TMI Blog2018 (1) TMI 1554X X X X Extracts X X X X X X X X Extracts X X X X ..... re-useable. Once such items sold cannot be termed as scrap would make the provisions of Section 206C of the Act in applicable. The items sold by the assessee do not fit into the category of scrap as explained in the case of Priya Blue Industries (P.) Ltd. [2015 (11) TMI 1216 - GUJARAT HIGH COURT] . Therefore, in our considered opinion, the assessee cannot be treated as an assessee in default and on the impugned sales cannot be treated as sale of scrap thereby making the assessee out of the purview of Section 206C of the Act. Insofar as the submissions of Form 27C is concerned, the Hon ble High Court of Gujarat in the case of Siyaram Metal Udyog (P.) Ltd. [2016 (7) TMI 68 - GUJARAT HIGH COURT ] has held that No time limit is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee asking it to explain why it should not be treated as an assessee in default within the meaning of Section 206C of the Act. In its reply, the assessee pointed out that sales made against TCS amounts to ₹ 28,50,300/- on which TCS collected is ₹ 31,536/- which has been deposited in treasury in time. The A.O. found that the assessee has not submitted proof of filing of Form 27C nor it has obtained the same from the buyers of scrap. The A.O. concluded by holding that the assessee was liable for collecting TCS @ 1% and accordingly raised the demand u/s. 206C(1) at ₹ 5,43,679/- and u/s. 206C(7) ₹ 5,87,173/-. 4. Aggrieved by this, the assessee carried the matter before the ld. CIT(A) but without much success ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee himself has not generated any scrap in manufacturing activity, as contemplated in the Explanation. He was a trader. Therefore, the assessee has not sold scrap as such. He has sold the products resulted from ship breaking activity, which are re-usable. Thus, the assessee was not supposed to collect tax under section 206C of the Act. The Id.AO has erred in raising the demand. I allow all appeals and delete additions. 7. The Hon ble Jurisdictional High Court of Gujarat in the case of Priya Blue Industries (P.) Ltd. (supra) was seized with the following substantial questions of law:- (A) Whether the Appellate Tribunal has substantially erred in law in interpreting the term Scrap as defined in clause (b) to Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity and constitute sizeable chunk of production done by ship breakers. Though such products may be commercially known as scrap they are not waste and scrap , as such items are usable as such, and, therefore, do not fall within the definition of scrap as envisaged in the Explanation to section 206C(l) of the Act. 7. Section 206C of the Act bears the heading, Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap etc. and provides that every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opportunity of hearing to the assessee. Thus, the Tribunal after recording a finding of fact to the effect that the products obtained by the assessee in the course of ship breaking activity are usable as such, and, therefore, do not fall within the definition of scrap has remitted the matter to the Assessing Officer to grant relief accordingly. Essentially, therefore, the impugned order of the Tribunal is based upon a finding of fact which does not give rise to any question of law. 9. Insofar as the course of action adopted by the Tribunal in remitting the matter to the Assessing Officer to decide in relation to which of the items the assessee is entitled to relief under the provisions of section 206C(1) of the Act is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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