The West Bengal Sales Tax Act, 1994
Chapter V : RETURN AND PAYMENT OF TAX, INTEREST, PENALTY AND DEDUCTION OF AMOUNT AT SOURCE TOWARDS PAYMENT OF TAX ETC.

38. Deduction at source from payment to a dealer against execution of works contract

(1) Notwithstanding anything contained in section 30 or any rules made thereunder or any terms of a contract to the contrary, any person responsible for paying any sum to any dealer for execution of a works contract referred to in section 15 wholly or partly in pursuance of a contract between such dealer and-

(a) Government,

(b) a local authority,

(d) a company incorporated under the Companies Act, 1956, (1 of 1956), including a Government Undertaking,

(e) a co-operative society registered or deemed to be registered under the West Bengal Co-operative Societies Act, 1983, (West Ben. Act XLV of 1983),

(f) an educational institution, or

(g) a promoter ;

shall, at the time of payment of such sum in cash or by issue of a cheque or draft or any other mode of payment, deduct an amount towards tax equal to two per centum of such sum being paid in respect of such works contract :

PROVIDED that no deduction under this sub-section (1) shall be made where -

(i) the payment is made as advance prior to the commencement of the execution of such works contract ;

(ii) no transfer of property in goods (whether as goods or in some other form) is involved in the execution of such works contract ; or

(iii) where the dealer produces a certificate from the Commissioner under section 94 that he has no liability to pay tax under section 15 or that he has paid tax payable by, or due from, him under that section :

PROVIDED FURTHER that no deduction under this sub-section shall be made in respect of that part of payment to a dealer which represents his contractual transfer price of the goods as referred to in clause (a) of sub-section (1) of section 21 where such dealer declares in writing to that effect claiming exemption from tax.

EXPLANATION.- For the purposes of this sub-section "promoter" means a person who constructs, reconstructs, converts, renovates or extends or causes to be constructed, reconstructed, converted, renovated or extended, a building (including a flat or apartment or a block of flats or apartments or a resort) on a plot of land for the purpose of transfer of such building by sale or otherwise to any other person or to a company, firm, co-operative society or any association of persons, and includes-

(i) his assignee, if any,

(ii) the person who develops or reclaims the land, the person who constructs, reconstructs, converts, renovates or extends, and the person who transfers, such building, if such persons are different,

(iii) a society registered under the West Bengal Societies Registration Act, 1962 (West Bengal Act 36 of 1961), or

(iv) any firm, board or other association of persons, established by or under any law for the time being in force,

but excluding those referred to in clause (a) to (f) of this sub-section.

(2) Where deduction of an amount is made under sub-section (1),-

(a) the person making such deduction shall deposit the amount so deducted into a Government Treasury or Reserve Bank of India within such time, in such manner and in such form or challan as may be prescribed, or

(b) in the case of a person who adopts "public works system of accounting" and makes such deduction, he shall transfer the amount so deducted to the appropriate head of account through account statement in the manner prescribed, which is required to be sent periodically to the Accountant General, West Bengal, and such transfer shall be deemed to be a deposit of the amount so deducted by the person making such deduction on the basis of such statement.

(3) After the deposit of the amount under sub-section (2), the person who makes the deduction and deposit shall, within fifteen days from the date of such deposit, issue to the dealer a certificate in the prescribed form for each deduction separately and send a copy of receipted challan or a copy of the account statement referred to in sub-section (2), as the case may be, to the Commissioner along with the relevant certificate of deduction and such document as may be prescribed.

(4) On receipt of a certificate of deduction referred to in sub-section (3), the deposit of an amount on account of a dealer referred to in sub-section (2) shall be adjusted by the Commissioner towards tax liability of the dealer under section 21, and shall constitute a good and sufficient discharge of the liability of the person deducting such amount to the dealer to the extent of the amount deducted and deposited.

(5) Where any person, while paying any sum to a dealer, contravenes the provisions of sub-section (1), sub-section (2) or sub-section (3), he shall be personally liable for such contravention, and the Commissioner may, after giving him an opportunity of being heard, by order in writing and in such manner as may be prescribed, impose on such person a penalty, not exceeding twice the amount required to be deducted and deposited by him into the Government Treasury or the Reserve Bank of India.

(6) Where the dealer from whose account any amount has been deducted under sub-section (1) and deposited under sub-section (2) proves to the satisfaction of the Commissioner that he is not liable to pay tax under section 15 and such amount was not wholly or partly payable by him under this Act, the Commissioner shall refund or adjust the amount refundable to the dealer in such manner as may be prescribed.