Persys Punj Lloyd Joint Venture v. Commissioner of Vat

order that the refund of the tax deducted at source shall be discussed in the assessment order to be passed under Section 23(3) and the refund shall be considered separately in the reassessment order to be passed under Section 24, subject to verification of Forms-VI and IX WP(C) Nos.8620/2009, 10287/2009, 10311/2009 & 10312/2009 filed by the sub-contractorand the petitionerrespectively. On the same day, i.e., 08.06.2006areassessmentorderwas passedfor the taxperiod I3.O1I2OO4 to 31.03.2004relevantto the taxyear2003-04underSection24 oftheDSTAct read with Section 16 ofthe WC Act. It would be neccssaiyto reproducethe entire reassessmentorder in order to appreciate the controversy in proper perspectiveand also in orderto appreciatethe rival stands. The reassessment order is reproduced below: - ''FORMOF ORDER OF ASSESSMENTUNDER SECTION16 OF THE DELHI SALES TAX ON WORK CONTRACT 1999 READ WITH24 OF THEDELHISALESTAXACT, 1975 ' WARD-62

¶1Name & Address of the dealer: M/s Persys Punj Lloyd Joint Venture 1/4 Sunder Vihar, New Delhi-87

¶2Nature ofbusiness: Construction

¶3Registration certificate No. WC/62/213000534/ 1003

¶4Period ofAssessment 2003-04 (13-1-2004 to 31-3-2004)

¶5Section & Sub-section under which assessment made ASSESSMENT ORDER WP(C) Nos.8620/2009, 10287/2009, 10311/2009 & 10312/2009 In responseto noticeST-15readwith WCCAct, 1999 issuedfor

4.07.2005. ShriRajneeshGoel, AdvocatewithPOA appearedon

8.8.2005andfinally on 8.5.2006. Filed sale summary, written submissions dated 13.9.2005 challenging reassessment dated 8.5.2006,- affidavit dated

31.03.2006,photocopies<ofreturns, 4Forms VI (receivedfrom two ofits sub contractors),chartreflectingamountreceiptfrom DMRC (distributedamongsubcontractors)with TDS, WCT and other details). Two Form-IX26(6)proceedingshave been taken separately. DealersubmittedNo. books ofaccountsare maintained. Only FormIXandForm VI &returnsis the basis ofassessment. The receiptofpaymentwhich arefurther distributedamong two of his associatessub contractors, who have issued Form VIfor executingworks contractsand has thus claimedrefundofTDS-Sincedealerhas not executedanyjob workand is claimed100% exemptionsonlyon accountofsub contract Filedaffidavitdated

31.03.2006stating the assessee dealer named asjoint venture consists of two equal constituents(1) Persys Sdn Bhd and (2) Punj Lloyd Ltd. —Both of which are separate companies registeredunder DST WC Act, 1999. The Joint Venturesimply acts as a conduit between both the constituents and DMRC Ltd. and does not execute any work on its own. The taxable turnover in the hands ofjoint venture is Nil Further DMRC had deducted ^5,07,203/-asper Form IXissuedby DMRCfrom the payment made to joint venture, which becomes refundable. Further submitted tax has been deducted at source by DMRC Ltd. from all payments including all types of advance payments made by it to the assessee and deposited in Govt. Revenue. The assessing authority is bound to allow credit for the same in'that financial year itself. The due tax shall be deposited by the subcontractors after, claiming exemptions a-provided in the Act. To safeguard govt. revenue as per Act no TDS has been deducted from sub contractors. WP(C) Nos.8620/2009, 10287/2009, 10311/2009 & 10312/2009 No books-ofaccountsare maintainedby dealeronlyFormIX& Form VI &returns is basis ofassessmentand refundbooks of accounts are maintainedas submittedby dealer only Form IX andTDS deductedby DMRCanddepositedin Govt. revenueon behalfofjointventure. Detailedletterto DMRCdated31.3.2006 for verificationissuedwith copy ofthe dealerandcreditshallthe allowedthereafteraccordingly. The verificationletterispartof assessment. Dealerfurther submittedthat no benefit of TDS advances has been availedby its sub-contractorwhile adjustingadvances in the bills raised for execution of works contract. Tax on total turnoverhas been calculatedtax has been depositedon turnover after claiming exemptions. Asper Actdealer has not collectedTDSfrom its sub-contractors in this regard, filed written submission date

31.03.2006. Difference in f, 2"^ & 4^^ quarter returns submitted were defectedat the time offinalization ofaccount whereas dealer h.as not maintained, separate books of accounts for joint venture. For late and wrongfiling ofreturns and TDS not deductedfrom sub-contractor the submissionof dealer are not accepted and a penalty of Tl0,000/- is imposed. GTO 29,32,34,912 Subcontract 29,32,34,912 Tax assessed Nil Tax deposited Subject ofverification Penalty 10,000 The dealer is directed to deposit ^10,000/- as per demand notice enclosed. Assessing Authority W-62"

¶8This order does not bear any date but it was clarified in the course of the hearing that it was passed on 08.06.2006. The reassessment order refers to the WP(C) Nos.8620/2009, 10287/2009, 10311/2009 & 10312/2009 fact that DMRC had deducted ?85,07,203/- as per Form IX issued by it to the petitionerfrom the paymentmade it and that the amountbecamerefundableto thepetitioner. There is furtherreferenceto the fact thatthe taxableturnoverin the hands of the joint venture is nil. The reassessmentorder further refers to a detailed letter dated 31.03.2006 sent to DMRC for verification and that the said letter was part of the assessment. In addition,the reassessmentorder notes the fact that the petitioner did not deduct tax when the amounts were paid to the sub-contractors i.e. the two member-companies and accordingly was liable to pay a penalty of ?10,000/-. Ultimatelyno tax demandwas raised againstthe petitionerin the reassessmentbecausethe amount of ^29,32,34,912/-received from the DMRC was paid to the sub-contractors fully. Thus except for reiterating the petitioner's claim for refund and stating that it would be granted after verification and imposing a penalty of ? 10,000/- for not deducting tax on the amounts paid by the petitioner to the member-companies, no taxable turnover has been determined to have escaped assessment. In other words, in the reassessment order also there was no tax demand.

¶9In respect of the tax year 2004-05, an order of assessment was passed on

31.03.2006 under Section 23(3) of the DST Act read with Section 16 of the WC Act. This assessment order is substantially in the same language and tenor as the reassessment order by the assessing authority on 08.06.2006 for the assessment year 2003-04. The only difference is that in the assessment year 2004-05, DMRC had paid ?12,54,17,546/- to the petitioner which was fully transferred (by the petitioner) to the member-companies. DMRC had deducted tax of ?2,20,60,306/- as per Form-IX issued by it. Accordingly in' the assessment order dated

31.03.2006, a refund of the entire amount of tax WP(C) Nos.8620/2009, 10287/2009, 10311/2009 & 10312/2009 Page 15 of33 vv\ deducted by DMRC was determined as payable to the petitioner subject to verification. For this year too a letter dated 31.03.2006 appears to have been written to the DMRC for verification of the tax deposit. As in the assessment year 2003-04, a penalty of ?10,000/-was imposed on the petitioner for late and wrong filing of return and for not deducting tax firom the payments made to the member-companies. I

¶10There is another development to which we must refer to at this stage. On

11.05.2009, tlii-ee re-assessment orders were passed by the assessing authority: two orders for different tax periods relating to the same assessment year i.e. 2003-04 and one order relating to assessment year 2004-05. These orders of reassessment were made under Section 24 of the DST Act read with Section 16 ofthe WC Act. In these orders, the assessingauthoritymade demandsoftax, interest and penalty. These orders are the subject matter of separate challenge by the petitioner in the otherthree writ petitions,the ground of challengebeing that those orders were passedwithoutjurisdictionas there was no escapement of turnover and only with a view to nullify the refunds determined in the earlier orderspassedby the assessingauthority. Wewill deal with thosewritpetitions separatelywithout mixing them up with the present writ petition at this stage, though there is some overlappingof the contentionsbetweenthis writ petition and those three writ petitions in the sense that one of the contentions in the present writ petition is that the refunds determinedhave been wrongly soughtto be nullified by reassessment orders passed on 11.05.2009. 1|. Coming to the present writ petition, after the orders determiningthe refunds were passed by the assessing authority for both the assessmentyears, the petitioner applied for the refundsby separateapplicationsdated 23.06.2006. WP(C) Nos.8620/2009, 10287/2009, 10311/2009 & 10312/2009' \V> These applicationssought rectificationof the mistakeallegedlycommittedby the assessing authority while passing the orders determiningthe refund and mentioningthatthelettershavebeenissuedto DMRC for verificationofthe tax deducted at source by them from the payments made to the petitioner. The letters have been filed as ArmexureP-III to the w^rit petition. We considerit necessary to reproduce one of these letters: - ''Rajnish Goyal & Associates ADVOCATES & ATTORNEYS E-mail: The D. V.A.TO. Ward No. 62 New Delhi Resi.:22371556, 22376332 Mob.: 9811078700 I-1/16, Shanti Mohan House (Behind Shiv Mandir) Ansari Road, Darya Ganj New Delhi -110002. Dated: 23.06.2006 Sub: M/S PERSYS PUNJLLOYD JOINT VENTURE 'A, Sunder Vihar, Paschim Vihar, New Delhi - Rectification of Mistake in Re-Assessment under Delhi Sales Tax on Works Contract Actfor Asst. Year 2003-04 & Issuance of Refund r^egarding. Dear Sir, This is with reference to the reassessment for the Asst. Year 2003-04 completed in the case of the captioned assessee by your learned predecessor under the Delhi Sales Tax on Works Contract Act, 1999 (hereinafter referred to as the 'Act'). While completing the assessment, it has been mentioned in the Reassessment Order, that as per the Form IX issued by the Delhi Metro Rail Corporation ltd.

(DMRC) a total amount of ^5,07,203.00 has been deducted at source and also deposited by them in the Govt. Treasury on behalf of the assessee. Since the WP(C)Nos.8620/2009,10287/2009,10311/2009& 10312/2009 Page17of33 tax payable as per the reassessment order is Nil, the entire amount of ^5,07,203.00 is Refundable in the hands of the assessee. TheAssessingOfficerhas notgiven creditfor the taxes paid by the DMRCLtd., despiteFormIXhavingbeen issuedby it infavour of the assesseeand also copies of all the Challansin respect of the payments made in the Govt. Treasury being submittedat the time of completionof assessmentand already there on record. TheDepartment had issued letter to DMRCLtd. regarding verificationof thepaymentsmade by them. However, the DMRCLtd., afterverifyingfrom theiradvisors,has informed us that there was no needfor any separate certificateand the TDS Certificate in Form No.IX alongwith the copies of the challansalready issued in respectof the depositof taxes made were sufficient evidencefor the allowabilityof credit to the assessee. In view of the aforesaid, you honour is requested to pass requisite Ordersfor the Rectificationof mistake, allowing of credit of taxes deducted/paid & the Issuance of Refund of ^8,07,203.00 along with upto date interest on the same. Thanking you. Yoursfaithfully, (RAJNISH GOYAL) ADVOCATE Counsel for the assessee" r

¶12The above applicationfor rectificationdid not evoke any responsefrom therespondents,compellingthepetitionerto remindthem by a seriesof letters/ reminders dated

16.10.2006,

22.01.2007, 16-17.07.2007 and 23.08.2007. Eventually on 20.09.2007 the second respondent (VATO) wrote letters to the petitionersstating that there was no mistake apparent from the record which WP(C)Nos.8620/2009,10287/2009,I0311/2009.&10312/2009 Pagel8of33 required rectificationunder Section 48 of the DST Act in relation to the issuanceofrefundsfor the assessmentyears 2003-04and 2004-05. Even after receiptofthe aforesaidletters,the petitionerkeptwritingto the respondentsin the matterofissuingthe refiinds. It was repeatedthat the refundshad already been determinedin the assessmentorders subjectto verificationwith DMRC, thattheseorderswerepassedin the year2006,thatthe TDS certificatein Form-IX issuedby DMRC and the paymentwhichwas duly certifiedby the DMRC were also submittedby the petitionerand were part of the recordand that the verificationpartshouldnot takesuchalong and unreasonabletime and in these circumstancesit was prayedthatthe refundsmay be issuedas earlyas possible. Formalapplicationsfor refiindin the prescribedform (Form ST-21 prescribed by Rule 29) were also submittedon 13.01.2008seekingrefundof?85,07,203/- for the assessmentyear 2003-04 and ^2,20,60,306/-for the assessmentyear 2004-05. Despitethese applicationsand reminders,the assessingauthoritydid not refund the amounts. Instead of refunding the amounts, the assessing authority in fact started reassessment proceedings which culminated in reassessment orders being passed under Section 24 of the DST Act on

11.05.2009 raising demands of tax, interest and penalty which virtually nullified the refunds.

¶13The contention of the petitioner, predictably, is that the refunds have been determinedby the assessing authority under orders validly passed and there being no dispute regarding the authenticity/ genuineness of the certificate of TDS issuedby DMRC in Form-IXand there beingno furtherliabilityupon the petitioner to pay any tax under the WC Act in respect of the contractswith DMRC which were to be executed only by the member-companies of the WP(C)Nos.8620/2009,10287/2009,10311/2009& 10312/2009 Page19of33 petitionerand there beingno disputethat the petitionerwas merelyactingas a conduit for passing on the monies from DMRC to the Malaysianand Indian company which actually carry out the works, and there being no statutory impedimentin issuingthe refunds,the actionofthe respondentsin withholding the refunds for an unreasonablylong periodoftime withoutany justification whatsoeveris arbitrary,illegaland cannotbe countenancedat all. It was even suggestedin the course of the argumentson behalfof the petitionerthat the action of the respondentswas malafide in as much as they proceededto pass reassessmentorders on 11.05.2009raisinghuge demands of tax, interestand penaltymerelyto withholdrefundsallegedlydetermined. WPfC)Nos.10311/2009.10312/2009and 10287/2009

¶14The relevantfacts in connectionwiththesethreewritpetitionsmayjnow be stated. After the completionof the earlier assessments/re-assessmentsin respect of the AssessmentYears 2003-04 and 2004-05, a show cause notice was issuedto the petitioneron 1?"' April, 2009. The show cause notice was issuedinterms ofSection7(7) ofthe WC Act, whichprovidesas under:- "(7) If any person as is referred to in sub-section (1) of sub section (2) or sub-section (3)fails to make the deduction or, after deducting fails to deposit the amount so deducted as required by sub-section (4), the assessing authority may, after giving to such person an opportunity ofbeing heard, by order in writing, direct that such person shall pay, by way of penalty, a sum not exceeding twice the amount deductible under this section besides tax deductible but not so deducted and, if deducted, not so deposited into the Government treasury. " WP(C)Nos.8620/2009, 10287/2009,10311/2009& 10312/2009 ,

¶15The show cause noticeissued on 17.04.2009was for the allegedfailure ofthe petitionerto complywith the provisionsof Section7(3) ofthe WC Act; the petitionerwas asked to show cause as to why the penaltyfor such failure cannotbe imposedunderSection7(7).

16.. It would appear that the petitioner submitted a detailed reply dated

29.04.2009to the assessingauthority,pointingout that even as per the earlier assessment/re-assessmentorders, the petitionerhad submitted Form No. VI issued by the sub-contractorsand that in those forms, the sub-contractorsi.e. the member-companiesof the joint venture have certified that they have undertakenthe work from the petitionerand thatthe salestax on the turnoverin executing the contract was paid by them. It was pointed out that all the particularsrelatingto the total value ofthe works contractundertakenby the sub-contractors,the turnoverofsales,and the detailsofpaymentsoftax such as challannumber, date, relevantperiod etc. were furnishedin those forms which were part of the record. It was thus pointed out, inter alia, that there was no such failureon the part of thepetitioneras would attractthe penaltyprovisions of Section 7(7) and a prayer was accordinglymade that the proceedingsmay be dropped. It is not known as to what happened to those proceedings.

¶17However, on 27.04.2009 i.e. two days prior to the date on which the petitioner submitted its detailed reply to the show cause notice, the assessing authority issued notices under Section 24 of the DST Act read with Section 16 of the WC Act in Form ST-15 seeking to re-open the assessments for the Assessment Years 2003-04 and 2004-05. At the end of the notices, the assessing authority recorded the reason for re-opening the assessments. For WP(C) Nos.8620/2009, 10287/2009, 10311/2009 & 10312/2009 instance, in the notice of re-opening issued for the period 13.01.2004 to

31.03.2004,the followingreasonwas mentioned:- "Reason: the dealerwas requiredto deductTDS@2%from the paymentmade to sub-contractorbut the dealerfailed to do so. AccordingoyST-15 issuedfor re-assessmentofcase for the year 2003-04(13.01.2004-31.03.2004)"

¶18Similarreasons were recordedin the other two re-openingnotices,the only differencebeingthe taxperiod.In the noticewhichis the subjectmatterof challengein WP(C) No.10312/2009,the tax periodmentionedin the reason is

22.10.2003to 12.01.2004and in the notice ofre-openingwhich is the subject matter of challenge in WP(C) No.10287/20.09,the tax period mentioned is

13.01.2004to 31.03.2004relatingto the AssessmentYear2004-05. Exceptfor these differences, the notices are the same.

¶19On receivingthe notices,the petitionersought time of 15 days on the ground that the officer concernedwho was looking after the sales tax matters was out of station. Apparently, this request did not find favour with the respondents who passed ex pane re-assessment orders, referring to the petitioner's reply dated 29.04.2009 in response to the show cause notice issued under Section 7(7) of the WC Act.

¶20All the re-assessmentorderswere passedon the same day i.e. 11"^ May, 2009. We may reproduce as specimen, the re-assessment order in respect of the Assessment Year 2003-04 (13.01.2004-31.03.2004):- "Form oforder of assessment under Section 24 ofDST Act 1975 read with Section 16/7(7) and Section 7(8) of DST on work Contract Act, 1999. WP(C) Nos.8620/2009, 10287/2009, 10311/2009 & 10312/2009 Name ofthe dealer: M/sPersysPunjLloydJ.V Addressofthe dealer: V4 Sunder Vihar, Paschim Vikar, New Delhi-63 Nature ofBusiness: Construction Registration Certificate: WC/62/213000534/1003 AssessmentPeriod: 2003-04 (13.01.2004 to

31.03.2004) Re-Assessment Order The above named dealer is regd. Under WCT Act 1999 w.e.f 13.01.2003 and he was liable to deduct TDS from the paymentmade to M/s PersysSDMBHDandM/s PunjLloydLtd as per section 7(3) of DST on work contract Act, 1999. But he failed to deduct the TDS @2% on payment of ^242553806/- made to abovesuh-conti'actors.The dealerwas askedto explain the reason for sales tax on Contract Act, 1999 vide notice no. 13425-13426dated 17.04.2009. In this connection the reply receivedfrom the dealeron 29.04.2009is notfoundsatisfactory. Thereafter ST 15 was issued to dealer on 27.04.2009for

11.05.2009but no body has appeared on behalf of the dealer. Therefore, the Re-assessmentOrder isframed as under:- GTO/Receipts 'Tax/TDS@2% Penalty Interest Total Tax Due 242553806.00 4851076.00 9702152.00 5821291.00 20374519.00 The dealer is directed to deposit tax ^20374519/-. Copy to the dealer' Sd/- AA WARD WP(C)Nos.8620/2009, 10287/2009,10311/2009& 10312/2009 Page 23 of33

¶21The followingchart sets out the relevantdetails with regard to all the threewritpetitions,includingthe figures oftax, interestand penaltydemanded in the re-assessment orders:- Writ Petition

(C) No. Tax period/ Assessment Year Date of re assessment order Amount demanded

(1)

(2)

(3) 10311/09 - 2003-04 [13.01.2004 to

31.03.2004]

11.05.2009 Tax(?=) Interest (?) Penalty 48,51,076 58,21,291 97,02,152 10312/09 2003-04 [22.10.2003 to

12.01.2004]

11.05.2009 Tax(^) Interest (?) Penalty (?) 14,53,743 17,44,492 29,07,485 10287/09 2004-05 [13.01.2004 to

31.03.2004]

11.05.2009 Tax(?) Interest (?) Penalty (T) 2,30,82,150 2,40,78,864 5,01,64,300

¶22The prayer in all the three writ petitions is for quashing the re assessmentnotices dated 2?"' April, 2009 as well as the re-assessmentorders passed on ll"' May, 2009. The contentionof the petitionerin these writ petitions is mainly that there was no turnover that escaped assessment, which alone can confer jurisdiction upon the assessing authority to re-open the assessment. It is submitted that it would be apparent from the reassessment orders that no turnover had escaped assessment and that the only purpose of the re-assessment proceedings was to impose a demand of tax allegedly deductible at source u/s. 7(3) of the WC Aci in respect of the payments made by the petitioner to the member-companies, interest thereon and also penalty under Section 7(7) of the Act. It is further submitted that these demands have been WP(C) Nos.8620/2009, 10287/2009, 10311/2009 & 10312/2009 Page.24 of 33 raisedsolelywith the viewto scuttlingthe claimofthe petitionerto the refunds whichis the subjectmatterofWP(C)No.8620/2009.• '

¶23On behalfofthe respondents,a preliminaryobjectionwas taken to the effect that the orders of re-assessmentwhich are challengedin WP(C) Nos. 10311/2009,10312/2009and 10287/2009can be appealed against under the relevantprovisionsofDST Act read with Section 16 ofthe WC Act and since that alternativeremedywas availableto the petitioner,the writpetitionsshould be dismissedas not maintainable. So far as WP(C)No.8620/2009is concerned, the contentionof the respondentsis that no refiindscan be grantedsince there were huge demandsraisedagainstthe petitionerunderthe re-assessmentorders for the same period.

¶24The preliminaryobjectionof the respondentsthat writ petitionsagainst the re-assessmentorders passed on ll''^ May, 2009 are not maintainablesince those orders were appealableneed not detain us since it is well settled that wherethe actionofan executiveauthorityactingwithoutjurisdiction-islikelyto subjectapersonto dilatoryproceedingsand undueharassment,the High Courts will issue appropriatewrits to prevent such consequences. The following observations of the Supreme Court in the case of Calcutta Discount Co. Ltd. V5. Income Tax Officer and Am. reported in (1961) 41ITR 191 are relevant: - ''Mr. Sastri next pointed out that at the stage when the Income Tax Officer issued the notices he was not acting judicially or quasi-judicially and so a writ of certiorari or prohibition cannot issue. It is well settled howsoever that though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting WP(C) Nos.8620/2009, 10287/2009, 10311/2009 & 10312/2009 \l^ withoutjurisdictionsubjects or is likely to subjecta person to lengthy proceedings and unnecessary harassment, the High \ Courts, it is well settled, will issue appropriate orders or directionstopreventsuchconsequences. Mr. Sastrimentionedmore than once thefact that the company would have sufficient opportunity to raise this question, viz. whetherthe Income Tax Officerhadreason to believethat under assessmenthad resultedfrom non-disclosureof materialfacts, before the Income Tax Officer himself in the assessment proceedings and, if unsuccessful there, before the Appellate Officer or the Appellate Tribunal or in the High Court under Section66(2)oftheIndianIncomeTaxAct. The existenceofsuch alternativeremedy is not howeveralwaysa sufficientreasonfor refusingaparty quick reliefby a writ or orderprohibitingan authorityactingwithoutjurisdictionfrom continuingsuchaction. In the present case the company contends that the conditions precedentfor the assumption of jurisdictionunder section 34 were not satisfied and came to the court at the earliest opportunity. There is nothingin its conductwhich wouldjustify the refusal of proper relief under Article 226. When the Constitutionconferson the High Courtsthepowerto give reliefit becomesthe duty ofthe courts to give such reliefinfit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons. In the present case we can find no reasonfor whichreliefshould be refused."

¶25In State ofHimachal Pradesh & Ors. v. Gujarat Ambuja Cement Ltd.,

(2005) 6 see 499, the following principles were recognised: -

(a) The issue of existence of alternative remedy is a rule of self-imposed limitation; it is essentially a rule ofpolicy, convenience and. discretion, but never a rule of law.

(b) The High Court should ensure that the petitioner has made out a strong case to invoke the extraordinary jurisdiction despite the existence ofalternative remedies. WP(C)Nos.8620/2009, 10287/2009,10311/2009& 10312/2009 Page26of33

(c) Where there has been a serious breach oftheprinciples of natural justice or procedure, where the order or the proceedings are wholly without jurisdiction, where the ' vires ofa statute is challenged or where there has been an abuse of the process of law, the High Court may exercise its discretion topermit thepetitioner to invoke article 226. In Ram and Shyam Company v. Slate of Haryana,

(1985) 3 SCC 267, it was opined that if the alternative remedy is an appeal from "Caesar to Caesar's wife" the existence of such a remedy would be a mirage and an exercise in futility. In Godrej Sara Lee Limited V5. AssLCommissioner and Anr. (2009) 14 SCC 338 the Supreme Court observed as under: - the question as to whether the said Notification could have a retrospective ejfect or retro-active operation being a jurisdictional fact, should have been determined by the High Court in exercise of its writ jurisdiction under Article 226 of the Constitution ofIndia as it is well known that when an order of a statutory authority is questioned on the ground that the same suffers from lack ofjurisdiction, alternative remedy may not be a bar. (See: Whirlpool Corporation v. Registrar Trade Marks and Mumtaz Post Graduate Decgree College v^'. Vice Chancellor).'' In the light of the above observationsof the Supreme Court, we overrulethe preliminaryobjectionofthe respondents. Inthe case on hand, apartfrom being appeals from "Caesarto Caesar",the petitionerwould be likelyto be asked to make pre-depositofthe disputedtax, interestand penaltyu/s. 43(5) ofthe DST Act. This is likely to affect the finances of the petitioner prejudicially, particularly when the grievance is that the orders complained of lack WP(C)Nos.8620/2009,10287/2009,10311/2009&10312/2009 Page27 of33 jurisdiction,ex-facie. In such a scenario,the appeal remedy cannot be said to ! be an efficacious one.

¶26The contentions of the petitioner in WP(C) No.8620/2009 oh the one hand and the other three writ petitionson the other, necessarilytelescopeinto each other becausethough refunds were determinedby the respondents,they did not bother to get the response from the DMRC for the letter of verification sent by them and furthermore,proceededto pass re-assessmentorders raising huge demands against the petitioner which neutralised the refund claims. The validityof the action of the respondentsboth in not issuingthe refund orders withina reasonabletime after the passingof the orders determiningthe refund and in framing re-assessment orders to nullify the refund are to be viewed together and in an integrated manner. They cannot be divorced from each other. We would therefore prefer to first examine the validity of the re assessment proceedings initiated under Section 24 of the DST Act.

¶27By virtue of Section 16 of the WC Act, several provisions of the DST Act are incorporated by reference into the WC Act. The provisions of the DST Act relating to the assessment, re-assessment, refund, and appeals are some of them. Re-assessment proceedings are dealt with under Section 24 of the DST Act which runs as under "24. Turnover escaping assessment —1. Where after a dealer has been assessed under Section 23 for any year or part thereof the Commissioner has reason to believe that the whole or any part of the turnover of a dealer in respect of any period has escaped assessment to tax or has been under-assessedor has been assessed at a rate lower than the rate at which it is assessable, or any deduction has been wrongly made therefrom, the Commissioner may - WP(C)Nos.8620/2009,10287/2009,10311/2009& 10312/2009 Page 28 of33

(a) withinsixyearsfrom the date offinal orderofassessment,in a case where the dealer has concealed, omitted or failed to disclosefully theparticularsofsuch turnover;and

(b) withinfouryearsfrom the date offinalorderofassessment,in any other case, serve a notice on the dealerandaftergiving the dealer,an opportunityof being heard and making such inquiryashe considersnecessary,proceedto determineto the best judgment, the amount of tax due from the dealer in respectofsuch turnover, and the provisionsofthis Act shall, sofar as may be, apply accordingly. "

¶28In order that proceedings can be taken under Section 24, the first conditionis that the Commissionershouldhave reasonto believethatthewhole or any part ofthe turnoverofthe dealerhas escapedassessmentto tax or has been under-assessedor has been assessedat a rate lower than the appropriate rateor any deductionwas wronglymade from the turnover.

¶29In the reason mentionedat the bottom of Form ST-15 which is the notice of re-assessment,what has been statedby the respondentsis that thepetitioner was requiredto deducttax at the rate of2% from the paymentsmadeto the sub contractors,butfailedto do so. The questionis whetherthis can hold good as the reason to believe that taxable turnover had escaped assessment. It must be rememberedthat the petitionerdoes not effectany sales to its sub-contractors; all it does - and this fact has also been accepted by the respondents - is to pass on the monies received from DMRC to the sub-contractors, acting as a conduits The question of turnover in the hands of petitioner Would arise only if it indulgesin sale of goods. The petitionermerelytransfersthe monies received from DMRC to the member-companies. WP(C)Nos.8620/2009,10287/2009,10311/2009&10312/2009 Page29 of33

¶30Section2(t) of the WC Act defines "turnoverof sale" as meaning "the aggregateof the amount of sale price receivedor receivable by a dealer in respectof any transferofpropertyin goods involvedin the executionof any works contract whetherexecutedfully orpartly during any.period". Sincethe expression"turnoverof sale" is definedin the WC Act, it is notpermissibleto look at the definition of "turnover" in Section 2(o) of the DST Act, because Section16(1) of the WC Act does not incorporatethe definitionsectionsof the DST Act into the WC Act. It is not in dispute that the petitioner, who is a dealerregisteredunder the WC Act has not receivedany amount of sale price from the sub-contractors in respect of any transfer of property in goods involved in the execution of any works contract, whether executed fully or partlyduringany period. On the contrary,the petitionerhas transferredorpaid monies to the sub-contractors. It did not deduct tax under Section 7(3) of the WC Act at the rate of 2% of the paymentbecausethe payment was not "/or the transferofproperty ingoods (whetheras goodsor insome otherform) involved in the execution, whether whollyor inpart ". The payment was merely by way of passing the monies received from DMRC to the sub-contractors. Moreover, the petitioner had obtained Form VI from the sub-contractorsin terms of Rule 5(1)(b) of the Delhi Sales Tax on Works Contract Rules, 1999 and these forms were submitted to the respondents when the petitioner's assessments were made. It was in these circumstances and by virtue of the relevant statutory provisions that the petitioner did not deduct tax.

¶31It is a highly debatable question whether the failure to deduct tax by the petitioner in accordance with Section 7(3) of the WC Act can amount to "turnover of sale" escaping assessm.ent. Tax deducted at source is only a mode WP(C)Nos.8620/2009, 10287/2009,10311/2009 & 10312/2009 ofcollectingthe tax payableby the recipientofthe money; the deductorofthe tax acts as the agentofthe Revenue. Thereis, therefore,no basisto reopenthe assessmenton the ground ofthe wliole or part ofthe turnoverhaving escaped assessment. The reasongiven for reopeningthe assessmentdoes not establish any escapementofturnover. It only refers to the allegedfailure on the part of the petitionerto deduct tax from the payments made to the sub-contractors. Even assumingfor the sake of argumentthat there was such a failure, it does not amount to turnover escaping assessmentin the petitioner'shands. The reassessmentnotices appearto us to have been issuedwithoutany application of mind and without having regard to any of the statutoryprovisions. This becomes more pronouncedif one looks at the cryptic manner in which the reassessmentordershave been framed. Moreover,eventhe penaltywhich is to be imposed, if at all, is under Section7(7) ofthe WC Act and that too after providingreasonableopportunityto the petitionerofbeing heard as envisaged underthatsection,but strangelyithas beenimposedinthe reassessmentorders. No reasonableopportunitywas givento the petitionerofbeingheardnor was a separateorderimposingthe penaltypassed. The petitionerfiled the returnsfor the assessmentyears 2003-04 and 2004-05 and had also fornished Form-VI with all the relevant particulars showing the payment of tax by the sub-^ contractors. It seems to us that the respondentNo.2 (VATO) chose to adopt a rather unusual procedure - to say the least-by imposing penalty in the reassessment order itself without bothering to go through the procedure envisagedby Section7(7) ofthe Act, assumingthat penaltyproceedingscould be lawfullyinitiatedagainstthepetitionerunderthat section. WP(C)Nos.8620/2009,10287/2009,10311/2009&10312/2009 Page31of33

¶32The reassessment orders passed on 11.5.2009 for both the assessment years are, therefore, without jurisdiction. The notices as well as the reassessment orders are accordingly quashed.

¶33The contention of the petitioner in WP(C) No.8620/2009 merits acceptance. Refunds were determinedby orders passed by the respondents under Section 23(3) and/or Section24 of the DST Act read with Section 16 of the WCAct for both the years. In these orders,the refunds due to the petitioner were determined and quantijSed. The petitioner had furnished the relevant forms which enable it to claim the reftind of the tax deducted by DMRC. This is not controverted. It is also a matter of record that letters dated 31.3.2006 were sent by the respondentsto DMRC for verificationof the claim of the petitioner. It is not loiownwhethertherewas any responsefrom DMRC. It is, however,the case of the petitionerthat no such verificationwas requiredat all since the Forms-IX were submitted to the respondents in the assessment proceedings. This is not deniedby the respondents. There is nothingon record to show that DMRC denied having issued the Forms No.IX to the petitioner certifying to the deduction of tax at source. The respondents have not also found any irregularities or fault with the Forms No.VI filed by the petitioner, being declarations of the sub-contractors that they have paid the tax. The refund claims had also been made in the prescribed form by the petitioner on

13.1.2008. Despite all this and without finding any fault in the certificates or pointing out any lack of compliance on the part of the petitioner, the respondents have refused to grant the refund, for the only apparent reason that verification has to be done from DMRC. That verification has been pending since March, 2006 when letters were purportedly written by the respondents to WP(C) Nos.8620/2009, 10287/2009, 10311/2009 & 10312/2009 DMRC. Such circumstances, coupled with the fact that in May, 2009 steps were taken to reopen the assessments of the petitioner to raise demands of not only tax and interest but also of penalty, and that too without affording any hearing to the petitioner, make it clear that the conduct of the respondents in withholding the refund was unwarranted and contrary to law. A writ of mandamus is accordingly issued in terms of prayer (i). The refunds have been withheld for several years without any justification. The respondents are, therefore, directed to issue the refunds forthwith, and at any rate within four weeks from today with interest as applicable under the relevant provisions of the WC Act read with DST Act.

¶34In view of the foregoing discussion, all the writ petitions are allowed. The respondents to pay costs to the petitioner which we assess at ^40,000/- . ^ (R.V. EASWAR) JUDGE FEBRUARY 12,2013 hs/shaloo/Bisht (S. RAVINDRA BHAT) JUDGE WP(C)Nos.8620/2009, 10287/2009,10311/2009& 10312/2009 Page 33 of33

IN THE HIGH COURT OF DELHI AT NEW DELHI Reservedon: 13''^December,2012 % Date ofDecision:12"^February,2013 V + W.P.(C) 8620/2009, C.M. APPL. 5744/2009 + W.P.(C) 10287/2009 + W.P.(C) 10311/2009 + W.P.(C) 10312/2009 M/S PERSYS PUNJ LLOYD JOINT VENTURE ..... Petitioner Through: Mr. Randhir Chawla and Ms. Renu Sahgal, Advocates.' versus COMMISSIONER OF VAT & ORS. Respondent Tlirough: Mr. Vineet Bhatia, Advocate. CORAM: MR. JUSTICE S. RAVINDRA BHAT MR. JUSTICE R.V. EASWAR R.V. EASWAR, J.: 1. Theseare four writpetitionsfiledunderarticle226 ofthe Constitutionof India by M/s. Persys Punj Lloyd Joint Venture of New Delhi, hereinafter referredto as 'the petitioner'. They arise from orders passedunder the Delhi SalesTax on WorksContractsAct, 1999 ('WCAct')readwithDelhi SalesAct, 1975 ('DSTAct'). Sinceall the petitionswereheardtogetherandthreeofthem also involvecommonissues,they are disposedofby asingleorderfor the sake of convenience. WP(C)Nos.8620'/2009,10287/2009,10311/2009&10312/2009 Page1of33 Signed By:RAM DATT Certify that the digital and physical file have been compared and the digital data is as per the physical file and no page is missing. W.P. (C) No.8620/2009 2. This writ petition has been filed in the following circumstances. The petitioner is a joint venture consisting of two companies-Persys SDN BHD, a company incorporated, in Malaysia and having a local project office in Delhi and Punj Lloyd Ltd., a company incorporated in India under the Companies Act, 1956. Both these companies are registered with the sales tax department of the Government of NCT of Delhi separately under the WC Act and the DST Act. The Malaysian company and the Indian company were separately awarded contracts by the Delhi Metro Rail Corporation (DMRC) for execution of certain works. The Malaysian company was awarded the contract for reinforced and pre-stressing steel, pre-cast concrete work for the superstructure and the Indian company was to execute the work in connection with the survey, temporary barricades, pile foundations, etc. Under a memorandum of understanding executed on 10.10.2003 these two companies came together as a joint venture. Under the MOU, each member of the joint venture had to raise its own independentbill for the work executedand the paymentwas to be receivedby thejointventurefrom DMRC to be distributedby thejointventurebetweenits two membersin terms oftheir separatebills. The petitioner,whichis the joint venture,was also registeredas adealerunderthe WC Actw. e. f. 13.01.2013. 3. On 21.03.2005,an assessmentwas completedupon the petitionerunder Section 16 of the WC Act reatd with Section 23(3) of the DST Act. The assessmentorder is brief and it would be better to reproducethe same: - "FORM OF ORDER OF ASSESSMENTUNDER SECTION16 OF THE DELHI SALES TAX ON WORK CONTRACT, 1999 READ WITH23(3) OF THEDELHISALESTAXACT, 1975 WP(C)Nos.8620/2009,10287/2009,103I1/2009&10312/2009 Page2of33 WARD-62 1. Name & Address of the dealer: M/s Persys Punj Lloyd Joint Venture 1/4 Sunder Vihar, New Delhi-87 2. Nature ofbusiness: Construction 3. Registration certificate No. JVC/62/213000534/ 1003 4. P eriod ofAssessment 2003-04 5. Section & Sub-section under which assessment made 16 r/w 23(3) assessment ORDF.n The L&Vhas beenfixedw.e.f. 22.10.73. The dealerdeals in the above business. Returns have beenfiled in time exceptfor f' and 4' qrs hencepenaltyof riOOO/- is imposed Salefigures differ and the same is allowed. In •response to notice, Shri Rajneesh Goyal CA with POA appearedbefore me andfiled tradingaccount, sales summary, affidavit, audited balance sheet and details ofpayment. The dealer has filed 2 TDS certificate and the credit of the tax depositedis givenafterverification.Nothingadverseon record. The assessment isframed as under: GTO Labour & Service Sub-contract Taxable 4% Taxable 8% 293234912 293234912 Tax assd Tax/TDSpaid Tax due Interest Penalty 8697203 8507203 1000 \(f^ WP(C)Nos.8620/2009,10287/2009,10311/2009& 10312/2009 Page 3 of33 4. Taxpaidpr