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TMI Blog2015 (5) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... and agent/fiduciary and not that of a sovereign and a subject. It is not a business receipt of the licensee which the licensee collects on its own behalf in connection with its business of generating and supplying electricity. The licensee does not collect the electricity duty for its own consumption or utilization. If the licensee collects the duty but does not pay the same to the Government, the statute provides mechanism for the Government to recover the same from the licensee. Even in a case where the licensee is unable to recover the duty but recovers the energy charges, the statutes still provides a procedure for the Government to recover the duty either from the consumer or from the licensee. This view of ours finds support from the decision of Commissioner of Income Tax-vs.-Devatha Chandraiah (1983 (4) TMI 6 - ANDHRA PRADESH High Court). Though the said case deals with sales tax, the principle laid down in that case supports our view. The mischief that Section 43B of the Income Tax Act intended to present, is taken care of by the provisions of the Bengal Electricity Duty Act itself. Thus We clarify that the provision of Section 43B of the Income Tax Act does not apply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the electricity duty collected by the appellant licensee from the consumers falls within the purview of Section 43B of the Income Tax Act, 1961 and as such he dismissed the appeals of assessee-company and upheld the order of the assessing officer. (4) The assessee company preferred appeal against the Commissioner s orders before the Income Tax Tribunal. (5) In its order dated 21st October, 2003 the Ld. Tribunal observed that on a reading of the provisions of Section 5(1) of the Bengal Electricity Duty Act, 1935, it is clear that it is the obligation or duty of the licensee to pay electricity duty payable under Section 3 of the said Act in respect of the energy supplied by the licensee to the consumers unless the licensee is unable to recover his dues, i.e., the dues for the energy supplied by the licensee to the consumers. The provisions contained in Section 5(1) of the said Act also indicate that the duty so payable by the licensee in respect of energy supplied by it to the consumers shall be a first charge on the amount recoverable by the licensee for the energy supplied by it and shall be a debt due from it to the State Government. The electricity duty shall be a first ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Act. Section 43B does not cover all and every payment made by an assessee to the Government and covers only such payments which are chargeable to the assessee. Referring to Sections 2, 3 and 5 of the Bengal Electricity Duty Act, 1935, he contended that on a reading of the aforesaid provisions, it would be clear that the electricity duty is not a levy of tax/duty on the assessee but the role of the assessee as a licensee is to act as a mere collecting agent of the Government and the electricity duty is a charge on the consumers of electricity for the energy consumed by them. He further submitted that the levy of electricity duty is not on the licensee for generation or distribution of electricity and the payment of electricity duty is not a primary liability of the assesse. The assessee is merely supplying energy to the consumers and is obliged to collect the duty from the consumers and make over the same to the State Government. He further pointed out that the assessee neither includes the electricity duty collected from the consumers in the credit balance of its profit and loss account nor is the said sum payable debited to the profit and loss account. He contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable to the sovereign qua- sovereign, but not the amounts payable to the sovereign quaprincipal. With those observations, the Kerala High Court held that Section 43B of the Income Tax Act cannot be invoked in making the assessment of the liability of the assessee under the Income Act with regard to the amounts collected by the assessee pursuant to the obligation cast on it under Section 5 of the Kerala Electricity Duty Act, 1963. (9) Ld. Counsel for the appellant also relied on a Division Bench decision of the Andhra Pradesh High Court in the case of Commissioner of Income Tax-vs.-Devatha Chandraiah Sons reported in (1985) 154 ITR 893. In that case the assessee was a registered firm dealing as commission agent in diverse agricultural commodities and was acting as the commission agent on behalf of the agriculturists, i.e., the agriculturists brought their produce to the assessee for sale and the assessee sold the same on behalf of the agriculturists to various parties. Under the Andhra Pradesh General Sales Tax Act, a commission agent is liable for sales tax if it is not able to prove that the sales made by it were on behalf of the agriculturist principals. However, if it pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee was collecting sales tax only as a commission agent of the principal and the amount cannot be treated as its income. (12) Appearing for the respondents, Ld. Counsel submitted that the amount of electricity duty collected by the assessee-company forms an integral part of the commercial transaction of supplying and distributing electricity and, as such, it is nothing but trading receipt. She contended that it is the nature and the quality of the receipts and not the head under which it is taken or entered in the accounts of the assessee that would be determinative and decisive. She further contended that merely because the electricity duty was not credited in the sale account by the assessee-company in its book of account, the same would not alter or change the nature, character and quality of the amount collected by the assessee by way of electricity duty in the course of its business activities. It was further argued by the Ld. Counsel that perusal of the entire provisions of the Bengal Electricity Act, 1935 would show that it was the primary liability of the assessee-company to pay electricity duty to the Government under the provisions of the said Act. As such, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me taxpayers who did not discharge their statutory liabilities even though they claimed those liabilities as a deduction on the ground that they maintain accounts on mercantile or accrual basis. The Section was intended to apply to cases where the statutory liability remained undischarged though the assessee in such a case claimed deduction on the ground that he maintained those accounts on mercantile business. The question that falls for determination by us is whether Section 43B applies to the electricity duty collected by the assessee company from the consumers of electricity in terms of the provisions of the Bengal Electricity Act, 1935. (16) Sections 3, 5 and 8 of the Bengal Electricity Duty Act, 1985, in so far the same are relevant for the present purpose are reproduced hereunder:- S. 3(1) Subject to the provisions of sub-Section (2) and (3), there shall be charged, levied and paid to the State Government a duty (hereinafter referred to as electricity duty ), on the units of energy consumed at the rates specified in the First Schedule. 5(1) In the case of energy supplied by a licensee, the licensee shall collect and pay to the State Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t charge created by Section 5 (1) of the Act on the amount recoverable by the licensee for the energy supplied by him in respect of duty payable to the Government, is to induce the licensee to make every effort to recover the electricity duty from the consumers for payment to the Government. If the licensee recovers only the price of energy supplied from the consumers but not the electricity duty, then a secondary liability arises on the part of the licensee to make payment of the duty to the Government. However, if the licensee is unable to recover the energy charges as well as the electricity duty, there is no liability on the part of the licensee to pay any duty to the Government. (18) The wording of Section 5 (1) of the 1935 Act to the effect that when any person fails or neglects to pay the electricity duty due from him, the licensee may disconnect power supplied to such person, also indicates that the primary liability of payment of duty is that of the consumer. (19) Thus, in our view, the electricity duty, not being a sum payable by the assessee as a primary liability by way of tax, duty, cess or fee, Section 43B is not attracted to the licensee/assessee in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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