2000 (6) TMI 15 - HC - Income Tax

Summary

Issues:
1. Interpretation of section 206C of the Income-tax Act, 1961 regarding the definition of "buyer."
2. Whether L-14A licensees are liable to pay ten percent of the license fee as income-tax at source under section 206C.
3. Determining the role of the Excise and Taxation Commissioner in the context of section 206C.

Analysis:
1. The court addressed the interpretation of section 206C of the Income-tax Act, 1961 concerning the definition of "buyer." The judgment clarified that L-14A licensees, who were considered subsequent buyers of alcoholic liquor from L-13 licensees, were not considered "buyers" within the meaning of the Act. The court emphasized that this interpretation remained valid unless the same person held both L-14A and L-13 licenses, in which case the L-14A licensee would not be considered a buyer in further sales of goods, thus affecting the previous judgment.

2. The issue of whether L-14A licensees were required to pay ten percent of the license fee as income-tax at source under section 206C was also examined. The court reiterated its previous decision that the Excise and Taxation Commissioner, who issued L-14A licenses, was not considered a seller within the meaning of the Act. Therefore, the amount sought to be collected as tax at source from the petitioners was not deemed payable under the provision, leading to the conclusion that the Commissioner could not recover ten percent of the license fee as income-tax at source.

3. Regarding the role of the Excise and Taxation Commissioner in the context of section 206C, the court held that the Commissioner was not a seller within the meaning of the Act. Consequently, the impugned notices issued by the Deputy Excise and Taxation Commissioner seeking to collect ten percent of the license fee as income-tax at source were quashed. The court allowed the writ petitions, highlighting that the petitioners were not required to pay the tax at source, and each party was directed to bear its own costs.