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TMI Blog2002 (4) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ise duty as the same is the practice which is prevalent in other States. The Central Government accepted the demand and issued a direction that the tax at source should be deducted only on the cost of the liquor. Even after the issuance of the direction of the Central Government the respondents insisted of deduction of tax at the rate of 10 per cent. on the issue price. It is urged in the writ petition that a writ petition was filed at Indore Bench forming the subject-matter of W.P. No. 1042 of 1995-Ashok Kumar v. Union of India, and by order dated September 12, 1996, this court directed the tax at source should be deducted only on the cost of liquor supplied by the Government of Madhya Pradesh. Similar view was also taken by the Gwalior Bench in Writ Petition No. 2325 of 1996- Vinod Kumar Rathore v. Union of India. It is set forth in the petition that in compliance with the aforesaid orders the Excise Commissioner, Madhya Pradesh, had issued a circular to all the districts to follow the order and collect the tax at source only on the cost of liquor. A copy of the said circular has been brought on record as annexure P4. It is averred in the writ petition that in spite of the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular No. 585, dated November 27, 1990 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, New Delhi, to show that the issue Has been clarified in the said circular and that should govern the field. Assailing the action of the respondents, Mr. Ashok Agrawal, learned counsel for the petitioner, has placed heavy reliance on the decisions rendered by the Indore Bench and Gwalior Bench. It is his submission that the excise duty cannot be regarded as a part of sale price if the sale contents are scrutinised in proper detail. Learned counsel has submitted that the excise duty is not the price of liquor and, therefore, its inclusion for the purpose of determination of price in order to deduct the tax at source is absolutely unsound. Mr. Rohit Arya, learned standing counsel for the Department, has submitted that the decisions rendered by the Indore Bench as well as the Gwalior Bench are not attracted and that is why the Department has challenged the order in L.P.A. before the Division Bench at Gwalior Bench. It is put forth by him that if section 44AC of the Act is read conjointly with sections 206C and 276BB of the Act it would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned single judge referred to the decision rendered in the case of Ashok Kumar and mentioned what transpired in the case of Ashok Kumar and noted the submissions of the Department and, thereafter, posed the question in paragraph 6 as under: "6. The only question involved in this case is about the purchase price within the meaning of section 44AC of the Act (as it stood then). The Explanation clarified that 'purchase price' means any amount (by whatever name called) paid or payable by the buyer to obtain the goods referred to in this clause." Thereafter, the learned single judge referred to the decisions rendered in the cases of Union of India v. A. Sanyasi Rao [1996] 219 ITR 330 (SC) and Bharat Prasad Choudhary v. Union of India [1998] 229 ITR 363 (Patna). After referring to said decisions the learned single judge in paragraph 8 expressed the view as under: "8. Since the case is covered by the judgment of this court in Writ Petition No. 1042 of 1995 (Ashok Kumar v. Union of India), the petition succeeds and is allowed and it is directed that tax at source shall be collected only in respect of cost of liquor supplied by the Madhya Pradesh Government and shall not include ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; (3) --------------------------------------------------------------------------------------- (i) Alcoholic liquor for human consumption (other than Ten per cent. Indian made foreign liquor) and tendu leaves (ii) Timber obtained under a forest lease Fifteen per cent. (iii) Timber obtained by any mode other than under a Five per cent. forest lease (iv) Any other forest produce not being timber or tendu Fifteen per cent. leaves --------------------------------------------------------------------------------------- Provided that where the Assessing Officer, on an application made by the buyer, gives a certificate in the prescribed form that to the best of his belief any of the goods referred to in the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things and not for trading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... canning the documents filed on computer media will be carried out and the media will be duly authenticated by the Assessing Officer; and (b) the Assessing Officer shall also take due care to preserve the computer media by duplicating, transferring, mastering or storage without loss of data. (6) Any person responsible for collecting the tax who fails to collect the tax in accordance with the provisions of this section, shall, notwithstanding such failure, be liable to pay the tax to the credit of the Central Government in accordance with the provisions of sub-section (3). (7) Without prejudice to the provisions of sub-section (6), if the seller does not collect the tax or after collecting the tax fails to pay it as required under this section, he shall be liable to pay simple interest at the rate of two per cent. per month or part thereof on the amount of such tax from the date on which such tax was collectible to the date on Which the tax was actually paid. (8) Where the tax has not been paid as aforesaid, after it is collected, the amount of the tax together with the amount of simple interest thereon referred to in sub-section (7) shall be charged upon all the assets of the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at source under section 206C of the Income-tax Act in respect of profits and gains from the business of trading in alcoholic liquor, forest produce, etc., as also to earlier circulars referred in paragraph 1 of Circular No. 565. 2. As a result of different systems prevailing in different States, the term 'purchase price', used in section 44AC of the Income-tax Act was being understood in different ways. In order to clarify this point, the Finance Act, 1990, has amended the said section to provide that the purchase price would mean any amount (by whatever name called) paid or payable by the buyer to obtain the goods referred to in that section, except the bid 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause, except the amount paid or payable towards bid money in an auction, or, as the case may be, the highest accepted offer in case of a tender or any other mode. As explained by the Central Board of Direct Taxes in Circular No. 585, dated November 27, 1990, the said definition was incorporated so as to make incumbent the collection of income-tax at source also by reference to the excise duty. The said concept of the 'purchase price' has not been retained by the Legislature in the substituted provisions. Therefore, in my opinion, the Bench decision, referred to above, has no bearing on the question involved in the present cases. In the above view of the matter, since the sellers are entitled to receive only the cost price from the retail vendors, therefore, neither it is incumbent nor permissible on their part to collect any amount by way of income-tax with reference to the excise duty payable by the buyers to the Government as a measure of tax or consideration for parting with the exclusive privilege. They will be statutorily liable to collect an amount as income-tax with reference to the cost price only." S.B. Sinha, J. while agreeing with the conclusions came to hold as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d lifts its stock from the warehouses at Gairatganj and Abdullaganj. In this context, I may also profitably refer to section 2(6a) of the M.P. Excise Act, 1915, which defines excise duty. The said provision reads as under: "2(6a) 'excise duty' and 'countervailing duty' means any such excise duty or countervailing duty, as the case may be, as is mentioned in entry 51 of List II in the Seventh Schedule to the Constitution." Section 13 of the aforesaid Act deals with grant of licence required for manufacture, etc., of intoxicants. Section 14 provides for establishment or licensing of distilleries and warehouses. Section 15 of the aforesaid Act which deals with the payment of duty on removal from distillery, brewery or place of storage reads as under: "15. Payment of duty on removal from distillery, brewery or place of storage.--Without the sanction of the State Government no intoxicant shall be removed from any distillery, brewery, warehouse, or other place of storage established or licensed under this Act unless the duty (if any) payable under Chapter V, has been paid or a bond has been executed for the payment thereof." In this context I may also refer to section 26 of the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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