40. Deduction at source from payment to a dealer against execution of works contract
(1) Notwithstanding anything contained in section 32 or any rules made there under 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 14, wholly or partly in pursuance of a contract between such dealer and-
(a) Government,
(b) a local authority,
(c) a corporation or a body established by or under any law for the time being in force,
(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 Bengal Act 45 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 shall be made,-
(i) where the payment is made as advance prior to the commencement of the execution of such works contract; or
(ii) where 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 sub-section (2) of section 99 that he has no liability to pay tax under section 14 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 (2) of section 18, 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 purposes of transfer of such building by sale or otherwise to any person or to a company, firm, cooperative 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, 1961 (West Bengal Act 26 of 1961),
(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 clauses (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 ‘[an appropriate Government Treasury 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.
(2A) After the deposit of the amount deducted under sub-section (2), the person who makes the deduction, shall furnish a scroll, within such date, in such manner, and to such authority, as may be prescribed.
(2B) Where the person who makes the deduction under sub-section (2) or a contractee, delays in furnishing the scroll referred to in sub-section (2A),he shall be liable to pay late fee and the provisions of sub section (2) of section 32 shall, mutatis mutandis, apply;
(b) in sub-section (3), for the words “within fifteen days from the date of such deposit”, the words “within twenty-five days from the end of the English Calendar month during which deduction is made” shall be substituted.
(3) After the deposit of the amount under sub-section (2), the person who makes the deduction and deposit, shall, within twenty-five days from the end of the English Calendar month during which deduction is made”, 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.
(3A) Where a contractee discovers any omission or error in the data entered in the scroll, he may furnish a revised scroll within six English Calendar months beginning from the month immediately following the month in which the original scroll is to be furnished, and if the revised scroll shows a greater amount of tax deducted, or late fee or interest payable, than what was shown in the original scroll, it shall be accompanied by a copy of the receipted challan or a copy of the account statement showing the extra amount of tax, late fee or interest payable thereon, in the manner as may be prescribed:
Provided that the Commissioner may, if he is satisfied on the reasons adduced by the contractee, extend, by an order in writing, the time for revising the scroll.”;
(3B) Where the person who makes the deduction under subsection (2) or a contractee,fails to deposit the amount so deducted towards tax leviable on intra-State contractual transfer price, within the prescribed date, he shall pay a simple interest at the rate specified in section 34B for the period commencing on the date immediately following the prescribed date for payment of such amount and upto the date preceding the date of payment of such amount or preceding the date of commencement of proceeding under section 55, whichever is later.
(3C) Where the interest payable under sub-section (3B) has not been paid, the Commissioner may determine the amount of interest so payable and issue notice to the person for payment of the same in such manner as may be prescribed, and if the amount of interest so demanded is not paid within the date specified in such notice, the amount may be recovered in accordance with the provisions of section 55 or section 60.
(3D) No interest or late fee or penalty shall be payable under this section in such cases, or under such circumstances, and subject to such conditions or restrictions, if any, as the State Government may, by notification, specify.
(4) On receipt of a certificate of deduction referred to in sub-section (3), the deposit of an amount of a dealer referred to in sub-section (2), shall be adjusted by the Commissioner towards tax liability of the dealer under section 18, 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 appropriate Government Treasury.
(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 14 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.
