TMI Blog2010 (12) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... the income of the State of Bihar, but was indeed an advance collection of tax to be done by the State of Bihar in the capacity of wholeseller in relation to the income of the retailers. - the provisions of article 289 of the Constitution are inapplicable to the facts and circumstances of the present case. - Revenue did suffer on account of inaction on the part of the petitioner to realize TDS (TCS) at the time of sales to the retailers. Furthermore, even if part of the amount of income-tax was paid by a few of the retailers, in contradistinction to thousands of retailers, it will be open to the petitioner to apply for refund of the same in accordance with the prescribed procedure. - decided in favor of revenue. - CWJC NO 2101/00 - - - D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of country-made liquor as a wholeseller. The whole-sale business in such manner commenced on May 18, 1989, and continued till December 1991, when the State Government appointed wholesellers on the private side. The present writ petition, therefore, deals with the financial years 1989-90, 1990-91, 1991-92, except for the period April 1, 1989 to May 17, 1989, and the period of December 1991 till March 1992, which are excluded. The authorities under the Act took the stand that the present writ petitioner was obliged in law to realize tax deducted at source (TDS) from the vendees and the retailers in terms of section 206C(4), read with section 45AC, of the Act. The State Government had not collected the TDS, nor had submitted returns or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leads to double taxation. The Revenue has not suffered any loss of revenue. He relies on the judgment of the Supreme Court in Hindustan Coca Cola Beverage P. Ltd. v. CIT [2007] 293 ITR 226 (SC). He next submits that the amount collected by the State Government from the retailers form part of the State exchequer and, there-fore, cannot be taxed in terms of article 289 of the Constitution of India. He relies on the judgment of the Supreme Court in Hindustan Coca Cola Beverage P. Ltd. [2007] 293 ITR 226 (SC). He lastly submits that, in any view of the matter, the brief periods prior to, and after the end of the period in question, have to be excluded from reckoning. 5. Learned assistant counsel for the Revenue has supported the impugned ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered the submissions of learned counsel for the parties. It is evident on a perusal of the order dated May 9, 1989 (annexure I), and the order dated May 8, 1989 (annexure II), that the State Government had taken over the wholesale business of country-made liquor in the State of Bihar for the period May 18, 1989 till December, 1989, which fell within the financial years 1989-90, 1990-91, and 1991-92. Therefore, it was incumbent on the petitioner to realize TDS as per the law in force at that point of time in terms of section 206C of the Act. The petitioner had failed to discharge its statutory duty, as a result of which the Revenue was justified in taking steps to quantify the amount as per the procedure prescribed by section 44AC of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was passed and the amount was quantified, the Revenue served repeated notices on the petitioner to deposit the amount quantified as per annexure III series which was completely ignored. Consequently, the Revenue was left with no option and had to take action in terms of section 226(3) of the Act. We do not find fault with the action of the Revenue on the question of realization of the demand also which was indeed in full conformity with the principles of natural justice as well as the prescribed procedure. 9. We must deal with the scope and content of article 289 of the Constitution of India. The same is reproduced here in below : "289. Exemption of property and income of a State from Union taxation.-(1) The property and income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed income of its retailers, and indeed the petitioner would have pro tanto received more from its retailers. 11. We are also of the view that sub-article (2) of article 289 is equally inapplicable to the facts and circumstance of the present case, because the same authorizes Parliament to enact laws for imposition of tax on properties, on any trade or business carried on by the State Government. We held hereinabove that TDS in the present case was not taxation orlevy on the income of the State of Bihar, but was indeed an advance collection of tax to be done by the State of Bihar in the capacity ofwholeseller in relation to the income of the retailers. We are, therefore, of the view that the provisions of article 289 of the Constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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