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2019 (1) TMI 1946 - HC - Income TaxApplicability of the provisions of Section 206C(1) in relation to certain instances of bulk sale of coal to other units - default in collection of TCS - HELD THAT:- Admitted position is that the entire shareholding of the writ petitioner is owned by the State of Jharkhand. Thus the writ petitioner comes within the ambit of the expression "public sector company". Provisions of Section 206C(1) of the Act cannot apply to the writ petitioner irrespective of the fact as to whether the writ petitioner is the end user of the coal purchased or it is a trader of coal. The Income Tax authority has solely relied on the aspect that the writ petitioner was not the end-user of coal, ignoring the fact that a public sector company was kept outside the purview of the expression "buyer" as specified in Section 206C(1) of the Act. In such circumstances, we are unable to sustain the order of the Income Tax authorities in which liability to collect tax at source from the buyer has been made applicable in the case of the writ petitioner. Writ petitioner being a wholly owned company of the State of Jharkhand cannot be subjected to the provisions of Section 206C(1) of the Act to the extent the said Section covers a buyer, having regard to the Explanation (aa) to the aforesaid provision read with Section 2(36A) of the Act. We accordingly direct the Income Tax authorities to refund the sum collected on account of TCS to CCL treating the writ petitioner as buyer under the aforesaid provision and CCL in turn shall refund the said sum to the writ petitioner. For the purpose of determining the exact quantum of sum collected, the Deputy Commissioner of Income Tax, TDS Circle, Ranchi shall give a hearing to both the writ petitioner and the CCL and this quantification exercise shall be completed within a period of 10 weeks from the date of communication of this order. Learned counsel for the Income Tax authorities wanted the regular refund course to be followed in this case. We, however, do not think such a course ought to be followed as ex facie there has been collection of income tax without the authority of law in the present case and the Hon'ble Supreme Court in the case of Corporation Bank [2008 (11) TMI 387 - SUPREME COURT] had directed refund of the amount in a proceeding arising out of a writ petition. WP allowed.
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