No TDS on discount given to Stamp Vendors for purchasing stamps in bulk quantity

0 comments Tuesday, September 11, 2012
The assessee, an association of stamp vendors, bought stamps from the State Govt. at a discount. The department claimed that the stamp vendors were “agents” of the State Govt. and that the said discount was “commission or brokerage” and the State Govt. ought to deduct TDS u/s 194H. The assessee filed a Writ Petition to challenge the department’s action. The Gujarat High Court upheld the assessee’s plea that (a) title in the stamps passed to the vendors and that they were not “agents” of the State Govt. but were transacting on a “principal to principal” basis and (b) the discount available to the stamp vendors was not “commission or brokerage” so as to fall within s. 194H. On appeal by the department to the Supreme Court, HELD dismissing the appeal:
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Lower/Nil rate of tax deduction certificate for works contractors under Punjab VAT Act, 2005

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It is ussualy seen that works contractors registered under Punjab VAT Act, 2005 have always refund to claim from the Excise & Taxation department due to the fact that their final tax liability is much lower/Nil than the tax deductions made u/s 27 of Punjab VAT Act, 2005. It results in blocking of their working capital till the time they get refund from the Department.The solution to it is to resort to section 27(10) of Punjab VAT Act, 2005.

The relevant provisions of PVAT Act 2005 and certain relevant judgements have been discussed herebelow in this regard
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