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TMI Blog2005 (1) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Act, tax at source can be deducted only on the cost price and not on the price including the excise duty. Counsel for the respondent-Department submitted that the aforesaid judgments have not laid down the correct law and section 206C of the Act has not been interpreted properly. He submitted that this question has been determined by the apex court in the case of McDowell and Co. Ltd. v. CTO [1985] 154 ITR 148 whereby earlier judgment in the case of McDowell and Co. Ltd. v. CTO [1977] 39 STC 151 (SC); AIR 1977 SC 1459 has been overruled. He invited attention of this court to the judgment in the case of Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979] 43 STC 13; AIR 1978 SC 1496 and submitted that the question of sale price has been considered in this case. In this case the question of sale price chargeable by the purchaser under the scheme of the cement control order and the sales tax levied upon the said product was considered. In para. 17 of the judgment, it has been held that the amount of freight formed part of the "sale price" within the meaning of the first part of the definition of that term and was includible in the turnover of the assessee. Counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to him for the amount so collected on the production of the certificate furnished under sub-section (5) in the assessment made under this Act for the assessment year for which such income is assessable. (5) Every person collecting tax in accordance with the provisions of this section shall within ten days from the date of debit or receipt of the amount furnish to the buyer to whose account such amount is debited or from whom such payment is received, a certificate to the effect that tax has been collected, and specifying the sum so collected, the rate at which the tax has been collected and such other particulars as may be prescribed. (5A) Every person collecting tax in accordance with the provisions of this section shall prepare half-yearly returns for the period ending on 30th September and 31st March in each financial year, and deliver or cause to be delivered to the prescribed income-tax authority such returns in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed. (5B) Notwithstanding anything contained in any other law for the time being in force, a return filed on a floppy, diskette, magnetic cartridge tape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the convenience of assessees and the interests of revenue, by notification in the Official Gazette, make rules specifying the cases in which, and the circumstances under which, an application may be made for the grant of a certificate under sub-section (9) and the conditions subject to which such certificate may be granted and providing for all other matters connected therewith. Explanation.- For the purposes of this section,- (a) 'buyer' means a person who obtains in any sale, by way of auction, tender or any other mode, goods of the nature specified in the table in sub-section (1) or the right to receive any such goods but does not include,- (i) a public sector company, (ii) a buyer in the further sale of such goods obtained in pursuance of such sale, or (iii) a buyer where the goods are not obtained by him by way of auction and where the sale price of such goods to be sold by the buyer is fixed by or under any State Act; (b) 'seller' means the Central Government, a State Government or any local authority or corporation or authority established by or under a Central, State or Provincial Act, or any company or firm or cooperative society." Explanation (a) defines the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for the sale and is includible in the turnover of the manufacturer. The purchaser has paid the tax because the law asks him to pay it on behalf of the manufacturer. In the case of Union of India v. Om Prakash S.S. and Co. [2001] 248 ITR 105 (SC), the provisions of section 206C of the Income-tax Act, 1461, have been considered. It is held that the aforesaid section refers to a case where by reason of the payment to the seller, the buyer gets specific goods mentioned in the table to the said section or gets a right to collect or receive those goods by virtue of that payment. When the Government issues a licence, it only enables the licensee to carry on trade or business in that item. The payment made by the licensee by way of licence fee does not, ipso facto, entitle the licensee to lift the goods. For obtaining the goods mentioned in the table, the licensee has to place an order on the manufacturer or the supplier of the said goods and it is at that point of time that section 206C would get attracted. While interpreting the word "buyer" occurring in section 206C(11), it is held that the word "buyer" would mean where a person by virtue of the payment gets a right to receive spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount in an auction. Accordingly, the excise duty paid or payable by the buyer will also form part of the purchase price for the purposes of section 44AC. On the same analogy, the 'Nirgam Mulya' or issue price which is paid by a buyer in the State of Uttar Pradesh will also form part of the purchase price. Thus, income-tax will have-to be collected at source under the provisions of section 206C by all persons referred to in section 44AC of the Income-tax Act, 1961 (e.g., Central Government, State Government, local authority, corporations, etc.) at the specified rates, with reference to the purchase price including the excise duty, etc. 3. The above amendment has come into force with effect from the assessment year 1991-92, and, therefore, will be applicable to the collections under section 206C made during the financial year 1990-91. 4. The Finance Act, 1990 has further amended section 44AC so as to include a 'co-operative society' also within the meaning of the term 'seller' as defined therein. The said amendment has also come into effect from the assessment year 1991-92, and will, accordingly, apply to collections made under section 206C during the financial year 1990-91. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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