W.P.(C) No. 01 of 2017. Case: Nektor Engineers & Project Consultants Vs Union of India and Ors.. Sikkim High Court
| Case Number | W.P.(C) No. 01 of 2017 |
| Counsel | For Appellant: A.K Upadhyaya, Sr. Advocate, Debojit Senapati, Aruna Chhetri and Hemlata Sharma, Advocates and For Respondents: Karma Thinlay, Central Government Counsel |
| Judges | Meenakshi Madan Rai, J. |
| Issue | Income Tax Act, 1961 - Sections 194C, 194J |
| Judgement Date | April 03, 2017 |
| Court | Sikkim High Court |
Judgment:
Meenakshi Madan Rai, J.
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Aggrieved by the action of the Respondent No. 4, in issuing Show Cause bearing No. 54(II) BRPD-II/2016/229, dated 06.10.2016, and cancelling the work awarded to the Petitioner, being NIT No. 01/CE/IBBZ-II-SLG/2016/17 (hereinafter "NIT 01") namely consultancy services for preparation of Detailed Project Report (DPR) for additional High altitude roads under Phase-II in the State of Sikkim, using satellite imagery, vide its impugned letter bearing No. 54(11)/EE/BRPD-II/2016/282 dated 08.12.2016, the Petitioner seeks issuance of a Writ, in the nature of mandamus, certiorari or any other appropriate writ direction or Order of like nature.
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The facts averred are that, the Petitioner a registered Partnership Firm with its Office located at Ahmedabad, Gujarat is engaged in providing consultancy services in the field of Civil and Structural Engineering including Architectural design and specialty Engineering Services and has over the years provided such service to various clients, including the Central Public Works Department and other Governmental Organizations. The Petitioner being eligible, having executed four works of similar class during the required period, participated in the NIT 01 floated by the Respondent No. 4, for online percentage bids on two bid system, for the aforesaid work of Consultancy Services. The last time and date for submission of bid was 3.00 P.M. on 21.06.2016.
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After considering his bids, the Respondents found the Petitioner competent to execute the work and accordingly, issued letter dated 27.07.2016 informing the Petitioner of the acceptance of his bid and requested him to furnish Performance Security Guarantee, which was duly complied with on 04.08.2016.
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In the meanwhile, the Petitioner received a letter from the Respondent No. 04 dated 01.08.2016 stating therein that the TDS certificate issued by M/s. Vraj and Vaj constructions in favour of the Petitioner's Company for the year 2009-10 revealed that the payment of tax shown to be deducted at source was under Section 194C which relates to Contractors, @ 1% only, while Tax Deduction for Consultancy services is 10%. That, as the present bid of the Petitioner had been approved on the basis of the said Consultancy works, he was requested to submit proof of balance tax deposited in the Income Tax Department during the final settlement of Tax liabilities. This was followed by letter dated 05.08.2016 calling upon the Petitioner to submit such proof within five days i.e. by 10.08.2016, failing which action would be initiated against him in terms of the letter of transmittal signed by the Petitioner while submitting the eligibility bid document.
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Refuting the above allegations, the petitioner's stand was that merely because TDS was deducted under Section 194C of the Income Tax Act, 1961 by the party making payment, would not alter the nature of the work from Consultancy to that of Contractor nor would it permit classification of the work, to one in the nature of a Contractor as sought to be alleged by the Respondent No. 4. The Petitioner sought to clarify vide his response dated 08.08.2016 to the Respondent No. 4, that it does not have any say under which section of the Act payment is deducted by the payer at the end of every financial year, nevertheless the actual Tax payable by the payee, (i.e. the Petitioner) on the Income of the entire year is paid after taking into account TDS deducted by the respective payers. It was further averred that notwithstanding the rate at which TDS was deducted by M/s. Vraj and Vaj constructions, the full tax liability for the year was paid by the Petitioner. In response thereof the Respondent No. 4 vide letter dated 12.08.2016 requested the Petitioner to contact the Asst. Engineer, Border Road, Project Sub - Division I, Lachung, North Sikkim, requiring the Petitioner to complete the formal Agreement within 15 days from the date of the letter and to commence the work, the same being time bound. The Petitioner took steps accordingly and submitted a report pertaining to Stage I of the work and the reconnaissance survey, for approval of the Respondents on 26.09.2016, along with the first running bill, both are however pending. Subsequent thereto, correspondence ensued between the parties from 12.09.2016 to 27.09.2016 with regard to the work in question.
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While awaiting the approval, the Petitioner was served with the impugned Show Cause dated 06.10.2016 by Respondent No. 4 to the effect that a communication was received from the office of the Income Tax officer, (ITO) Ahmedabad, Gujarat who had clarified that the Petitioner had shown Contract receipt under Section 194 C of the Act, of Rs. 97,98,383/- received from M/s. Vraj and Vaj Constructions for A.Y. 2010-11. That the assessee had shown the nature of business code as 0505 Contractors (others) and not Consultant...
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