41. Advance recovery of tax from works contractors.–
(1) Subject to the provisions of section 6,
every person, responsible for making any payment in discharge of any liability on account of valuable
consideration payable in respect of transfer of property in goods (whether as goods or in some other form)
vested in the execution of a works contract shall be lawfully competent to deduct an amount at the rate or
rates, not exceeding four per cent. to be specified by the State Government, in a notification published in
the Official Gazette, purporting to be a part or full amount of tax payable on the sale of such goods from
every bill or invoice raised by the works contractor as payable by the person and no such payment or
discharge of any such bill or invoice raised by a works contractor shall be made without deduction as
aforesaid.
Explanation.–For the purposes of this section, the “person” in this section shall include all officers and
authorities of the Central or the State Government or of a company, corporation, Board, authority, co-
operative societies, undertaking or any other body constituted or formed under any Act and of any firm or
association of persons and organisation:
Provided that , the State Government may prescribe the conditions subject to which no such deductions
shall be made.
(2) No such payment or discharge of any bill or invoice raised in respect of transfer of property in goods
(whether as goods or in some other form) by a works contractor shall be made without the deduction referred
to in sub-section
(1):
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Provided that no deduction under sub-section
(1) shall be made where the payment is made as advance
prior to the commencement of the execution of such works contract until it forms part of the sale price
payable for transfer of property in goods (whether as goods or in some other form):
Provided further that no deduction under sub-section
(1) shall be made from the payment or any part
thereof, where–
(a) the payment or any part thereof does not relate to any transfer of property in goods (whether as
goods or in some other form) involved in the execution of works contract;
(b) the dealer produces a certificate issued by the Deputy Commissioner, Commercial Taxes or the
Assistant Commissioner, Commercial Taxes or the Commercial Taxes Officer, in-charge of the
concerned Circle to the effect that the payment or any part thereof relates to such transfer of property
in goods (whether as goods or in some other form) on which he has no further liability to pay tax in
terms of the provisions of section 15 of the Central Sales Tax Act, 1956 (74 of 1956);
(c) the dealer produces a certificate issued by the Deputy Commissioner, Commercial Taxes or the
Assistant Commissioner, Commercial Taxes or the Commercial Taxes Officer, in charge of the
concerned Circle to the effect that the payment or any part thereof relates to such transfer of property
in goods (whether as goods or in some other form) on which he has no liability to pay tax in terms of
the provisions of section 6.
(3) The amount deducted under sub-section
(1) shall be adjusted against the amount of tax finally
assessed or determined as being payable by the concerned works contractor and any amount deducted in
excess of the tax so assessed or determined shall be refunded in accordance with the provisions of this Act.
(4) The deduction referred to in sub-section
(1) shall be made in the manner prescribed.
(5) The person making the deduction shall issue a certificate, in the form and manner prescribed,
containing such particulars as may be required to be mentioned therein, to the works contractor or person
from whose bill or invoice such deduction has been made and such certificate shall be deemed to be a valid
discharge of liability in terms of provisions of sub-section
(9) of section 24 to the extent of amount of
deduction made under sub-section
(1).
(6) If any person contravenes any or all of the provisions of sub-sections
(1),
(2) and
(5), the prescribed
authority shall, after giving a reasonable opportunity of being heard, by order in writing direct that such
person shall pay by way of penalty, a sum not exceeding twice the amount of tax deductible or deducted
and not deposited in the Government Treasury.
(7) The provisions of sections 39 and 47 shall, mutatis mutandis, apply for recovery of any amount of
tax deducted but not deposited into the Government Treasury or any penalty imposed under this section.
