TDS amounts constitute payment – Arbitral Award for Refund to the Contractor – Supplier
Commercial Arbitration Petition No.1380 of 2019 with Notice of Motion No.2464 of 2019 of National Cooperative Consumer’s Federation of India Limited Vs. Mirah Dekor Pvt Ltd (formerly known as Mirah Dekor Limited)
Respondent Mirah supplies consumer items including groceries to government and non-government clients including the petitioner Federation.
The Federation has been giving groceries to ashram schools and hostels of the Tribal Development Department, Nashik.
Mirah was given tenders for 2009-2010, M2010-2011 and 2011-2012. Federation would pay the invoices after deducting fixed margin of 1.5% and also deducted TDS of Rs.1.37 crores.
By the arbitral award dated 31.5.2019, Mirah was awarded Rs.1.36 crores with interest.
HELD that all amounts admittedly deducted by TDD and paid to the Revenue, are the amounts for which the Federation had credit. The title to benefits flowing from such amounts is evidenced by the Form 16A and Form 26AS. The Federation would to pay a correspondingly lesser amount in it total tax bill. Whether the tax assessment results in payment of tax or refund of excess tax paid is totally irrelevant.
TDS amount is an integral part of the amount received by the Federation from the Department. It is trite law that the total amount including the TDS is the income of the Federation and therefore, it is amount received by the Federation. The amounts of TDS effected by the Department from the amounts paid to the Federation were in the aggregate across all vendors.
Challenge to the Arbitral Award on the ground of limitation – Mirah has been chasing the Federation since 2011, the Federation has admitted amount but payable on completion of tax assessment. The non payment after follow up lead to arbitration notice dated 20.10.2014 and second invocation on 12.4.2017 followed by section 11 petition. The Federation did not take the stand that section 11 petition was barred by limitation. Section 11 petition was allowed on 2.2.2018. Therefore, invocation was made within time. Therefore, the view of the Arbitral Tribunal on the point of limitation is not perverse.
TDS amounts constitute payment – Arbitral Award for Refund to the Contractor – Supplier
TDS by the Department and credited to the account of Federation constituted payment received by the Federation. Th obligation of Federation to pay TDS amount to Mirah was not contingent on completion of tax assessments.
