1992 (9) TMI 36 - HC - Income Tax

Summary

Issues involved:
The judgment addresses the legality of deducting income tax from L-13 licensees of liquor under section 206C of the Income-tax Act, 1961, as amended, and the applicability of previous court decisions to the current scenario.

Details of the Judgment:

1. Background and Legal Framework:
The petitioners, L-13 licensees of liquor, were granted licenses for a specific period and were subject to fixed license fees. Distilleries were deducting income tax and an additional surcharge from the petitioners at the time of purchase. The petitioners challenged this practice based on previous court decisions.

2. Previous Court Decisions:
The judgment refers to the case of K. K. Mittal and Co. v. Union of India, where the court prohibited distilleries from deducting income tax from L-13 licensees. The court also highlighted the Himachal Pradesh High Court's decision in Gian Chand Ashok Kumar and Co. v. Union of India, supporting the non-deduction of income tax from L-13 licensees.

3. Applicability of Section 206C:
Section 206C of the Income-tax Act, 1961, was amended, but the court found no significant change from the previous provisions. The judgment emphasized that collecting income tax from L-13 license holders would be arbitrary, considering their nominal profit margins.

4. Precedent and Conclusion:
The court addressed the issue of following precedents in light of Supreme Court decisions staving the operation of previous judgments. Despite this, the court relied on the decision in K. K. Mittal's case and directed the respondents not to deduct or charge income tax from the petitioners, the L-13 licensees, under section 206C of the Income-tax Act.

In conclusion, the judgment allowed the writ petitions, prohibiting the deduction or charging of income tax from L-13 licensees and emphasizing the applicability of previous court decisions in similar matters.