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TMI Blog2011 (6) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... he buyers of its products and that the provisions of section 206C are neither attracted in its case nor applicable to it. 2. Ground No. 2 Without prejudice to the above, appellant submits that the Commissioner of Income-tax (Appeals) is not justified in rejecting the appellant's contention that as part of the products were sold to manufacturers for use of items purchased in the manufacturing process and not for resale, the question of effecting TCS under section 206C does not arise. 3. Ground No. 3 Without prejudice to the above contentions, appellant submits that the Commissioner of Income-tax (Appeals) is not justified in rejecting the appellant's contention that in respect of the sales made to buyers who have already been assessed to tax and who have filed their Income-tax returns disclosing the impugned transactions, the provisions of section 206C are not attracted." 3. The facts relating to the issues are stated in brief. The assessee is a cooperative society engaged in collection of forest produce and selling them to various organizations/persons. During the financial year 2004-05, the assessee has sold the minor forest produce (MFP) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h forms have been enclosed with the letter and it is not possible whether they have filed within the stipulated time and the Corporation has also not furnished any evidence that they have been submitted to the CIT within the stipulated time". 4. The assessee also contended that the parties who have purchased the goods from the assessee have duly recorded the same in their respective books of account and have also filed the Income-tax returns. However, since the assessee did not file any evidence in support of the said contentions, the Assessing Officer rejected the same. The assessee also claimed that the medical herbs sold by it will not come under the definition of forest produce and hence they are exempt from TCS. The Assessing Officer was not convinced with the said explanation also. Accordingly the Assessing Officer held that the assessee is liable to collect tax at source @ 2.5 per cent of the sales affected by it as per the provisions of section 206C of the Act. Since the assessee has failed to collect the TCS, the Assessing Officer raised a demand of Rs. 58,26,028 under section 206C(6) of the Act and interest of Rs. 7,21,633 under section 206C (7) of the Act. Aggrieved, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in pursuance of such sale of (iii) a buyer where the goods are not obtained by him by way of auction and where the sale price of such goods to be sold by the buyer is fixed by or under any State Act. The said Explanation was amended by the Finance Act, 2003 w.e.f. 1-6-2003 as per which the definition of buyer did not include (i) a public sector company or (ii) a buyer in the retail sale of such goods obtained in pursuance of such sale. The said Explanation was further amended by the Taxation Laws (Amendment) Act, 2003 w.e.f. 8-9-2003 wherein it was provided that the definition of buyer did not include (i) a public sector company, a Central Government, a State Government and an Embassy, a High Commission, Legation, Commission, Consulate and the Trade Representation of a foreign State and a club or (ii) a buyer in the retail sale of such goods purchased by him for personal consumption. For the financial year 2004-05 with which we are concerned in the present appeal, the law relating to the definition of buyer was as per the Taxation Laws (Amendment) Act w.e.f. 8-9-2003. The appellant obviously do not fall in sub-clause (ii) or clause (a) of the Explanation to section 206C. Goin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaration on or before the 7th day of the month next following the month in which the declaration is furnished to him. In the instant case, the appellant has neither furnished 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. In the absence of such evidence, the above contention of the appellant cannot be entertained and hence this ground of appeal is dismissed". Before us also, the assessee did not produce any evidence to show that it has complied with the procedures prescribed under the Act and Rules in order to get exemption from complying with the provisions of section 206C of the Act. Hence we do not find any reason to interfere with the decision of Learned CIT(A) on this issue. 7. With regard to the third ground, the Learned A.R submitted that the TCS is a method of collection of tax from the purchasers and the said purchasers are entitled to claim tax credit of TCS against the tax payable by them. Thus the TCS is akin to the TDS. The only difference is that in the case of TDS, the payer has to deduct TDS and pay only the net a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the tax deductor has satisfied the officer in charge of TDS that the tax due has been paid by the deductee assessee." The Hon'ble Supreme Court took into consideration the above said circular of CBDT while rendering the decision that the recovery of tax cannot be made once again, if the payees have already paid tax on the income on which there was no deduction/short deduction of tax. 8.1 However, under the provisions of section 206C, a liability to collect tax at source (TCS) at the specified percentage on the sales effected is imposed upon every person, being a seller of specified goods mentioned in that section. The nature of goods mentioned is (a) Alcoholic Liquor for human consumption. (b) Tendu leaves (c) Timber obtained under a forest lease. (d) Timber obtained by any mode other than under a forest lease. (e) Any other forest produce not being timber or tendu leaves. (f) Scrap. As per the provisions of section 206C(6), any person who is responsible for collecting the tax (TCS) shall be liable to pay the TCS amount even if he fails to collect the tax from the buyers. For the sake of conveni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court took into account Circular No. 275/201/95-IT(B), dt. 29th January, 1997 issued by the CBDT wherein it was clarified "no demand visualized under section 201(1) of the IT Act should be enforced after the tax deductor has satisfied the officer incharge of TDS, the taxes due have been paid by the deductee assessee. However, this will not alter the liability to charge interest under section 201(1A) of the Act till the date of payment of taxes by the deductee assessee or the liability for penalty under section 271C of the IT Act". However, this is the position of law insofar as the provisions of section 201(1) and 201 (1A) are concerned section 206C(6) and section 201(1) are not similarly worded. 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, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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