2006 (3) TMI 74 - SC - Income Tax

Respondent imported spirit from outside West Bengal - claim for deduction of the amounts payable was rejected by the Income-tax Officer and CIT on the ground that fee payable to the Government by whatever name it is called is a duty and hence it is hit by mischief of section 43B - we feel that an opportunity should be granted to the respondent of meeting this case fairly. Accordingly, we set aside the decision of the High Court as well as the Tribunal and remand the matters back

Summary

Issues:
Assessment of additional fee under West Bengal Excise Rules for import of spirits and its treatment under section 43B of the Income-tax Act, 1961.

Analysis:
The case involved the assessment of additional fee under the West Bengal Excise Rules for the import of spirits and its treatment under section 43B of the Income-tax Act, 1961. The respondent's claim for deduction of the amounts payable was initially rejected by the Income-tax Officer citing section 43B. The Commissioner and the Tribunal also held that the fee payable was akin to a duty and thus covered by section 43B. However, the High Court held that the amount paid was a price for the grant of a privilege, neither a duty nor a fee. The issue was then brought before the Supreme Court for further deliberation.

The Supreme Court noted that the Tribunal had erred in not considering the contention that the levy was an excise duty. The Court found that the Department raised the issue of the impost being a countervailing duty for the first time before the Court, which was not clear in the previous orders. The Court observed that the issue was not squarely raised before the Tribunal or in the reference application. Despite this, the Court decided to grant the respondent an opportunity to address the case of it being a countervailing duty. The Court set aside the decisions of the High Court and the Tribunal and remanded the matters back to the Tribunal for a fresh decision on this specific issue alone. The Court clarified that it had not decided on the merits of the issue and allowed the parties to raise any relevant points before the Tribunal.

In conclusion, the Supreme Court's judgment focused on the treatment of the additional fee under the West Bengal Excise Rules for the import of spirits under section 43B of the Income-tax Act, 1961. The Court highlighted the need for a clear consideration of whether the levy was an excise duty or a countervailing duty, which had not been adequately addressed in the previous proceedings. The Court granted the respondent an opportunity to address the countervailing duty argument and remanded the case back to the Tribunal for a fresh decision solely on this issue, emphasizing that the decision did not prejudice any party's rights to present their arguments before the Tribunal.