Tax deduction from the bills or invoices of the works contractors etc.

(1) Notwithstanding anything contrary contained in section 20, every person making any payment or discharge or any liability on account of valuable consideration payable— (a) for the transfer of property in goods, whether as goods or in some other form, involved in the execution of works contract, and (b) for the transfer of property in goods on account of sales of such goods made to the Government of India or to any State Government, shall deduct an amount not exceeding four percentum, as may be prescribed, purporting to be a part or full of the tax payable on such sales, from the bills or invoices raised by the works contractor or by the dealer selling such goods, as payable by the person: Provided that no deduction of such amount shall be made in respect of any transfer of property in goods, the turnover of which is deductible, from the dealer‘s gross turnover, under sub-section (3) of section 6: Provided further that no such payment or discharge of any bill raised by the works contractor of the dealer selling such goods shall be made without deductions: Provided further that if the State Government is satisfied that it is necessary to do so in the interest of the State revenue, it may notify the names/posts of such persons who shall be competent persons to make such deduction. (2) The deduction referred to in sub-section (1) shall be made in the manner, as may be prescribed, and the payment of such deduction into the Government treasury shall be the responsibility of the person making such deduction. (3) The person making such deduction shall issue deduction certificate in the prescribed manner to the person or dealer from whose bill or invoice, such deduction has been made. (4) If any person contravenes any or all of the provisions of sub-section (1) or (2) or (3), the prescribed Authority shall, after giving an opportunity of being heard, by an order, in writing, direct that such person shall pay by way of penalty, a sum equal to the amount of tax deductible under sub-section (1). (5) The provisions of sections 25 and 27 for recovery of any amount of tax due from a dealer shall mutatis mutandis apply for recovery of any amount of tax, deducted and / or any penalty imposed but not deposited under this section.