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2022 (2) TMI 474 - AT - Income TaxTDS u/s 194C - payments made by the assessee to its affiliates - Payment towards face value of the meal vouchers to the affiliates - primary contention of the assessee that in terms of approval granted by the Reserve Bank of India (RBI) under the Payment and Settlement Systems Act, 2007 (‘’PSS Act’’), the assessee is operating a payment system for issuance of meal vouchers, wherein, the only role played by it is to provide an alternative system of payment - As per assessee since the payment made by the assessee to the affiliates is merely reimbursement for the prepaid vouchers under the alternative system of payment, it is not exigible to TDS provisions - HELD THAT:- The factual matrix reveals that the assessee is operating a semi-closed prepaid payment system being authorized by RBI in terms of section 7 of the Payment and Settlement System Act, 2017. Under the aforesaid scheme, the assessee issues printed paper vouchers to be utilized for purchase of food and non-alcoholic beverages at certain specified establishments. It is an accepted factual position that the service charge received by the assessee, both, from the customers as well as affiliates is offered as income. So far as the face value of the meal voucher is concerned, as per clause 8 of RBI Master Circular placed in the paper book, the amount received from the customers towards issuance of meal vouchers has to be kept in escrow account maintained with any Scheduled Commercial Bank. The Master circular mandates that the amount so deposited in the escrow account can only be used for making payment towards reimbursement of the face value of the meal voucher to the affiliates. The Government Regulations make it clear that the face value of the meal vouchers cannot be used by the assessee for any other purpose. Thus, it is very much clear that the amount received by the assessee from customers for providing the meal vouchers is not an income of the assessee but has to be used only for the purpose of making payment to the affiliates towards redemption value of vouchers. The entire scheme relating to issuance of printed meal vouchers read with PSS Act and RBI Master Circular make it clear that the assessee is merely a facilitator or a medium for enabling payments to be made by the user of the vouchers to the affiliates when the user purchases food and non alcoholic beverage from the affiliates. In other words, the assessee is merely providing the service of an alternative mode of making payment. Except one of the categories i.e. catering, the payment of the face value of meal vouchers to affiliates would not come within the definition of work either as per the general meaning or even under the extended meaning of work as per section 194C of the Act. In so far as catering is concerned, the admitted factual position is, the assessee has deducted tax on the payment made to caterers, who basically are in house facilities established by customers of the assessee. Thus, under no circumstances, the payment made by the assessee towards face value of the meal vouchers to the affiliates can come within the ambit of section 194C of the Act. In any case of the matter, as per the scheme of PSS Act and Master Circular issued by the RBI, the amount received towards face value of the meal vouchers is not money belonging to the assessee and has to be used exclusively for the purpose of making payment to the affiliates. There is nothing on record to suggest that the regulatory authorities have found any violation of conditions of PSS Act, 2007 or the RBI guidelines by the assessee while carrying out the business. Thus, the assessee is merely a custodian of the money and for facilitating the provision of making available food and beverages to the employees of customers through the affiliates, the assessee is merely a service provider. Because of the service provided by the assessee, both, the affiliates and employees are benefited. For this process of facilitation which is in the nature of service, the assessee receives service charges both from its customers as well as affiliates. The payment made by the assessee towards face value of the meal vouchers to the affiliates are not in the nature of payment made towards works contract so as to fall within the provision of section 194C - Demand raised under section 201(1) and 201(1A) are deleted. The grounds raised by the assessee are allowed.
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