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2023 (8) TMI 828 - HC - Income TaxTCS deduction - collection of toll by lease or the person employed by him on behalf of the Govt. under HP Tolls Act, 1975 - HELD THAT - As before any liability is imposed on the appellant for payment of tax, it is required to be verified as to whether respective toll lessees of the Himachal Pradesh Government had in fact paid taxes on their income/ sale turn over while collecting tolls at the barriers erected by the State Government or not. In the event such toll lessees had already paid tax on their income, even if the appellant had not deducted the TCS on such income, then the appellant cannot be mulcted with the liability to again pay the tax. In the event of the AO finding that the toll lessees had not paid the tax which ought to have been deducted as TCS by the appellant when it had filed its return, the appellant shall be held liable to pay the same. Therefore, the appellant is directed to share with the respective AO the details of the toll lessees including their PAN number for the respective assessment years in question within four weeks. On receipt of such information, within eight weeks the AO shall verify the return filed by the respective toll lessees , and in the event he comes to the conclusion that the said toll licencee had already paid tax which ought to have been deducted as TCS by the appellant, then he shall not levy any tax on the appellant. If not, he may proceed to collect the same from the appellant Department. The appellant is held liable to pay interest u/s 206C (7) of the Act to the Department for the period between the date of default in deduction of TCS and the date on which the toll licencee had actually paid the income tax on the amount for which there had been a short fall in such deduction, within eight weeks of notification of the same by the Assessing Officer to the appellant.
Issues involved:
The judgment deals with the following substantial questions of law: 1. Whether toll collection under HP Tolls Act, 1975 falls under section 206C (IC) of the Income Tax Act, 1961. 2. Whether delegation of toll collection under section 3-A of HP Tolls Act, 1975 is a statutory authority and not a business as defined under the Income Tax Act. 3. Whether toll collection under HP Tolls Act, 1975 is considered a toll plaza under the Income Tax Act. 4. Whether toll collection under HP Tolls Act, 1975 is exempt from Union Taxation under Article 289(1) of the Constitution. 5. Whether Income Tax is to be assessed on toll lessees and not on the tax collection of the State. Comprehensive Details: 1. The State of Himachal Pradesh enacted the Himachal Pradesh Tolls Act, 1975 to levy tolls on vehicles passing over road infrastructure in the state. 2. Tolls barriers were established by the State Government in certain districts under the Act. 3. The State Government can grant the lease of toll collection rights to individuals for respective financial years through auction or tender under Section 3-A of the Act. 4. Successful bidders are required to pay installments of the lease money into the Government Treasury. 5. The Income Tax Department found no Tax Collection at Source (TCS) being made by authorized representatives collecting toll payments. 6. Notices were issued under Section 156(3) of the Income Tax Act against the Department of Excise & Taxation. 7. Orders were passed for the years 2004-05 to 2008-09, leading to a significant tax demand by the Income Tax Department. 8. Appeals were filed before the Commissioner of Income Tax (Appeals) and later before the Income Tax Appellate Tribunal, which upheld the demands. 9. The appellant contended that TCS provisions are similar to TDS and argued against the liability to pay tax if the lessees had already paid taxes. 10. The appellant cited legal precedents to support their argument regarding tax liability in similar cases. 11. The judgment directed the appellant to provide details of toll lessees to Assessing Officers for verification of tax payments. 12. The Assessing Officer will determine if the toll lessees have paid taxes, and if not, the appellant will be liable to pay the tax. 13. The appellant is also held liable to pay interest under Section 206C (7) for the period of default in TCS deduction. 14. The appeals were disposed of with directions for further actions by the appellant and Assessing Officers.
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