High Court Of Himachal Pradesh
Rudra & Co. & Ors. vs. Union Of India & Ors.
M.N. Rao, C.J. & Lokeshwar Singh Panta, J.
CWP Nos. 94, 95, 101 & 102 of 1998
10th March, 1998
Rajesh Mandhotra, Ramakant Sharma & J.L. Bhardwaj, for the Petitioners : Ashwani Pathak, Indar Singh, B.S. Ranjan, H.M. Sharma, Bhupender Gupta & Neeraj Gupta, for the Respondents
M.N. Rao, C.J. :
All the petitioners in this batch of writ petitions are liquor licence-holders ; they purchase country liquor from Govt. distilleries and sell the same to retail shops which cater to the demands of individual consumers. In each of these petitions, a writ of mandamus is sought against the respondents-IT authorities, not to collect the income-tax at source and consequently refund the tax collected under s. 206C of the IT Act.
On behalf of the petitioners it is contended that the Division Bench of this Court in Gian Chand Ashok Kumar & Co. vs. Union of India (1991) 100 CTR (HP) 1 : (1991) 187 ITR 188 (HP) : TC 5R.620, declared that L-13 licensees fell within the purview of s. 44AC, therefore, the tax at source in so far as the purchases made by them were concerned, should not be deducted and that judgment applies on all fours to the present petitioners.
In opposition to this, the learned Advocate-General has urged that the aforesaid judgment of the Division Bench of this Court has no relevance since s. 44AC itself was deleted and as the Supreme Court in Union of India vs. A. Sanyasi Rao (1996) 132 CTR (SC) 81 : (1996) 219 ITR 330 (SC), has sustained the constitutionality of s. 206C, it is not open to the petitioners to urge that the deduction of tax at source is impermissible in law.
We shall first briefly deal with the judgment of the Division Bench of this Court in Gian Chand Ashok Kumar & Co.âs case (supra). The petitioners in that case were holders of L-13 licences. They purchased liquor from Govt. distilleries and they were required to sell the liquor at the prices fixed under the provisions of the Excise Act. Sec. 44AC of the IT Act incorporated certain special provisions for computing profits and gains from the business of trading in certain goods. Sub-s. (1) specified the percentage of profit in such businesses. So far as Indian made foreign liquor is concerned, it mentioned that 40 per cent of the amount payable by the buyer as the purchase price shall be deemed to be the profits and gains of the buyer from the business. The proviso to s. 44AC inserted by s. 10 of the Direct Tax Laws (Amendment) Act, 1989, read as under: “Provided that nothing contained in this clause shall apply to a buyer where the goods are not obtained by him by way of auction and where the sale price of such goods to be sold by the buyer is fixed by or under any State Act.”
After examining the nature of the trade, the source of purchase, the obligation of the petitioners to sell the liquor at the rates specified under the statute, the Division Bench concluded that the petitioners came within the purview of the proviso and, therefore, the provisions of sub-s. (1) of s. 44AC do not apply to them. Sec. 44AC was deleted by the Finance Act, 1992, w.e.f. 1st April, 1993. The deletion of s. 44AC had resulted in certain minor consequential amendments to s. 206C, which after omitting the immaterial parts reads as under : “206C. (1) Every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax. TAB
Provided that where the AO, 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. . . . . (4) Any amount collected in accordance with the provisions of this section and paid under sub-s. (3) shall be deemed as payment of tax on behalf of the person from whom the amount has been collected and credit shall be given to him for the amount so collected on the production of the certificate furnished under sub-s. (5) in the assessment made under this Act for the assessment year for which such income is assessable. . . Explanation.âFor the purposes of this sectionâ (a) âbuyerâ means a person who obtains in any sale, by way of auction, tender or any other mode, goods of the nature specified in the Table in sub-s. (1) or the right to receive any such goods but does not include,â (i) a public sector company, (ii) a buyer in the further sale of such goods obtained in pursuance of such sale, or (iii) a buyer where the goods are not obtained by him by way of auction and where the sale price of such goods to be sold by the buyer is fixed by or under any State Act ;”
5. It is true that the petitioners herein have not purchased the country liquor by way of auction but that does not take them out of the purview of s. 206C. The Explanation to the section is clear as to who is a “buyer”. It says that the buyer is one “who obtains in any sale, by way of auction, tender or any other mode, goods of the nature specified in the Table . . .” As the petitioners paid the purchase price to the Govt. distilleries, they squarely come under the Explanation (expression) “or any other mode”. It is, therefore, obligatory on the part of the sellerâthe Govt. distilleriesâto collect income-tax from the petitioners at the rates specified in sub-s. (1) of s. 206C.
We must also mention in this context that the constitutionality of s. 206C was upheld by the Supreme Court in Union of India vs. A. Sanyasi Rao (supra). A feeble attempt was made on behalf of the petitioners to press Art. 14 of the Constitution into service. They rely upon document exhibit P-8, a letter dt. 18th Dec., 1997, addressed by the ITO, Ward 2 (TDS), Palampur, to Rangar Breweries Limited, Mehatpur District, Una, HP. In this communication, the ITO has stated that in respect of licence-holders Kewal Krishan & Co. and Sh Gopal Krishan Sood, partner, the High Court of Himachal Pradesh had directed the IT authorities not to collect the income-tax at source under s. 206C of the Act, in view of the judgment delivered in the month of March, 1990, in the case of Gian Chand Ashok Kumar & Co. vs. Union of India (supra). This document in any way does not support the case of the petitioners as already stated by us supra. Gian Chand Ashok Kumar and Co.âs case (supra) concerns the applicability of the proviso to s. 44AC and the Division Bench of this Court has rightly decided the case taking into consideration the facts and circumstances of the case.
After the deletion of s. 44AC, Gian Chand Ashok Kumar & Co.âs case (supra) has absolutely no relevance in judging the legality as to deduction of income-tax at source. As the case of the petitioners squarely falls under s. 206C, it is not open to them to contend that the deduction of tax at source is not permissible in law.
9. For the aforesaid reasons, all the writ petitions fail and are hereby dismissed with no order as to costs.
[Citation : 233 ITR 66]