Uttarakhand Transport Corporation vs Commissioner, Commercial Tax

K.M. Joseph, C.J.—We have heard the learned Senior Counsel for the revisionist and also the learned counsel for the State on the Applications for delay. The delay is not being seriously opposed and we are inclined to condone the delay. The delay stands condoned. The Applications for condonation of delay, accordingly, stand allowed.

These revision petitions being connected, we are disposing of these petitions by way of this common order.

We have also heard the learned Senior Counsel as also counsel for the respondent on the merit of the matter.

In these cases, the revisionist challenges the order passed by the Tribunal. The revision petitions are directed against the common order passed in five Appeals for various years commencing from 2005-06 onwards and culminating in various years. In short, the apparent facts are as follows:

The revisionist is a Government Corporation; it provides service to transport the passengers from one place to another; for this purpose, buses are taken on contract from various persons; for the same, rent is paid. Under the Uttarakhand Value Added Tax Act 2005, tax is leviable on the amount paid by the revisionist to the owners of the vehicles on the basis of the Act. The transaction is taxable as it is a deemed sale being a transfer of a right to use in the light of the amendment to Article 366 of the Constitution followed by the provisions contained in the Tax Act. The controversy relates to the liability of the revisionist to deduct tax at source at the rate of 4%. Revisionist did not deduct tax at 4%. Consequently, proceedings were taken to impose penalty on the revisionist. Penalty came to be imposed by the officer at twice the amounts. In Appeals carried by the revisionist, the First Appellate Authority upheld the decision to impose the penalty but reduced the quantum from twice the amount to an amount equal to the amount, which should have been deducted. The said decision of the First Appellate Authority was challenged before the Tribunal both by the revisionist as also the State. It is by the common impugned order that the Tribunal while rejecting the contentions of the revisionist against the decision of the officer to impose the penalty was pleased, however, to modify the quantum once again and the penalty was reduced to a sum representing 20% of the amount, which should have been deducted at source. It is feeling aggrieved by the same that the revisionist is before us.

Learned counsel for the respondent points out that no substantial question of law as such has been framed.

Learned senior counsel for the revisionist would point out that the revisionist is not exigible to tax being a statutory corporation and, in fact, there was a proposal, which emanated from the revisionist, which was pending before the State Government seeking exemption from payment of tax. As it is apposite, we advert to Section 35 of the Uttarakhand Value Added Tax Act (hereinafter referred to as the Act). Section 35 of the Act reads as follows:

SECTION 35: Recovery of Tax by way of Tax Deduction at Source:

(2) Where under an agreement of transfer of right to use any goods for any purpose (whether or not for a specified period) the lessee to whom the right to use any goods is transferred, is-

(a) a registered dealer, or

(b) the Central Government or any State Government; or

(c) any local authority, any corporation or undertaking constituted by or under a Central Act or a State Act; or

(d) any Co-operative society or any other society, club, firm or other association of persons or a company, whether incorporated or not, the person responsible for making such payment to the lessor (who is transferring the right to use any goods) for discharge of liabilities under such agreement, shall at the time of making such payment to the lessor, either in cash or by credit or any other manner, deduct an amount at the rate of four percent of such sum towards part or, as the case may be, full satisfaction of the tax payable under this Act on account of such transfer of right to use any goods:

Provided that the Assessing Authority may, if satisfied that it is expedient in the public interest so to do and for reasons to be recorded in writing, order that in any case or class of cases no such deduction shall be made or, as the case may be, such deduction shall be made at a lesser rate:

Provided further that where any deduction has been made by a contractor from the payment made to his sub-contractor in accordance with sub-section (3), the amount of such payment shall be deducted from the amount on which deduction is to be made under this sub-section.

There is no dispute that the revisionist Corporation is a corporation, which is constituted under the State Act. Also the fact remains, even going by the revisionist, revisionist sought exemption from tax, which itself would show that it could not have been the revisionist''s understanding that it still stood exempted from the obligation to follow the provisions of Section 35 and deduct tax as provided therein. We notice that, in fact, the revisionist has been granted considerable relief in the matter of quantum by the Tribunal.

In the circumstances, we find that there is no substantial question of law in the revisions and we see no ground to interfere in the Revisions. The Revisions fail and the same are dismissed.