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TMI Blog2025 (3) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... l before us: "1) That under the facts and the law, appellant denied his liability for making TCS on compounding fees received from illegal miners, illegal transporters and for illegal storage of minerals on which royalty is payable. Prayed that the Appellant is a Department of Chhattisgarh Government and is a regulatory authority for mining in the district and that there is no default in making TCS u/s. 206C(1C), the demand kindly be cancelled. 2. That under the facts and the law, the learned CIT (Appeals) erred in confirming the order of learned AO who held that appellant was liable to make TCS on compounding fees received for illegal mining & illegal transportation of Rs. 70,363/- comprising of Rs. 38,875/- towards Short TCS and Rs. 31,488/- towards interest. Prayed that compounding fees is not Royalty and there was no liability to make TCS u/s. 206C(1C) of Income Tax Act, 1961. Above demand be cancelled." 3. Shri N.C. Gupta, Ld. Authorized Representative (for short 'AR') for the assessee at the threshold of hearing submitted that the captioned appeals involved a delay of 41 days. The Ld. AR had filed an application seeking condonation of delay a/w. "affidavit", dated 24.02. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Hon'ble Jurisdictional ITAT, Raipur as per its order dt.21.07.2023 in the case of District Mining Officer, Bemtara, 152 Taxmann.com 583, in which the Hon'ble ITAT, Raipur has held as under : "26. Considering the aforesaid multi-facet contentions of Shri G.S. Agrawal, Ld. AR, we shall now deal with the issue that as to whether or not any obligation was cast upon the assessee to collect tax at source (TCS) on the amounts that were received by it as compounding fees (as claimed by the assessee) from the illegal miners/transporters of minerals in the backdrop of the mandate of Section 206C(1C) of the Act r.w. Section 2(47) of the Act, i.e. definition of the term "transfer". 27. At the very outset, it may be observed that what is relevant and determinative as regards the obligation of the assessee, i.e. DMO to collect tax at source (TCS) u/s. 206C(1C) of the Act, is as to whether any right or interest, either in whole or in part in the mine was transferred to another person for use of the same for the purpose of business. Existence of a valid lease or license or contract is not a sine qua non, but rather on construing as per the principle of noscitur a sociis the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... z. Shri. Dinesh Kothari (supra) who was found extracting and transporting, minerals in contravention of the provisions of CMMR in itself reveals that the illegal miner/transporter of minerals was called upon by the assessee to pay 10 times of the amount of royalty in the form of compounding fees. In sum and substance the illegal miner/transporter of minerals as per Rule 71(5) of the CMMR was required to make payment of market value of mineral so extracted or transported a/w such fine which may extend to double the market value of minerals so extracted or transported but the same in no case was to be less than Rs. 5000/- or 10 times of royalty of minerals so extracted, whichever was higher. As per Rule 71(5) of the CMMR an amount i.e. 10 times of royalty of minerals so extracted is collected by the assessee from the illegal miners/transporters of minerals. Our observation is fortified by the aforesaid instance referred to by the Ld. AR wherein an amount of Rs. 90,000/- i.e. 10 times of royalty of Rs. 9000/- had been collected by the assessee from the illegal miner/transporter of minerals i.e. Shri Dinesh Kothari (supra), Page 24 of APB. Apart from that a reference to a letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay the specified amount of DMF, and no involvement of the assessee can be traced in the scheme of the MMDR Act, but we are afraid that the said factual position cannot be gathered on a perusal of the accounts of the assessee as had been placed before us. We, say so, for the reason that a perusal of the "Receipts and Payments account" of the assessee i.e. DMO for the year ending 31-3-2017 reveals reference of 'District Mineral Foundation Trust" on the same, Page 38 to 41 of APB. Also, a similar position prevails in the audited accounts of the assessee for the immediately succeeding year ending 31-3-2018. Apart from that, we find that in the accounts of the assessee i.e. DMO for the immediately succeeding year i.e. F.Y.2017-18 the payments made by the lease holders towards "Contribution funds" are reflected. As the accounts of the assessee prima facie militates against the aforesaid observations arrived at by us by looking into the provisions of section 98 of the Mines and Minerals (Development and Regulation) Act, 1957, therefore, in our considered view the matter in all fairness requires to be revisited by the A.O. The A.0 is directed to verify as to whether the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts paid by the lease holders to NMET. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee." 6.1 Hence, all the grounds of appeal raised by the appellant are dealt in the above referred decision of the Hon'ble Jurisdictional ITAT, Raipur, which is binding on the first Appellate Authority. Hence, following the decision of the Hon'ble ITAT, Raipur, the various issues raised by the appellant are adjudicated as discussed in subsequent paras. 6.2 As held by the Hon'ble ITAT, Raipur in the above referred decision, the appellant was required to collect tax at source on illegal mining and transportation and by not complying the same, the appellant violated provisions of sec.206C(1C) r.w.s.206C(6), 206C(6A) and 206C(7) of the Income Tax Act, 1961. Hence, the order of the A.O. on the issue is confirmed and the demand raised by the A.O. on short TCS and interest thereon u/s. 206C(1C) r.w. 206C(6), 206C(6A) and 206C(7) of the Act in respect of illegal mining an transportation is confirmed and the appeal raised by the appellant on this issue is dismissed. 6.3 As regards collection of tax at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . including interest thereon u/s. 206C(1C) r.w.s. 206C(6), 206C(6A) and 206C(7) of the Act is deleted. 6.4.2 However, wherever the appellant had received contribution from the lease holders towards the National Mineral Exploration Trust, the demand raised by the A.O. including interest thereon u/s. 206C(1C) r.w.s. 206C(6), 206C(6A) and 206C(7) of the Act is confirmed. 6.4.3 The A.O. is directed to verify as to whether the appellant was in receipt of contributions towards NMET from the leaseholders; or the amounts were paid by the respective lease holders directly to the NMET and give effect to the directions as per para 6.4.1 and 6.4.2 above. Hence, this ground of appeal is adjudicated, subject to the directions as above. 7. In the result, the appeal is partly allowed." 6. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 7. We have heard the Ld. Authorized Representatives of both the parties and perused the orders of the lower authorities, as well as considered the order of the Tribunal passed in the case of District Mining Officer, Bemetara Vs. DCIT (TDS), Raipur (C.G) & Ors, 152 Taxmann.com 583. 8. Shri N.C Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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