` 208 IN THE HIGH COURT OF PUNJAB AND HARYANA Manak Chand Rajendra Kumar State of Punjab and another CORAM: HON’BLE HON’BLE MR. JUSTICE Present: Mr. Mr. Rishab Singla Mr. Saurabh Kapoor, Addl. AG, Mr. Anupam Singla, Advocate and Mr. A.K. Rangolia, Advocate for respondent No.2. ASHWANI KUMAR MISHRA, A.C.J. 1. The petitioner is a proprietary concern based at Jaipur in the State of Rajasthan. It is registered under TIN No.08221701860. the provisions of Central Excise Act as well as Service Tax provisions of Finance Act, 1994, with requisite registration stated that the petitioner is accordance with law. 2. It transpires that in the year 2012, the Punjab School Education Board (respondent No.2), floated a tender booklets to be used in the examination conducted by the Board for 10th standard. The petitioner participated in the tender and was allotted the contract for supply of requisite number of IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP-12345 Date of Decision: Manak Chand Rajendra Kumar Vs. State of Punjab and another HON’BLE THE ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE ROHIT KAPOOR Mr. Sandeep Goyal, Sr. Advocate with Mr. Rishab Singla, Advocate for the petitioner. Mr. Saurabh Kapoor, Addl. AG, Mr. Anupam Singla, Advocate and Mr. A.K. Rangolia, Advocate for respondent No.2. *** ASHWANI KUMAR MISHRA, A.C.J. (Oral) The petitioner is a proprietary concern based at Jaipur in the State of Rajasthan. It is registered under the provisions of Rajasthan VAT Act, having .08221701860. The petitioner also claims to have been registered under the provisions of Central Excise Act as well as Service Tax provisions of Finance Act, 1994, with requisite registration stated that the petitioner is filing its returns accordance with law. It transpires that in the year 2012, the Punjab School Education Board (respondent No.2), floated a tender to be used in the examination conducted by the Board for 10th standard. The petitioner participated in the tender and was allotted the contract for supply of requisite number of answer booklets. Such supply was actua IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 12345-2015 (O&M) Date of Decision: 20.07.2026 …Petitioner …Respondents THE ACTING CHIEF JUSTICE ROHIT KAPOOR Sandeep Goyal, Sr. Advocate with , Advocate for the petitioner. Mr. Saurabh Kapoor, Addl. AG, Punjab Mr. Anupam Singla, Advocate and Mr. A.K. Rangolia, Advocate for respondent No.2. (Oral) The petitioner is a proprietary concern based at Jaipur in the State of the provisions of Rajasthan VAT Act, having The petitioner also claims to have been registered under the provisions of Central Excise Act as well as Service Tax and under the provisions of Finance Act, 1994, with requisite registration number. It is also filing its returns at Jaipur and is paying taxes, in It transpires that in the year 2012, the Punjab School Education Board (respondent No.2), floated a tender for printing and supply of answer to be used in the examination conducted by the Board for 10th standard. The petitioner participated in the tender and was allotted the contract for supply . Such supply was actually made by the The petitioner is a proprietary concern based at Jaipur in the State of the provisions of Rajasthan VAT Act, having The petitioner also claims to have been registered under under the number. It is also at Jaipur and is paying taxes, in It transpires that in the year 2012, the Punjab School Education printing and supply of answer to be used in the examination conducted by the Board for 10th standard. The petitioner participated in the tender and was allotted the contract for supply lly made by the RAJESH KUMAR 2026.07.27 16:29 I attest the accuracy and authenticity of this order/judgment. CWP-12345-2015 (O&M) [2] petitioner from Rajasthan to respondent No.2 at Mohali. The respondent No.2 deducted TDS under Section 27 of the Punjab VAT Act, from the amount payable to the petitioner. Subsequently, similar supplies were also made by the petitioner to respondent No.2 and TDS was deducted in the same manner and all such deductions are the subject matter of challenge in the present writ petition. 3. It transpires that the deduction of TDS from the petitioner is pursuant to Section 27 of the Punjab VAT Act, 2005, (for short ‘the Act, 2005’) which is reproduced as under:- “27. (1) Notwithstanding anything contained in any of the provisions of this Act, every contractee responsible for making payment to any person (hereinafter in this section referred to as the contractor) for discharge of any liability on account of valuable consideration, exceeding rupees five lac in a single contract payable for the transfer of property in goods (whether as goods or in some other form) in pursuance of a works contract, shall, at the time of making such payment to the contractor either in cash or in any other manner, deduct an amount equal to two per cent of such sum towards the tax payable under this Act on account of such contract: Provided that any individual or Hindu undivided family not registered under this Act, shall not be liable for deduction of such tax. (2) Any contractor responsible for making any payment or discharge of any liability to any sub-contractor or in pursuance of a contract with the sub- contractor, for the transfer of property in goods (whether as goods or in some other form) involved in the execution whether wholly or in part, of the work undertaken by the contractor, shall, at the time of such payment or discharge, in cash or by cheque or draft or by any other mode, deduct an amount, equal to two per cent of such payment or discharge, purporting to be a part of the tax, payable under this Act on such transfer, from the bills or invoices raised by the sub-contractor, as payable by the contractor. (3) Every person liable to deduct tax at source under sub-section (1) or sub- section (2), as the case may be, shall make an application in the prescribed manner to the designated officer for allotment of Tax Deduction Number. The designated officer, after satisfying that the application is in order, shall allot Tax Deduction Number. (4) The amount deducted under sub-section (1) or sub-section (2), as the case may be, shall be deposited into the Government Treasury by the person making such deduction in the prescribed manner and shall also file a return of tax deduction and payment thereof in such form and in such manner, as may be prescribed. (5) Any deduction made in accordance with the provisions of this section and credited into the Government Treasury, shall be treated as payment towards the tax payable 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, in the prescribed form in this regard. (6) If any contractee or the contractor, as is referred to in sub-section (1) or sub- section (2), as the case may be, fails to make the deduction or after deducting such amount fails to deposit the amount so deducted, the designated officer may, after giving an opportunity of being heard, by order in writing, direct that the contractee or the contractor shall pay, by way of penalty, a sum, equal to the amount deductible under this section, but not so deducted, and if deducted, not so deposited into the Government Treasury. RAJESH KUMAR 2026.07.27 16:29 I attest the accuracy and authenticity of this order/judgment. CWP-12345-2015 (O&M) [3] (7) Without prejudice to the provision of sub-section (6), if any contractee or the contractor, as the case may be, 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 per cent per month on the amount deductible under this section, but not so deducted and, if deducted, but not so deposited, from the date on which such amount was deductible to the date, on which such amount is actually deposited. (8) Where the amount has not been deposited after deduction, such amount together with interest referred to in sub-section (7), shall be a charge upon all the assets of the person concerned. (9) Payment by way of deduction in accordance with sub-section (1) or sub- section (2), shall be without prejudice to any other mode of recovery of tax, due under this Act from the contractor or the sub-contractor, as the case may be.” 4. The above provisions would go to show that liability would arise for deduction of VAT in a case related to ‘works contract’. ‘Works Contract’ has been defined under Section 2(zu) of the Act, 2005, in following terms:- “Section 2 (zu) “works contract” includes any agreement for carrying out, for cash, deferred payment or other valuable consideration, building ,construction, manufacturing, processing, fabrication, erection, installation, fitting out, improvement, modification, repairs or commissioning of any movable or immovable property.” 5. According to the petitioner, there is no ‘works contract’ awarded to the petitioner and the contract for supply of answer booklets does not amount to ‘works contract’. It is also submitted that the Punjab State has not imposed any liability of tax on the sale proceeds pursuant to contract for supply of answer booklets that was awarded in favour of the petitioner. It is, therefore, submitted that maximum period of 6 years for levy of demand has also expired much earlier, therefore, any deduction made by respondent No.2, would be illegal and arbitrary. Prayer is accordingly made for refund of such amount. 6. Taking cognizance of such submissions, this Court directed the amount of TDS to be invested by 2nd respondent in an interest bearing account on 22.09.2015. Such deposits continued to remain invested. On 28.08.2025, the Coordinate Bench noticed the petitioner’s contention that in fact no stand of the State of Punjab, qua liability to pay VAT by the petitioner, is on record. Mr. Kapoor, appearing for the State of Punjab, on the basis of instructions obtained, RAJESH KUMAR 2026.07.27 16:29 I attest the accuracy and authenticity of this order/judgment. CWP-12345-2015 (O&M) [4] does not dispute the petitioner’s assertion, as per which no liability to pay tax on such transaction has been raised against the petitioner. It is also undisputed that the maximum period of levy of such demand has also expired. 7. We otherwise find substance in the petitioner’s contention that supply of answer booklets would not amount to ‘works contract’ and, therefore, there existed no liability on the part of the petitioner to pay VAT and consequently, the TDS deducted from the petitioner was unauthorized. 8. In that view of the matter, this petition succeeds and is allowed. Mandamus is issued to respondent No.2 to refund the amount of VAT collected from the petitioner as TDS along with interest accrued thereon, within a period of four weeks, henceforth. 9. All pending misc. application(s), if any, also stand disposed of. (ASHWANI KUMAR MISHRA) ACTING CHIEF JUSTICE (ROHIT KAPOOR) JUDGE 20.07.2026 rajesh 1. Whether speaking/reasoned? : Yes/No 2. Whether reportable? : Yes/No RAJESH KUMAR 2026.07.27 16:29 I attest the accuracy and authenticity of this order/judgment.