TMI Blog2002 (4) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... nce fees, tax at source was deducted at the rate of 10 per cent. on the issue price which is inclusive of cost of liquor plus excise duty on it. The said deduction was done as per section 206C of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). As put forth in the writ petition many contractors submitted representations to the Central Government for a direction that the tax at source should be deducted only on the cost of liquor purchased from the State Government and exclusive of the excise duty as the same is the practice which is prevalent in other States. The Central Government accepted the demand and issued a direction that the tax at source should be deducted only on the cost of the liquor. Even after the issuance of the direction of the Central Government the respondents insisted of deduction of tax at the rate of 10 per cent. on the issue price. It is urged in the writ petition that a writ petition was filed at Indore Bench forming the subject-matter of W.P. No. 1042 of 1995-Ashok Kumar v. Union of India, and by order dated September 12, 1996, this court directed the tax at source should be deducted only on the cost of liquor supplied by the Government o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r/purchaser for purchasing from the Government and these amounts are clearly covered by the expression "amount payable by the buyer" as per section 206C(1) of the Act. It is put forth that the country liquor contractors are the buyers and the State Government authorities are the sellers and, therefore, as per the provisions engrafted under section 206C(1) the payment made by the buyer to the seller including the auction money would be subject to the collection of tax at source. A reference has been made to Circular No. 585, dated November 27, 1990 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, New Delhi, to show that the issue Has been clarified in the said circular and that should govern the field. Assailing the action of the respondents, Mr. Ashok Agrawal, learned counsel for the petitioner, has placed heavy reliance on the decisions rendered by the Indore Bench and Gwalior Bench. It is his submission that the excise duty cannot be regarded as a part of sale price if the sale contents are scrutinised in proper detail. Learned counsel has submitted that the excise duty is not the price of liquor and, therefore, its i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties keeping in view the letter dated August 1, 1994. It is submitted by Mr. Rohit Arya, learned standing counsel for Department, that as the decision was rendered on consent and making reference to a letter the same cannot be a binding precedent. Without getting into the subtleties of the said submission I may only state that as learned counsel for the parties have argued at length I will deal with the matter keeping in view the provisions and the law relating to the field. In the case of Vinod Kumar Rathore, the learned single judge referred to the decision rendered in the case of Ashok Kumar and mentioned what transpired in the case of Ashok Kumar and noted the submissions of the Department and, thereafter, posed the question in paragraph 6 as under: "6. The only question involved in this case is about the purchase price within the meaning of section 44AC of the Act (as it stood then). The Explanation clarified that 'purchase price' means any amount (by whatever name called) paid or payable by the buyer to obtain the goods referred to in this clause." Thereafter, the learned single judge referred to the decisions rendered in the cases of Union of India v. A. Sanyas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for human consumption (other than Ten per cent. Indian made foreign liquor) and tendu leaves (ii) Timber obtained under a forest lease Fifteen per cent. (iii) Timber obtained by any mode other than under a Five per cent. forest lease (iv) Any other forest produce not being timber or tendu Fifteen per cent. leaves --------------------------------------------------------------------------------------- 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 amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this section, shall, notwithstanding such failure, be liable to pay the tax to the credit of the Central Government in accordance with the provisions of sub-section (3). (7) Without prejudice to the 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 two 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 charged 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 (I), 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) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different ways. In order to clarify this point, the Finance Act, 1990, has amended the said section to provide that the purchase price would mean any amount (by whatever name called) paid or payable by the buyer to obtain the goods referred to in that section, except the bid amount in an auction. Accordingly, the excise duty paid or payable by the buyer will also form part of the purchase price for the purposes of section 44Ac. On the same analogy, the 'Nirgam Mulya' or issue price which is paid by a buyer in the State of Uttar Pradesh will also form part of the purchase price. Thus, income-tax will have to be collected at source under the provisions of section 206C by all persons referred to in section 44AC of the Income-tax Act, 1961 (e.g., Central Government, State Government, Local Authority, Corporations, etc.) at the specified rates, with reference to the purchase price including the excise duty, etc. 3. The above amendment has come into force with effect from the assessment year 1991-92 and, therefore, will be applicable to the collections under section 206C made during the financial year 1990-91. 4. The Finance Act, 1990, has further amended section 44AC so as to includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se duty. The said concept of the 'purchase price' has not been retained by the Legislature in the substituted provisions. Therefore, in my opinion, the Bench decision, referred to above, has no bearing on the question involved in the present cases. In the above view of the matter, since the sellers are entitled to receive only the cost price from the retail vendors, therefore, neither it is incumbent nor permissible on their part to collect any amount by way of income-tax with reference to the excise duty payable by the buyers to the Government as a measure of tax or consideration for parting with the exclusive privilege. They will be statutorily liable to collect an amount as income-tax with reference to the cost price only." S.B. Sinha, J. while agreeing with the conclusions came to hold as under: "The situation obtaining in this case is absolutely different as, by reason of the present arrangement, excise duty is to be paid separately to the State of Bihar, whereas the cost price is to be paid directly by way of bank draft to the contractors, i.e., wholesaler and/or manufacturer of country spirit. Retail dealers, in this case are required to deposit the excise duty payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II in the Seventh Schedule to the Constitution." Section 13 of the aforesaid Act deals with grant of licence required for manufacture, etc., of intoxicants. Section 14 provides for establishment or licensing of distilleries and warehouses. Section 15 of the aforesaid Act which deals with the payment of duty on removal from distillery, brewery or place of storage reads as under: "15. Payment of duty on removal from distillery, brewery or place of storage.--Without the sanction of the State Government no intoxicant shall be removed from any distillery, brewery, warehouse, or other place of storage established or licensed under this Act unless the duty (if any) payable under Chapter V, has been paid or a bond has been executed for the payment thereof." In this context I may also refer to section 26 of the aforesaid Act which deals with ways of levying such duty. The said provision reads as under: "26. Ways of levying such duty.--Subject to such rules regulating the time, place and manner as the State Government may prescribe, such duty shall be levied rateably on the quantity of excisable article imported, exported, transported, collected or manufactured in or issued from a di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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