2025-VIL-1082-KAR
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VAT High Court Cases

Karnataka Value Added Tax Act, 2003 - TDS credit, Transfer of TDS credit, Rule 44(3)(f) of the Karnataka Value Added Tax Rules, 2005 - Appellant is a sub-contractor who executed civil works contracts for NPCC Ltd. for the contract awarded by Hindustan Aeronautics Limited. NPCC Ltd. deducted TDS under Section 9A of the Karnataka VAT Act and issued a TDS certificate in Form VAT-156 in its own name – Appellant claimed the TDS credit, but the Prescribed Authority denied it, applying Rule 44(3)(f) of the Karnataka VAT Rules, 2005, which prohibits transfer of TDS credit from one person to another - The First Appellate Authority allowed the assessee's appeal and directed the transfer of TDS credit from NPCC Ltd. to the assessee. The Revisional Authority invoked Section 64 of the KVAT Act and set aside the order of the First Appellate Authority, holding that the transfer of TDS credit was contrary to Rule 44(3)(f) - Whether the assessee-subcontractor is entitled to claim the TDS credit reflected in the TDS certificate (Form VAT-156) issued in the name of the main contractor NPCC Ltd – HELD - The assessee is not entitled to claim the TDS credit reflected in the TDS certificate (Form VAT-156) issued in the name of the main contractor NPCC Ltd. The Rule 44(3)(f) of the KVAT Rules specifically prohibits the transfer of TDS credit from one person to another. The TDS credit has already been claimed by NPCC Ltd. and accounted for by the Prescribed Authority. Once the TDS has been allowed as credit, it cannot be transferred or claimed again, as doing so would result in double credit of the same amount – Further, the direction of the First Appellate Authority to transfer the TDS credit from NPCC Ltd. to the assessee was contrary to the statutory provisions and hence erroneous and prejudicial to the interest of the Revenue - The appeal filed by the Appellant-sub-contractor is dismissed
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