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TMI Blog2019 (1) TMI 1946X X X X Extracts X X X X X X X X Extracts X X X X ..... lely relied on the aspect that the writ petitioner was not the end-user of coal, ignoring the fact that a public sector company was kept outside the purview of the expression buyer as specified in Section 206C(1) of the Act. In such circumstances, we are unable to sustain the order of the Income Tax authorities in which liability to collect tax at source from the buyer has been made applicable in the case of the writ petitioner. Writ petitioner being a wholly owned company of the State of Jharkhand cannot be subjected to the provisions of Section 206C(1) of the Act to the extent the said Section covers a buyer, having regard to the Explanation (aa) to the aforesaid provision read with Section 2(36A) of the Act. We accordingly direct th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g for the petitioner, is to purchase coal from different public sector coal companies for resale to small and medium scale industries. In the present case, the dispute is over applicability of the provisions of Section 206C(1) of the Income Tax Act, 1961 upon the petitioner in relation to certain instances of bulk sale of coal to other units. The said provision broadly requires bulk seller of different commodities including coal to collect in addition to the price of coal a sum equivalent to one per cent thereof as Tax Collected at Source (TCS). The said sum in turn is remitted to Income Tax authorities on account of the individual buyers. The provisions of Section 206C(1) of the Act stipulate:- 206C. ... ... (1) Every person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Government, and an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or (B) a local authority as defined in Explanation to clause (2) of section 10; or (C) a public sector company which is engaged in the business of carrying passengers;] As would be evident from the aforesaid definition, a public sector company is excluded from the definition of buyer. 3. The term public sector company has been defined in Section 2(36A) of the Act and this definition reads:- 2(36A) public sector company means any corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er passed under Section 154/206C(1)/206C(7) of the Act. As would be evident from this order, CCL had raised the point before the issuing authority, being the Deputy Commissioner of Income Tax, TDS Circle, Ranchi that the writ petitioner was a State Government undertaking but the Income Tax authorities proceeded on the basis that as the writ petitioner did not have any plant or factory, it was treated as a trader. The aforesaid order was passed in a rectification proceeding initiated by the Income Tax authorities mainly pertaining to collection of TCS. 6. Point was raised on locus of the writ petitioner to maintain this action and it was argued by Mr. Lamba, learned counsel for the Income Tax authorities that since collection was made fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court and the Hon'ble Supreme Court held in paragraph 13 of the said report:- 13. There is, in our view, no doubt that the reclassification of ammonium nitrate by the order of the Central Board dated November, 1980, casts upon the appellants the obligation to pay the excise duty that is leviable as a result. Such obligation does not arise merely by reason of an agreement between SAIL and the appellants but also by virtue of the provisions of Chapter X of the Central Excise Rules, 1944. The appellants suffer adverse civil consequences and have, therefore, the locus to challenge the reclassification. There is no forum other than the High Court under Article 226 where they can do so, and the High Court was in error in no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the said provision specifically excludes any Corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956. It was urged by Mr. Gadodia that the writ petitioner was a Government company under the provisions of Section 617 of the Companies Act, 1956 and this fact has not been disputed by the Income Tax authority. Thus, the provisions of Section 206C(1) of the Act cannot apply to the writ petitioner irrespective of the fact as to whether the writ petitioner is the end user of the coal purchased or it is a trader of coal. The Income Tax authority has solely relied on the aspect that the writ petitioner was not the end-user of coal, ignoring the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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