Compounding of tax liability in case of Works Contract

(1) Notwithstanding anything contained in sections 9, 11, 12 or 13, every contractor referred to in clause (xi) of section 2 may, subject to such restrictions and conditions and in such manner as may be prescribed, at his option, instead of paying tax in accordance with section 12 pay, on the total value of each of the works contract executed by him, a lump sum tax, by way of composition, at the rate of two percent or at such rate not exceeding fifteen percent, as the State Government may, from time to time, by notification, specify: Provided that in case of cancellation of the permission granted for payment of lump sum tax by way of composition, the provisions of sections 9, 10, 11 and 12 and rules made thereunder shall apply (2) A contractor, exercising option under sub-section (1) shall, so long as the option remains in force, not be required to maintain accounts of his business under this Act or the rules made thereunder except the records in original of the works contract, extent of their execution and payments received or receivable in relation to such works contract executed or under execution (3) The State Government may prescribe that every person or any specified class of persons, making any payment to contractor who has exercised option under this section, shall deduct towards payment of lump sum tax, by way of composition at the prescribed rate or rates from the contractor on account of the works contract executed by him and remit the amounts so deducted to the State Government (4) If any person fails to deduct or having deducted fails to remit to the State Government within the prescribed time, the amount deductible under sub-section (1) and sub-section (3), shall be liable for penalty of a sum not exceeding twice the amount deductible (5) The amount deductible and actually deducted under sub-section (3) and sub-section (4) shall be deemed to be a tax for the purpose of the Sikkim (Collection of Taxes and Prevention of Evasion of Payment of Taxes) Act, 1987 (7 of 1987) (6) The assessing authority may, for the purpose of ascertaining the deduction of payment of tax in appropriate manner and for evaluation thereof, require any contractor, including a contractor not registered under this Act, to produce before him any other relevant documents maintained by the contractor and or to furnish any information connected with the works executed by such contractor, subject to sub-section (2) of this section, and the contractor shall comply with such requirements (7) Subject as aforesaid, the relevant documents shall, at all reasonable times, be open to inspection, search and seizure, if need be, by the assessing authority or any person appointed to assist him under sub-section (3) of section 3.