Works contractors eligible for advance VAT exemption -P&H HC

The Punjab & Haryana High Court  in CWP 19835 of 2014 Ayyappa Infra Projects Pvt Ltd vs State of Punjab has directed the State of Punjab to issue clarification to the effect that works contractors are also eligible for exemption from advance VAT levied u/s 6(7) of Punjab VAT Act, 2005.

In this case the challenge was made to the vires of the provisions relating to advance tax by the petitioner who is a works contractor doing work in Punjab.

The exemption from advance VAT was denied to the petitioner on the ground that works contractors are not covered under the catagories of dealers to whom the exemption from Advance VAT can be allowed as per the notification dated 04.10.2013.

However, the State admitted before the High Court that works contractors whose TDS is being deducted, is not liable to pay advance tax. Thereby the Hon’ble High Court directed the State Government to issue the clarification in this regard within fortnight from the date of order.

Thus it has become cystal clear that the works contractors are also eligible for exemption from advance VAT u/s 6(7) of Punjab VAT Act, 2005.

The full judgement is as follows:

HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH

 

Civil Writ Petition No.19835 of 2014

 

Date of Order: 12.12.2014

 

Ayappa Infra Projects Pvt. Ltd., Jalandhar

 

Versus

 

The State of Punjab and others

 

CORAM: HON’BLE MR. JUSTICE RAJIVE BHALLA

 

 HON’BLE MR. JUSTICE B.S.WALIA

 

RAJIVE BHALLA, J (Oral)

The petitioner primarily contends that a person whose TDS is being deducted, cannot be called upon to pay advance tax in lieu of liability with respect to VAT.

Counsel for the State of Punjab submits on instructions that the Government is in the process of clarifying that a person whose TDS is being deducted cannot be called upon to pay advance tax in lieu of liability with respect to VAT.

In view of the statement made by counsel for the State of Punjab, the present petition has been rendered infructuous and is disposed of accordingly.

The State of Punjab shall issue the requisite clarification within a fortnight from today and shall, thereafter, re-examine the matter and grant consequential relief, if any, due to the petitioner.