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TMI Blog2013 (1) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appropriate authority, the respondents shall not deduct income tax from the bills of the petitioners towards supply of salt under the agreement which is found to be agreement for supply on sale. In favour of petitioner - Writ Petition (C) Nos.330/2010, 449/2006 and 359/2011 - - - Dated:- 27-7-2012 - MR. S.C. DAS J. For the petitioners: M r. D K Biswas, Advocate. For the respondents: Mr. S Chakraborty, Advocate JUDGMENT ORDER (ORAL) The 3(three) writ petitions are taken up together on the prayer of learned counsel of both side and this single order shall govern all the cases. 2. Heard learned counsel, Mr. D K Biswas for the petitioners and learned Addl. G.A., Mr. S Chakraborty for the State-respondents. 3. Pursuant to notices inviting tender, time to time, to supply Super Fine Crushed White Iodized Salt , the petitioner participated in the tender process, turned successful and got the order for supply of such salt under some specific terms and conditions, as per the agreement signed between the petitioners and the Government of Tripura. 4. Since the cases are similar in nature, as agreed to, by the learned counsel of both side, records of WP(C) 330 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fine Crushed White Iodised Salt in 1(One) K.G Poly Packet at Central Stores, A.D. Nagar, Agartala, @ Rs.555.00 (Rupees Five Hundred Fifty Five Only) per quintal for supply of Super Fine Crushed White Iodised Salt of 1(one) K.G. Poly packet at Dharmanagar (including Ganganagar Chandrapur) and at Udaipur, @ Rs,610.00 (Rupees six Hundred Ten Only). The aforesaid rates inclusive of all costs as mentioned in Clause 2 above. The above stipulation of the agreement makes it abundantly clear that the agreement was for supply of salt on sale. The agreement stipulates the quality of the salt, manner of supply and price per quintal as well as per matric ton. There is no element of any work contract in the agreement. 5. There is a clause in the agreement signed by the parties that there shall be a deduction of 2% from each bill towards income tax. 6. The petitioners challenged incorporation of that clause in the writ petitions on the ground that it was a contract for sale and so deduction of tax @ 2% at source from the bill is not permissible under the provisions of Income Tax Act, 1961. 7. The case of the petitioners is that pursuant to agreement signed between the petitioners and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97 quoted above, the respondents cannot be held responsible for failure to deduct tax at source @ 2% under Section 194C of the Income Tax Act, 1961. We, however, make it clear that as and when the Commissioner of Income Tax, NER, Shillong or the assessing officer of the appellant intimates the respondents that deduction under Section 194C of the Income Tax Act, 1961, is to be made from the bills of the appellant, the respondents will deduct income tax @2% of the total payment made to the appellant from out of the amount remaining to be paid to the appellant against supplies of iodised salt made under the contract in question. None of our observations will affect the tax liability of the appellant that may be payable by the appellant to the Income Tax authority directly under the provisions of the Income Tax Act, 1961. So far as the amounts already deducted by the respondents towards income tax are concerned, the same shall be deposited by the respondents in accordance with the Income Tax Act, 1961, and tax deduction certificates will be forthwith issued to the appellant by the respondents . A copy of the judgment is annexed as Annexure-2 to the writ petition which reflects the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of contract for supply printed material as per prescribed specification, it has been said that such contracts would also be covered under Section 194C. It has been represented that the views expressed in these two circulars, to the extent as pointed out above, are in contradiction to each other. 2. The matter has been examined by the Board and it is considered that exclusive reliance on Question/Answer No.15 of Circular No.715, without taking into account the principles laid down in Circular No.681 is not justified. Before taking a decision on the applicability of TDS under Section 194C on a contract, it would have to be examined whether the contract in question is a contract for work or a contract for sale and TDS shall be applicable only where it is a contract for work. 3. It is, therefore, clarified that the provisions of section 194C would apply in respect of a contract for supply of any article or thing as per prescribed specifications only if it is a contract for work and not a contract for sale as per the principles in this regard laid down in para 7(vi) of Circular No.681, dated 8-3-1994. The aforesaid letter, dated 28.07.1997, as reflected in the judgment of Wr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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