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TMI Blog2019 (1) TMI 1946X X X X Extracts X X X X X X X X Extracts X X X X ..... ector coal companies for resale to small and medium scale industries. In the present case, the dispute is over applicability of the provisions of Section 206C(1) of the Income Tax Act, 1961 upon the petitioner in relation to certain instances of bulk sale of coal to other units. The said provision broadly requires bulk seller of different commodities including coal to collect in addition to the price of coal a sum equivalent to one per cent thereof as Tax Collected at Source (TCS). The said sum in turn is remitted to Income Tax authorities on account of the individual buyers. The provisions of Section 206C(1) of the Act stipulate:- "206C. ... ... (1) Every person, being a seller shall, at the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; (ii) ... ... (iii) sub-section (1F) means a person who obtains in any sale, goods of the nature specified in the said sub-section, but does not include,- (A) the Central Government, a State Government, and an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or (B) a local authority as defined in Explanation to clause (2) of section 10; or (C) a public sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur letter No. 400 dt. 13.3.2018. Income Tax Department has collected Rs. 54,216,080.75 on account of TCS from CCL, which is to be paid by JSMDC. In its letter dated 06.02.2018, DCIT (TDS), Income Tax, TDS Circle, Ranchi has exempted other PSUs from paying TCS, except JSDMC (copy enclosed). You are therefore requested to clear the above dues immediately." 5. The aforesaid sum was collected by the Income Tax Department treating the CCL as a deductor in default in collection of TCS by an order passed under Section 154/206C(1)/206C(7) of the Act. As would be evident from this order, CCL had raised the point before the issuing authority, being the Deputy Commissioner of Income Tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the individual units claimed exemption. The I.D.L. Limited was one such individual unit. When exemption was denied to Steel Authority of India Limited, the ripple effect was felt by individual units. The I.D.L. Limited approached the High Court for enforcement of the exemption notification but was unsuccessful at the first instance. The opinion of the High Court was that the proper course would have been to institute a civil suit for recovery of the sum realized in spite of the exemption notification. The dispute travelled up to the Hon'ble Supreme Court and the Hon'ble Supreme Court held in paragraph 13 of the said report:- "13. There is, in our view, no doubt that the reclassification of ammonium nitrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner was a trader of coal. That description might fit the writ petitioner as it has no manufacturing facility and the main object of the writ petitioner so far as business of coal is concerned appears to be reselling the coal purchased to small and medium scale industries. But what the Income Tax authority failed to take into account was that there was altogether exemption of public sector units from the rigours of Sub-section (1) of Section 206C of the Act. The obligation to collect such tax has been cast upon the buyer of specified goods and Explanation to the said provision specifically excludes any Corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sum collected, the Deputy Commissioner of Income Tax, TDS Circle, Ranchi shall give a hearing to both the writ petitioner and the CCL and this quantification exercise shall be completed within a period of 10 weeks from the date of communication of this order. Learned counsel for the Income Tax authorities wanted the regular refund course to be followed in this case. We, however, do not think such a course ought to be followed as ex facie there has been collection of income tax without the authority of law in the present case and the Hon'ble Supreme Court in the case of Corporation Bank (supra) had directed refund of the amount in a proceeding arising out of a writ petition. Of course, in that decision the collection was on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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