TMI Blog2011 (3) TMI 1383X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, appeals lack merit and are hereby dismissed - Income Tax Appeal No. 299, 269, 270, 301, 302, 303 of 2000, 38, 41, 45, 48, 49, of 2001, 26, 28 of 2001 - - - Dated:- 31-3-2011 - Ferdino Inacio Rebello, Prakash Krishna, JJ. A.N. Mahajan, A. Kumar, B.J. Agarwal, D. Awasthi, G. Krishna, R.K. Upadhyay, S. Chopra for the Appellant S.P. Kesarwani for the Respondent JUDGEMENT 1. Raising a common question of law, the Commissioner of Income Tax has challenged the various orders passed by the Income Tax Appellate Tribunal on different dates by filing the present appeals under Section 260A of the Income Tax Act (hereinafter referred to as the Act). 2. The question involved is- "Whether on the facts and circumstances of the case the ITAT is legally justified in holding that an order passed under sub sections (6) and (7) of Section 206C of the Income Tax Act is appealable under Section 246 of the Act. 3. The following Assessment Years are involved in all the appeals: Income Tax Appeals Assessment Years 299 of 2000 1992-1993 269 of 2000 1997-1998 270 of 2000 1998-1999 301 of 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain fastened by the Assessing Officer by the order dated 5th of September, 1997. The matter was carried in appeal before the Commissioner of Income Tax (A) who dismissed the appeal being not maintainable. The matter was carried further in second appeal before the Income Tax Appellate Tribunal. There was a difference of opinion between the two members of the Tribunal and the matter was referred to the third member i.e. President of the Tribunal who agreed with the Accountant member holding that the appeal under Section 246(1) before the First Appellate Authority was maintainable. It may not be out of place to mention here that the Tribunal by majority has held that the appeal is maintainable under Section 246(1) (a) of the Act. The said order is under challenge in these appeals. 6. Heard Sri A.N. Mahajan, learned senior standing counsel for the Department and Sri S.P. Kesarwani, learned standing counsel for the assessee. 7. The main thrust of the argument of the Department is that only those orders which are specified under Section 246 of the Act are appealable. In none of the sub sections of Section 246, section 206C finds place. Therefore, an order passed under Section 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. These amounts are charged in lieu of grant of parting with State Government's exclusive right, no element of sale is involved. Hence these two items fall outside the ambit and scope of Section 206C of the Act. To put it in plain words, there was no liability on the part of the assessee to collect and deposit the tax at source on these two items. The assessee had denied his liability to be assessed under the Act, therefore, the appeal is maintainable u/s 246 (1) (a) or 246A(1) (a) of the Act. 11. Considered the respective submissions of the counsel for the parties and perused the record. 12. The U.P. Excise Act, 1910 is the Statute which governs the allotment/settlement/grant of licence to vend liquor country made and foreign made Indian liquor and Bhang by the State Government to the licensee. It is well settled that the State Government has exclusive privilege to carry on trade in the intoxicant liquor. It grants the licence to persons to carry on trade therein subject to certain terms and conditions including that of realisation of licence fee for such grant in lieu of part of its privilege. The payment of money for parting the privilege or the licence fee for doing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it was not liable to collect the tax at source on licence fee or on basic licence under the aforesaid sub sections and that is the reason it did not collect the tax on basic licence fee and the licence fee. The assessee is 'seller' of liquor bottles and it has collected the tax on the cost price of those bottles from the purchasers and deposited them indisputably. It, thus, pleads that in respect of the licence fee and licence he is not a 'seller' and corresponding thereto there is no 'buyer' thereof. Sale and purchase are the two sides of the same coin. The licence fee or the basic licence fee received by the assessee is for parting with the right of the State Government to deal in intoxicant liquor. The assessee qua these amounts canot be treated as a person responsible for collection of tax within the meaning of sub section (1) of Section 206C of the Act, as also laid down in the case of Om Prakash (supra). 19. The assessee submits that negation of its stand by the Department and calculation of the amount of short levy and interest under sub sections (6) and (7) of Section 206C amounts assessment and therefore the order is appealable under section 246(1) (a) or under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority passed a composite order dated 20.2.1997 for the financial years 1991-1992 to 1995-1996 under section 206C (1)/206C (7) of the Act creating a demand of Rs.1,84,19,216/-. The relevant portion of the order is reproduced below: "Keeping in view of the above facts and circumstances of the case I hold that the District Excise Officer as an assessee in default to deduct tax collection at source on the purchase price on account of basic licence fee (called Nirgam Mulya/Excise duty/Issue price etc.) for the financial year 1991-91, 92-93, 94-95 and 95-96. The short collection of tax at source on account of basic licence fee/Nirgam Mulya/Excise duty/Issue price with interest u/s206C(7) accordingly is worked out at Rs.1,84,19,216/- as per annexure III as under:- 1. Short collection of tax at source on the basic licence fee/nirgam Mulya/Excise duty/Issue price : Rs. 81,37,630/- 2. Interest u/s 206C(7) : Rs. 1,02,88,586/- Total Rs. : 1,84,19,216/- I, therefore, direct to issue necessary notice of demand and challan of Rs.1,84,19,216/- for payment within a week of receipt of this order, failing which, necessary action will be taken to recover the said demand. Penalty show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded that in the aforesaid clause the term "assessed" has been used in its widest connotation. 26. Section 206C has already been referred hereinabove is a machinery section. It sets out the machinery for collection of tax in advance from the specified persons by a "seller". It provides various consquences, such as: (1) The seller of specified goods is required to collect the tax at source from the purchaser at the time of sale at the specified rate; (2) The seller is required to deposit the tax so collected within the specified time and also file the return of collection of tax at source within the specified period; (3) Non collection of tax at source or late deposit of tax so collected, will entail liability to pay tax notwithstanding the such failure and also to pay simple interest @ 2% per month on the amount of such tax from the date on which such tax was collectable to the date on which the tax was actually paid. 27. The expression "assessed" used in Section 206C evidently has not been used in the sense of computation of income but has been used in the sense of either determination of the amount of tax payable or the whole procedure laid down in the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that section 206C specifically does not find place in any of the clauses either of Section 246 or 246A of the Act. 30. More or less a similar controversy arose under the Act before the Apex Court with regard to the maintainability of the appeal against the order whereby an application for registration of Firm or declaration for continuance of registration is rejected by the Assessing Officer as time barred. There being no specific provision providing for an appeal. The different High Courts took divergent views. Various High Courts including Allahabad High Court in the case of CIT vs. Nagarmal Bisheshar Lal (1991) 190 ITR 468 held that the order would be appealable as it amounts the refusal of the registration of Firm. An appeal is maintainable from an order rejecting an application for registration or declaration for continuance of registration. The other view was that no such appeal is maintainable as that appeal will lie only in the cases where registration is refused for the reasons set out in Section 184 (4) or 184 (7) of the Act. The Apex Court noticed that the question is regarding 'a right of appeal'. The view of the Allahabad High Court was upheld by the Apex Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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