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TMI Blog2006 (4) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... ew Delhi in I.T.A. Nos. 378, 377, 376 and 379/Delhi of 1997, respectively, for the financial years 1991-92, 1992-93, 1993-94 and 1994-95, whereby the learned Income-tax Appellate Tribunal has quashed the orders of the Commissioner of Income-tax (Appeals) (in short "the CIT(A)"), and allowed the appeals filed by the District Excise Officer, Dehradun, and recorded his finding that the assessee is not an assessee in default under section 206C of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). Appeals Nos. 36 and 2001 and 38 of 2001 have been filed by the appellants against the common order passed by the learned Income-tax Appellate Tribunal, Delhi Bench "D", New Delhi, in I.T.A. Nos. 192 and 4030/ Delhi of 1999, respectively, for the assessment years 1996-97 and 1997-98, whereby the learned Income-tax Appellate Tribunal set aside the order passed by the Commissioner of Income-tax (Appeals) and restored the matter to the file for deciding the appeals on the ground that the matter regarding maintainability of the appeals stands squarely covered by the decision taken by Third Member on January 21, 2000, in I.T.A. Nos. 162 to 165/Delhi of 1998. Appeals Nos. 197 of 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the bid money payable by the licensee at the rate specified on the total minimum guaranteed quantity of liquor as determined by the Excise Commissioner through notification, and thus such a bid money is not liable to tax under section 206C(7) of the Act. After appreciating the evidence the ITO (TDS) observed that the District Excise Officer was responsible for collecting tax at source in compliance with the provisions of section 206C and he has failed to do so. He, as such, held the assessee to be in default on account of tax collectible at source under section 206(6) of the Act. In the appeals filed before the Commissioner of Income-tax (Appeals), it was held by the Commissioner of Income-tax (Appeals) that the appellants/District Excise Officer was the "seller" of the country liquor in the respective financial years and he was liable to collect tax under section 206C of the Act from the buyers of the country liquor in his jurisdiction. The learned Commissioner of Income-tax (Appeals) further held that the "basic licence fee" is in fact the excise duty levied by it and formed part of the cost price of the country liquor, and as the appellant admittedly did not collect tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. (ii) Timber obtained under a forest lease Fifteen per cent. (iii) Timber obtained by any mode other than under a forest lease Five per cent. (iv) Any other forest produce not being timber or tendu leaves Fifteen per cent. (v) Scrap Ten per cent. Provided that where the Assessing Officer, on an application made by the buyer, gives a certificate in the prescribed form that to the best of his belief any of the goods referred to in the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things and not for trading purposes, the provisions of this sub-section shall not apply so long as the certificate is in force. (2) The power to recover tax by collection under sub-section (1) shall be without prejudice to any other mode of recovery. (3) Any person collecting any amount under sub-section (1) shall pay within seven days the amount so collected to the credit of the Central Government or as the Board directs. (4) Any amount collected in accordance with the provisions of this section and paid under sub-section (3) shall be deemed as payment of tax on behalf of the person from whom the amount has been collected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of sub-section (6), if the seller does not collect the tax or after collecting the tax fails to pay it as required under this section, he shall be liable to pay simple interest at the rate of one and one-fourth per cent, per month or part thereof on the amount of such tax from the date on which such tax was collectible to the date on which the tax was actually paid. (8) Where the tax has not been paid as aforesaid, after it is collected, the amount of the tax together with the amount of simple interest thereon referred to in sub-section (7) shall be a charge upon all the assets of the seller. (9) Where the Assessing Officer is satisfied that the total income of the buyer justifies the collection of the tax at any lower rate than the relevant rate specified in sub-section (1), the Assessing Officer shall, on an application made by the buyer in this behalf, give to him a certificate for collection of tax at such lower rate than the relevant rate specified in sub-section (1). (10) Where a certificate under sub-section (9) is given, the person responsible for collecting the tax shall, until such certificate is cancelled by the Assessing Officer, collect the tax at the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acted, so as to facilitate the collection of tax on that income which is bound to arise or accrue, at the very inception itself or at an anterior stage and considered in the said perspective, it is idle to contend that the aforesaid statutory provisions lack legislative competence. After all, the statutory provisions obliging to pay 'advance tax' is not anything new and the impugned provisions are akin to that. Counsel for the Revenue brought to our notice sections 44B, 44BB, 44BBA and 44D and contended that there are other similar provisions in the Act. We should state that they relate to nonresidents carrying on business in India and are not much relevant in construing sections 44AC and 206C of the Act. In this context, we should bear in mind that there is a clear distinction between the subject-matter of a tax and the standard by which the amount of tax is measured. Having regard to the past difficulties in making a normal assessment and collection in the case of certain categories of asses-sees, for convenience sake, the Legislature has chosen to make appropriate provision for collection of tax at an anterior stage by adopting the purchase price as the measure of tax. In our vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods specified in the Table in sub-section (1) is an event of tax under section 206C of the Income-tax Act. Under sections 24, 24A, 24B and 30 of the U.P. Excise Act, 1910, and under the Rules known as the U.P. Excise Licences (Tender-cum-Auction) Rules, 1991, framed for the purpose of the aforesaid sections, it is clear that the basic fee is not a consideration for sale of goods mentioned in section 206C of the Income-tax Act and the definition of "seller" and "buyer" in the Explanation appended thereto is not attracted. Sections 24, 24A, 24B and 30 of the U.P. Excise Act, 1910, read as under: "24. Grant of exclusive privilege of manufacture, etc.-Subject to the provisions of section 31, the Excise Commissioner many grant to any person a licence for the exclusive privilege,- (1) of manufacturing or supplying by wholesale, or of both, or (2) of selling by wholesale or by retail; or (3) of manufacturing or of supplying by wholesale, or of both, and of selling by retail; any country liquor or intoxicating drug within any local area. 24A.(1) Subject to the provisions of section 31, the Excise Commissioner may grant to any person a licence or licences for the exclusive priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial and at the rate of paise sixty per reputed quart bottle of beer, stout and other fermented liquors by the wholesale vendors of foreign liquor." For the sake of convenience, rules 2, 3, 5 and 8 of the U.P. Excise Licences (Tender-cum-Auction) Rules, 1991 (in short "the Rules"), as well as notification are reproduced as under: "2. Application.-These rules shall apply to the grant of licences for exclusive privilege selling bhang, country liquor, and foreign liquor by retail, under the tender-cum-auction system in the manner prescribed hereinafter but the Excise Commissioner reserves the right to grant any such licence on payment of a fixed fee or fee determined in accordance with graduated or uniform scale or by auction or by inviting tenders or thorough negotiations. 3. Definitions.-In these rules- 1. 'bid-money' means the consideration of the grant of licence, under section 24 or 24A of the Act for the exclusive privilege of selling by retail any bhang, or country liquor, or foreign liquor in the shop or group of shops for which the auction is made; payable by the auction purchaser under section 30 of the Act in two parts, comprising the licence fee and the basic licence fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distillery or bonded warehouse to the licensed vendor." A conjoint reading of the provisions of the Excise Act, the rules and the notification, it is clear that the basic licence fee is the part of the bid-money which is calculated on the entire minimum guaranteed quality at the rate notified by the Excise Commissioner. By notification dated March 11, 1992, the rate has been fixed. Rule 5 of the said rules provides that the licensing authority shall be competent to fix the number of shops or groups of shops and the minimum guaranteed quantity for the shop or group of shops. Therefore, while determining the number of shops or groups of shops in which the retail sale is to be made, a minimum guaranteed quantity is also fixed. Rule 8 of the said Rules requires a list of licences to be disposed of shall be exhibited along with basic licence fee, if any, in advance at the licensing authority's office on the basis of the rate specified in the notification on the minimum guaranteed quantity. Thus, the basic fee is the minimum bid money in the case of auction and the money to be shown in the tender if it is by way of tender. Thereafter, when the bid is held or tender is considered, the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attracted. The reliance placed on the Explanation to sub-section (11) of section 206C is misplaced as is evident from what is stated hereinabove. 'Buyer' would mean where a person by virtue of the payment gets a right to receive specific goods and not where he is merely allowed/permitted to carry on business in that trade. It is for this reason that we had earlier dismissed the special leave petitions and any observations of the High Court not in consonance with this may be not strictly correct but the fact remains that on licences issued by the Government permitting the licensee to carry on liquor trade the provisions of section 206C are not attracted as the licensee does not fall within the concept of 'buyer' referred to in that section. Buyer has to be buyer of goods and not merely a person who acquires a licence to carry on the business. Hence, the special leave petition is dismissed." In view of the above, the basic fee is not the price of goods but it is a consideration for parting with the privilege. We may notice here that rule 31 of the Rules provides that for lifting the intoxicants from the bonded warehouse the licensee, apart from paying the bid-money in the manner s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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