not available and in this regard, an FIR has also been filed by the Municipal Board at Police Station, Chhoti Sadri, Pratapgarh. Learned counsel submitted that the Form 16A could have been presented by the petitioner for necessary correction immediately, however, no steps were taken by the petitioner in this regard.

The counsel appearing for the second respondent-Department of Commercial Taxes, Government of Rajasthan submitted that the first respondent has not even obtained the blank Form VAT-41 from the Department of Commercial Taxes.

I have considered the submissions of the learned counsel for the parties and perused the material on record.

Indisputably, the amount in lieu of tax was deducted by the first respondent at the time of payment being made to the awardee of the contract, the petitioner herein, however, the certificate of deduction of tax during the period in question has not been issued till this date. As per the Rule 40(2) of the Rules, the respondent-awarder of the contract was under an obligation to deduct the amount as notified by the State Government in lieu of the tax and issue a certificate of deduction of tax to the contractor in Form VAT-41. Thus, admittedly, the first respondent has failed to discharge its statutory obligation in terms of Rule 40(2) of the Rules. As a matter of fact, as per the Rule 40(3)(a), the awarder of the contract is required to obtain the blank Form VAT-41 from the Assistant Commissioner or the Commercial Taxes Officer of the area where the office of the awarder is situated, or from any other authorize officer by the Commissioner as the case may be, after paying the amount as specified. Strangely enough, while deducting the amount in lieu of the tax, the first respondent even did not care to obtain the requisite blank Forms VAT-41 from the Department of Commercial Taxes and thus, gross negligence on the part of the first respondent in discharging its statutory obligation is apparent. The first respondent has not clarified as to whether the amount in lieu of the tax deducted as per the mandate of Rule 40(2) of the VAT Rules, has been deposited with the Department of Commercial Taxes through a challan in Form VAT-37 as per the mandate of Rule 40(5) of the VAT Rules or not.

Coming to the mentioning of wrong PAN number in the Form 16A, it is to be noticed that the error crept in was pointed out by the petitioner, however, no step was taken by the first respondent to do the needful and get the PAN number mentioned in the Form 16A corrected. It is also not in dispute that since the PAN number of the petitioner was not correctly mentioned the Bank has not credited the amount of tax deducted to the account of the Department of Income Tax. Obviously, without the certificate of deposit in Form 16A being produced by the petitioner and the verification of the deposit made by the concerned Income Tax Officer, the petitioner cannot claim adjustment of the amount of tax deducted at source. In this view of the matter, apparently, on account of negligence in discharging statutory obligation on the part of the first respondent, the petitioner has been made to suffer for no fault on its part.

In view of the discussion above, the writ petition deserves to be allowed.

Accordingly, the writ petition is allowed. The respondent-Municipal Board, Chhoti Sadri is directed to issue the certificate of amount deducted towards the tax, during the period from 2006-07 to 2009-10 and 2011-12, from the payment made to the petitioner for carrying out the works awarded, in the prescribed Form VAT-41. Likewise, the respondent shall issue corrected Form 16A, certifying the amount deducted from the payment made to the petitioner during the period in question, as per the mandate of provisions of Section 194C of the Act of 1961. The respondent-Municipal Board shall also furnish the requisite information in this regard to the Bank concerned as well as to the Department of Income Tax. The order passed by this Court as aforesaid, shall be complied with the respondent-Municipal Board within a period of two months from the receipt of certified copy of this order. The petitioner shall be entitled to cost quantified at Rs. 5,000/- from the respondent-Municipal Board, Chhoti Sadri.