M-S SUPRA MARKETING AGENCIES v. COMMERCIAL TAX OFFICER, HYDERABAD AND ORS

Citation: [2006] SUPP. 8 S.C.R. 1120

Court: Supreme Court of India

Bench: ARIJIT PASAYAT, LOKESHWAR SINGH PANTA

Case summary

M-S SUPRA MARKETING AGENCIES v. COMMERCIAL TAX OFFICER, HYDERABAD AND ORS.pdf

Judgment text

MIS SUPRA MARKETING AGENCIES v. COMMERCIAL TAX OFFICER, HYDERABAD AND ORS. NOVEMBER 13, 2006 [ARIJITPASAYAT ANDLOKESHWARSINGHPANTA,JJ. ] -~ Andhra Pradesh General Sales Tax Act, 1957/Central Sales Tax, 1956-. Sales Tax-Direction from Revenue-To Corporation seeking services /rvm assessee-dealer-To deduct sales tax at source on the payments made by it to the assessee-dealer-Due to some dispute regarding amounts payable to the assessee, only part of the sales tax deducted at· source deposited by t, Corporation to the Revenue-Revenue demanding balance amount from the assessee-Demand challenged in Writ Petition-Dismissed-On appeal, held: It is the Corporation and not the assessee who is required to deposit the tax-Since the tax had been deducted at source by the Corporation in terms of directions given by the Revenue. urt questioning the action. The High Court by impugned judgment dismissed the writ petition holding that there was no valid Circular in existence.

The High Court was of the view that letter issued by the Deputy Commissioner, Commercial Taxes cannot be equated with the circular which the Commissioner alone could have issued. It is also not relevant that in the arbitration proceedings, Corporation has been held liable to pay amounts which have been deducted at source at tax as Commercial Tax Officer was not a party to such proceedings. SUPRA MARKETINGAGENCIES 1•. COMMERCIALTAXOFFICER. HYDERABAD[PASAYAT, J. ] } J23 In support of appeals, learned counsel for the appellant submitted that notwithstanding the fact that the parties accept the position that whatever has been deducted at source has to be deposited with the Commercial Tax Department, the appellant is being asked to pay the amount again. Nobody disputes that the Corporation was required to deduct the amount and to deposit it. In fact the dispute on which the Corporation placed reliance has ....

nothing to do with the question of deposit of amounts which has been deducted at source. The State Government accepts that the Deputy Commissioner had issued communication in question acting on behalf of the Commissioner and it is a Circular by the Commissioner. It has also accepted that the Corporation is to deposit amounts which it has deducted at source. Learned counsel for respondents I and 2 submitted that Commercial Tax Officer and the State Government did not dispute the stand that the Corporation has to deposit the amounts which has been deducted at source. The stand of the Corporation essentially is that there is some dispute about the amounts to be paid to the appellant and in fact its stand is that the payment in excess of what is legally due has been made. The basic issue is whether the amount which has been deducted at source by the Corporation is required to be deposited with the Commercial Tax Department. There is no scope for any controversy on this score.

The amounts have been deducted in terms of the directions given by the Commissioner. The relevant portion ofthe Circular dated 17. 12. 1998 reads as follows: "During the course of meeting, I have made it clear to the suppliers that the tax should be deducted at source, that is by the Corporation in respect ofthe supplies ofgoods wherever tax is leviable. I, therefore, request you to kindly to confirm to the Commissioner of Commercial Taxes that the Corporation will be undertaking to deduct tax at source before paying the consideration to all the suppliers ofgoods ADARNA PROJECT. The tax so deducted from these suppliers, in case they are registered with ACTO Punjagutta Circle, under the said proceedings, may be paid through crossed cheque drawn in favour of Commercial Tax Officer, Punjagutta Circle, Hyderabad duly indicating the names of suppliers and the tax amount deducted from them in the covering letter. A certificate ofthe deduction may also be issued to the individual suppliers.

In respect of suppliers who are already registered in this State other than in Punjagutta Circle, such crossed cheques may be " issued in favour of the concerned C. T. O. in the State and sent by registered post to that C. T. O. ". The stand of the Corporation that it has raised the dispute about the amounts payable is really unconnected with the issue under consideration. Undisputedly, since the amounts have been deducted at source from the amounts paid to the appellant for supply of articles, Corporation had to ~· deposit the amounts. In the Circular of the Deputy Commissioner as quoted above, it has been clearly stated that the tax is to be deducted at source wherever tax is leviable. In the Commissioner's Circular dated 7. 7. 1999, it has been clearly stated that in the meeting held on 27. 3. I999, it was decided to deduct tax at source in respe_ct of all purchases made by the Corporation and to deposit the said amount with the Commissioner.

In view of the aforesaid factual position, we direct that the Corporation should deposit the amounts which have not 'yet be~n deposited in respect of amounts deducted at source as tax. The deposit shall be made within one month from today. It is unnecessary to state that we have not expressed any . ;;: 1 opinion on the dispute relating to the entitlement of the appellant and the question whether there has been any over payment as claimed by the Corporation. The appeals are allowed to the aforesaid extent. No costs. K. K. T. Apppeal allowed.