TMI Blog2005 (6) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ating the impugned instructions issued by the Income-tax Department for deduction of tax at source on discounts paid to stamp vendors with direction to the Treasury Officers to refund the amounts withheld from the petitioners and other stamp vendors under interim orders of this court, within three weeks from the date of production of copy of this judgment. - - - - - Dated:- 20-6-2005 - Judge(s) : C. N. RAMACHANDRAN NAIR. JUDGMENT C.N. Ramachandran Nair J.-While the petitioners in W.P. (C) Nos. 20115 of 2003 and 6718 of 2005 are Associations of Stamp Vendors in Kerala, the petitioners in all other writ petitions are individual stamp vendors. The challenge in all the W.P.(C) is against the demand made by the Income-tax Department to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers in stamp paper though subject to the discipline provided in the rules and so much so, deduction of income-tax on discount allowed is not authorised under section 194H of the Act. They have also referred to the provisions of the rules applicable for the sale of stamp paper in Gujarat and compared the said provisions with the rules in Kerala and contended that these writ petitions should be allowed following the decision of the Gujarat High Court. However, standing counsel contended in the first place that the decision of the Gujarat High Court is not correct and he also tried to distinguish the said decision by bringing to the notice of the court, the minor discrepancies between the rules in Gujarat as well as in Kerala particularly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ict discipline in regard to purchase and sale of stamps from the Government. Based on this finding the court held that discount allowed to stamp vendors does not constitute "commission" or "brokerage" to attract TDS on it under section 194H of the Act. Though standing counsel pointed out that section 194H provides for TDS on any payments for any service rendered in the course of buying and selling of goods whatever be the nature of payment, whether it be paid as discount or otherwise, I do not think the section contemplates discount granted by the seller to the buyer as "commission or brokerage". What is provided under rule 39 of the Stamp Rules is a discount to the stamp vendor at the time of sale of stamp paper to him by the Treasury. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t source under section 194H of the Act. However, such situation arises only when there is involvement of services of a third party on payment other than the seller and the purchaser of goods or when the recipient of the benefit markets goods as "agent" of the owner and not as independent dealer. As already stated a discount given on price by the seller to the purchaser cannot be termed as "commission" or "brokerage" for services rendered in the course of buying and selling of goods as the act of buying does not constitute rendering of any service. Counsel for the petitioners referred to various similar transactions involving licensing of dealers, payment of commission and price control. For example, marketing of medicines is controlled by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
