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2011 (3) TMI 80 - HC - Income TaxCollection of Tax at Soruce (TCS) - Purchase price for the purposes of section 206C - Licence fee - The assessee has not collected the tax at source on the licence fee i.e. the amount paid by the assessee to the State Government for parting with the privilege which exclusively belongs to the State Government, to the assessee - The said privilege is a permission to carry on the liquor business - There is no sale or purchase of that right as it does not relate to a merchandise goods - It is merely a sort of leave and licence to carry on the business in liquor - The aims and objects of the enactment of section 206C also supports this view - It has been enacted with a view to collect the tax at source on sale of alcoholic liquor for human consumption - The Tribunal has rightly held that no liability can be fastened on the assessees on the basic licence fee which was not part of purchase price in view of the fact that they were not sellers to retail contractors and basic licence fee was not part of the purchase price to be handed over to the distilleries - The distilleries after manufacture of liquor are required to supply the contracted quantity of liquor to the bonded warehouse which is owned by the State Government - The State Government remains in full control of the liquor placed in the bonded warehouse - The State Government sells the liquor by issuing the allotment to the licensees who pay the cost price of the liquor and the licence fee - Element of 'sale' as conceptually understood is not involved while charging licence fees – Hence, The Tribunal has rightly held that the basic licence fee is not purchase price for the purposes of section 206C of the Act - Decided against revenue.
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