Deduction of tax at source (in case of works contract)
(1) Notwithstanding anything contained in this Act, the Central Government, or any State Government, or an industrial, commercial or trading undertaking of the Central Government or of any State, or any such undertaking in joint sector or any other industrial, commercial or trading undertaking or any other person or body as may be notified by the Commissioner from time to time or a local authority or a statutory body, shall deduct out of the amounts payable by them to a dealer in respect of any works contract executed for them in the State, an amount equivalent to the tax payable by such dealer under the Act.
(2) No such deduction shall be made under sub-section (1), if the amounts payable by them are in respect of sales of any goods, in the course of inter-state trade or commerce or, in the course of export out of the territory of India or, import into the territory of India or, outside the State.
(3) The deduction under sub-section (1) shall be made by an authority on the basis of tax payable as calculated by the dealer.
(4) Where it is found that the tax payable as calculated by any dealer was less than the tax payable for the works contract executed by more than fifteen per cent and being so informed, the authority shall make deduction out of any amounts payable subsequent based on the certificate issued by the Assessing Authority of the area or the Assessing Authority of the dealer on an application to be made by the authority or dealer which shall be disposed of by the Assessing Authority within ten days from the date of its receipt, failing which deduction shall be made as calculated by the dealer till issue of certificate.
(5) The Authority making deduction under sub-section (1), shall send every month to the prescribed authority a statement in the prescribed form containing particulars of tax deducted during the preceding month and pay full amount of the tax so deducted by it within twenty days after the close of the preceding month in which such deductions were made and the amount so payable shall for the purposes of section 42 be deemed to be an amount due under this Act.
(6) Where default is made in complying with the provisions of sub-section (5), the prescribed authority may, after such enquiry as it deems fit and after giving opportunity to the concerned authority of being heard, determine to the best of its judgment, the amount of tax payable under this sub-section by such authority and the amount so determined shall be deemed to be the tax due under the Act for the purpose of Section 42.
(7) If default is committed in the payment of tax deducted beyond ten days after the expiry of the period specified under sub-section (5) , the authority making deductions under sub-section (1) shall pay, by way of interest, a sum equal to the interest specified under sub-section (1) of section 37 during the period in which such default is continued.
(8) The authority making deduction under sub-section (1), shall furnish to the dealer from whom such deduction is made, a certificate obtained from the prescribed authority containing such particulars as may be prescribed.
(9) Payment by way of deduction in accordance with sub-section (5), shall be without prejudice to any other mode of recovery of tax due under this Act from the dealer executing the works contract.
(10) Where tax in respect of the works contract is remitted under sub-section (5), the tax payable by the dealer for any period, in respect of such works contract shall be reduced by the amount of tax already remitted under the said sub-section.
(11) The burden of proving that the tax such works contract has already been remitted and of establishing the exact quantum of tax so remitted shall be on the dealer claiming the reduction of tax under sub-section (10).