TMI Blog2011 (6) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished the details of the buyers who furnished such Form No. 27C nor furnished the evidence relating to the fact that copies of such declarations were delivered to the Chief Commissioner or Commissioner - Decided against the assessee. Tax liability - TCS - While section 201(1) treats an assessee who fails to deduct the tax at source or after deduction, does not pay the same to the Government as an assessee in default - Held that:- Section 206C(6) clearly provides that any person responsible for collecting the tax who fails to collect the tax in accordance to the provisions of the said section, shall, not withstanding such failure, be liable to pay the tax to the credit of the Central Government - Thus, in case of failure to effect the TCS, becomes the liability of the collector of such tax and he is mandatorily required to pay the same to the Central Government as the word used in the said section is "shall" - Therefore, the case law relating to section 201(1) would not be applicable to the cases covered under section 206C(6) of the Act - Decided against the assessee. - 187 (VIZAG.) OF 2009 - - - Dated:- 2-6-2011 - SUNIL KUMAR YADAV, B.R. BASKARAN, JJ. G.V.N. Hari for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of section 206C of the Act on the sales effected by it. Since the assessee has failed to so collect the TCS, he issued show-cause notice to the assessee. In response thereto the assessee argued that the exemption provided under sub-clauses (1A) and (1B) of section 206C is applicable with regard to the sale of gum affected by it. However, the Assessing Officer rejected the said explanation of the assessee with the following observations: "The Corporation argued that with regard to sale of gum, the merchants who have purchased the stocks have further processed and exporting to foreign countries and hence they are exempt from collection of TCS. Sub-clauses (1A) (1B) of section 206C of the I.T. Act 1961 is clearly mentioned the procedure to be followed by the buyer and seller before the sale consideration taken place to get the exemption for non-collection of TCS. The sub-clauses are reproduced hereunder for ready reference. (1A) Notwithstanding anything contained in sub-section (1), no collection of tax shall be made in the case of a buyer, who is resident in India, if such buyer furnished to the person responsible for collecting tax, a declaration in writing in duplica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduce. Still aggrieved, the assessee is in appeal before us. 5. With regard to the first ground, the Learned Counsel for the assessee submitted that the tribal people are the first sellers of the forest produce and the assessee is a buyer and accordingly contended that the assessee, being the first buyer, is not covered by the provisions of section 206C of the Act. On the other hand, the Learned D.R contended that the assessee herein is squarely covered by section 206C and in that regard, he relied upon the decision of Learned CIT(A) on this issue. 5.1 We notice from the order of Learned CIT(A) that the assessee has placed reliance upon the letter of CBDT in F.No. 275/17/93-IT(D), dated 10-1-1996 addressed to the Joint secretary, Social welfare (TW) Department, Government of Andhra Pradesh, which reads as under: "I am directed to refer to your office letter No. 7326/S2/92-6, dated 15th November, 1995 on the above subject. The matter has been considered by the Board and it is clarified that no tax will be deducted at first stage, in which the tribals are the sellers of minor forest produce and the Corporation is the buyer, the provisions of section 206C are not applicable at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat provisions of section 206C are not applicable for the sales made by it, is not acceptable and this ground of appeal is dismissed." On a careful reading of the decision of Learned CIT(A), we notice that the first appellate authority has analysed the provisions as amended from time to time and has taken a rational view of the matter, with which we are convinced with. Hence we do not find any infirmity in the decision of Learned CIT(A) on this issue and accordingly reject this ground of the assessee. 6. With regard to ground number 2, the learned Authorised Representative submitted that some of the purchasers have utilized the products in manufacturing process and hence the impugned provisions are not applicable to that kind of sales. However, we notice that the Learned CIT(A) has pointed out that the assessee has not followed the procedure prescribed in this regard. Accordingly the Learned CIT(A) has rejected the contention of the assessee with the following observations: "Ground No. 3: It was submitted by the appellant that part of the products were sold to certain purchasers who utilized the same in the manufacturing process. The same was not resold by such purchasers. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y have been assessed to tax in respect of the purchases made by them from the assessee. Accordingly, he contented that the assessee should not be made liable to pay the TCS again on the impugned sales, since the purchasers have already paid the tax there on. In this regard, he relied upon the decision of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages (P.) Ltd. v. CIT [2007] 293 ITR 226/163 Taxman 355, which was rendered in the context of the provisions of section 201 of the Act relating to the failure to comply with the TDS provisions. The Learned A.R submitted that the provisions of TCS are akin to TDS provisions and hence the ratio of Supreme Court s decision cited above should be applied on the impugned issue also. However, the Learned Departmental Representative disputed the said claim of the assessee and submitted that the though the object of deduction/collection of TDS/ TCS is same, the liability imposed upon the assessee under TCS provisions (i.e., under section 206C) is far different from the liability imposed under TDS provisions (section 201). The Learned D.R further submitted that the Learned CIT(A) has clearly brought out the fine distinction betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 206C(6), the person, being the seller of specified goods, is not deemed to be an assessee in default, but is made liable to pay the TCS amount. Thus the entire liability in respect of TCS is fastened upon him whether or not he collects the TCS as per the provisions of section 206C(1) of the Act. This is in contrast with the provisions of section 201(1), where the person liable to deduct tax at source (TDS) is deemed to be an assessee in default in respect of the said TDS amount. It is also pertinent to note that the Finance Act, 2006 has inserted sub-section (6A) in section 206C, as per which, the person is also deemed to be an assessee in default in respect of TCS amount. The said section 206C(6A) is akin to section 201(1) of the Act. 8.2 However, in the instant case, the demand has been raised under section 206C(6) of the Act. Hence the Learned CIT(A) drew a distinction between this section and section 201(1). The observations of Learned CIT(A) are extracted below. "In this context, evidences were furnished with respect to 34 buyers who had purchased MFP to the extent of Rs. 15,82,98,388 and who had filed their returns of income incorporating the purchases made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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