(1) (a) Every person other than an individual, a Hindu Undivided Family, a firm or a company not under the control of the Government, responsible for making any payment or discharging any liability on account of any amount purporting to be the full or part payment of sale price or consideration for the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract shall, at the time of credit to the account of or payment to the dealer (hereinafter referred to as "contractor") of such amount in cash, by cheque, by adjustment or in any other manner, whatsoever, deduct in the prescribed manner, an amount calculated on the taxable turnover of such works contract at the rate as specified in the Fifth Schedule.

(b) (i) Where on an application being made by any contractor in this behalf, the Prescribed Authority is satisfied that any works contract under reference is separable and involves both transfer of property in goods and labour and services, or involves only labour and services and accordingly, justifies deduction of tax on a part of the sum payable in respect of any works contract or, as the case may be, justifies no deduction of tax at all, he shall, after giving the contractor a reasonable opportunity of being heard, grant him such certificate as may be appropriate:

Provided that the Prescribed Authority may reject such application, or on his own motion, cancel or modify such certificate, after giving the contractor a reasonable opportunity of being heard:

Provided further that, nothing in the said certificate shall affect the tax liability of the contractor.

(ii) Where such certificate is produced by the contractor, before the person responsible for payment, such person shall, unless the certificate is cancelled or modified by the Prescribed Authority, make deduction of tax in accordance with the said certificate. In the event of such certificate being cancelled or modified as provided, such person shall make the deductions accordingly.

(c) Any person mentioned in clause (a) of this sub-section entering into any contract with any contractor for transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract shall furnish within fifteen days from the date of signing of the contract such information as may be prescribed to the Prescribed Authority under whose jurisdiction the contractor's place of business is situated. Failure to do so shall entail a penalty not exceeding five hundred rupees per day of default after affording such person a reasonable opportunity of being heard.

(2) Every person other than an individual, a Hindu Undivided Family, a firm or a company not under the control of the Government responsible for making any payment or discharging any liability on account of any amount purporting to be the full or part payment of sale price or consideration for the transfer of the right to use any goods for any purpose, at the time of credit to the account of or payment to the payee of such amount in cash, by cheque, by adjustment or in any other manner, shall deduct an amount calculated at the rate specified in the Fifth Schedule from such sum towards full satisfaction of the tax payable under this Act on account of total sale price for the transfer of the right to use such goods.

(3) Every person responsible for paying sale price or consideration or any amount purporting to be the full or part payment of sale price or consideration in respect of any sale or supply of goods liable to tax under this Act to the Government or corporation, board, authority, undertaking or any other body by whatever name called, owned, financed or controlled wholly or substantially by the Government, at the time of credit to the account of or payment to the payee of such amount in cash, by cheque, by adjustment or in any other manner, whatsoever, shall deduct an amount calculated at the rate as may be specified in the Schedule from such sum towards full satisfaction of the tax payable under this Act on account of total sale price of such sale or supply.

(4) Notwithstanding anything contained in any other Law for the time being in force, every person mentioned in sub-section (1), sub-section (2) and sub-section (3) responsible for paying sale price in respect of any works contract or lease or sale or supply of goods shall not enter into such transaction unless the contractor, lessor or seller or supplier, as the case may be, produces an authenticated copy of the certificate of registration under this Act or furnishes an undertaking for getting himself registered and any such contractor, lessor or seller or supplier who is not so registered under this Act shall not be paid by the said responsible person any amount in respect of the sale or supply, before he gets himself registered under this Act and submits an authenticated copy of the certificate of registration.

(5) Every person referred to in sub-section (1), sub-section (2) and sub-section (3) responsible for paying sale price, shall within the prescribed time apply to the Prescribed Authority for allotment of a sales tax deduction account number. The number shall be quoted in such documents, statements and returns as may be prescribed.

(6) Any tax deducted under this section shall be paid into the Government account within such time and in such manner accompanied with such documents and statements of account as may be prescribed.

(7) The person making any deduction of tax under this section and paying it into the Government account shall issue to the payee a certificate of tax deduction and payment in such form and manner and within such time as may be prescribed.

(8) Any deduction made in accordance with the provisions of this section and credited into the Government account, shall be treated as payment of tax on behalf of the person from whose bills and invoices, the deduction has been made and credit shall be given to him for the amount so deducted on the production of the certificate prescribed in this regard, towards the amount of tax finally assessed or determined as being payable by the concerned person in the assessment for the relevant assessment year and any amount deducted in excess of the tax so assessed or determined shall be refundable in accordance with the provisions of this Act.

(9) The person responsible for deduction of tax shall within the prescribed time after the end of each year, file a return in the prescribed form to the Prescribed Authority.

(10) No interest or penalty shall be imposed or no recovery proceedings against the dealer or payee shall be initiated in respect of deduction of tax under this section.

(11) Where the amount has not been deposited after deduction, such amount and any other sum which may be payable under this section shall be a charge upon all the assets of the person concerned who made the deduction or who is liable to pay any other amount and shall be recoverable from him as arrears of land revenue:

Provided that no recovery proceedings shall be drawn up by the Prescribed Authority having jurisdiction over the person concerned without prior approval of the Commissioner.

(12) If any person as referred to in sub-section (1), sub-section (2) or sub-section (3) fails to make the deduction or after making the deduction fails to deposit the amount so deducted into the Government account, the Prescribed Authority may, after giving such person a reasonable opportunity of being heard, by an 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 account.

(13) Without prejudice to the provision of sub-section (12), if any person fails to make the deduction or after deducting fails to deposit the amount so deducted, he shall be liable to pay simple interest at the rate of one and half percent per month on the amount deductible under this section but not so deducted and, if deducted not so deposited, from the date on which such amount was deductible to the date on which such amount is actually deposited into the Government account.

(14) The commissioner may, with the prior approval of the State Government and by notification in the Official Gazette, direct any person or class of persons, other than the persons already specified in sub-section (1), (2) and (3), responsible for making any payment towards transactions covered by sub-sections (1), (2) or (3), to deduct tax at the rates specified in such sub-sections.

All other provisions of section 47 and rules framed thereunder relating to deductions of tax at source shall be applicable to such persons or class of persons.

Explanation.- For the removal of doubt it is hereby declared that for the purposes of this section, the word "Government" shall mean any State Government or the Central Government or the Government of any Union Territory of India.