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TMI Blog2022 (7) TMI 1271X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, if the timber is being sized, sawn into logs of different dimensions and shapes in activities carried on saw mills authorised by the Government, it would amount to a different produce. Even in respect of timbers which are procured as described in table, if it is used in the process of manufacturing, the provision of Section 206C(1) of the Act would not be applicable due to the fact that the product ceased to be a forest produce. As mentioned earlier, the facts in the case of Y. Moideen Kunhi Ors. ( 1985 (11) TMI 58 - HIGH COURT OF KARNATAKA AT BANGALORE] are different from the case on hand as the question in the said case was whether sawing of timber logs into different sizes, planks, beams would amount to manufacture within the meaning of Section 2(f) of the Central Excise and Salt Act, 1944. In the instant case, we are considering the effect of a special provision namely, Section 206(C) of the Act and the said decision cannot be applied to the case on hand. For all the above reasons, we agree with the ultimate conclusion arrived at by the tribunal in dismissing the appeal filed by the revenue but for the reasons assigned by us in the earlier paragraphs. In the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained by any other mode other than forest lease in terms of Section 206C(1) of the Act. Before issuance of such order, show cause notice was issued calling upon the assessee to state as to why he should not be deemed to be an assessee in default for non-collection of tax on sale of timber as per provision of Section 206C(1). The assessee submitted their reply and the case was discussed. The first objection raised by the assessee was that the tax collected at source is applicable on raw timber which mean timber logs that is obtained from the forest produce. Apart from that they had stated that they were trading in processed wood which are imported from countries like Indonesia, Malaysia and Burma. Further it was stated that sawn timber or in other words processed timber is derived from timber logs which are cut in different sizes and then planned by a process involving labour and power and the saw mills which undertake such exercise are recognised by the Government of India and they are extended various concessions from various Governmental departments. The reply given by the assessee was not accepted by the assessing officer primarily for the ground that swan timber conti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the amount payable by the buyer referred to in that section to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income tax on income comprised therein. TABLE S. No. Nature of goods percentage (1) (2) (3) (i) Alcoholic liquor for human consumption (other than Indian made foreign liquor) Fifteen per cent (ii) Timber obtained under a forest lease Fifteen per cent (iii) Timber obtained by any mode other than under a forest lease [Five] per cent (iv) Any other forest produce not being timber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the said provision namely, Section 206 of the Act by Finance Act, 1988 was intended to levy and collect presumptive tax in the case of trading in certain goods to remove hardship and to remove the lacuna. The trades mentioned therein are alcoholic liquor for human consumption; timber obtained under a forest lease; timber obtained by any mode other than under forest lease and any other forest produce not being timber, at different rates. The object of introduction of the new provisions for working out the profits on presumptive basis was to get over the problems faced in assessing the income and recovering the tax in the case of persons trading in the above mentioned items. Further, it was found that large number of persons who are engaged in these activities do not maintain any books of accounts and locating such persons after the contract or agreement becomes impossible in many cases and even in cases where assessment had been completed by the department, it became extremely difficult to collect taxes from them. Therefore, the provisions were brought into the statute not only to estimate the profits on presumptive basis but also to collect the tax on such transactions at specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the case. The submission made on behalf of the assessee was accepted and it was held as follows: The provisions of section 206C of the Act would apply only with reference to the timber obtained under a forest lease ; or timber obtained by any mode other than under a forest lease ; and any other forest produce not being timber. From the above provision, it is clear that the Legislature intends to apply this provision in respect of timber and other produce obtained from the forest and it is not intended to apply to any produce. Therefore, in order to attract the provisions of section 206C of the Act, one has to examine whether the items sold by the petitionercorporation are forest produce or not. In fact, the contention advanced by learned standing counsel for the Department would not reflect from the impugned order. On the other hand, the stand of the second respondent is that the provisions of section 206C of the Act are applicable only with reference to the forest produce. But, according to him, the items of produce sold by the petitionercorporation would fall under items (ii) and (iii) specified in the Table in section 206C of the Act. Therefore, there is absolutely no m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the person responsible for collecting tax, a declaration in writing to the effect that goods referred to in Column 2 of the table contained under Section 206C(1) are to be utilized for the purposes of manufacturing, processing or producing articles or things and not for trading. Thus, if the timber is being sized, sawn into logs of different dimensions and shapes in activities carried on saw mills authorised by the Government, it would amount to a different produce. Even in respect of timbers which are procured as described in table, if it is used in the process of manufacturing, the provision of Section 206C(1) of the Act would not be applicable due to the fact that the product ceased to be a forest produce. As mentioned earlier, the facts in the case of Y. Moideen Kunhi Ors. (supra) are different from the case on hand as the question in the said case was whether sawing of timber logs into different sizes, planks, beams would amount to manufacture within the meaning of Section 2(f) of the Central Excise and Salt Act, 1944. In the instant case, we are considering the effect of a special provision namely, Section 206(C) of the Act and the said decision cannot be applied to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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