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TMI Blog2013 (3) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... d commencing from the date on which the assessee ought to have deducted tax at source till the taxes are paid to the Government. 2. The facts and circumstances under which the assessee was treated as an assessee in default are as follows. The assessee (hereinafter referred to as "NAFED" or "Assessee" for the sake of brevity) is an apex Co-operative Society and Marketing Federation for dealing in agricultural produce, functioning under the direct control and supervision of the Ministry of Agriculture in the Central Government. Besides the Government of India (GOI) itself, the Primary Producer Co-operative Societies at the village, district and National Marketing Federation are its members. 3. The GOI through the Ministry of Agriculture in order to protect the interest of the farmers announces before the beginning of each agricultural season, the Minimum Support Price (MSP) for the major crops like wheat, rice, cotton, sugarcane, potatoes, onions, oilseeds etc. In case the price of any of these items falls below the MSP in any part of the country, then GOI enters the market and procures that agricultural produce at the MSP by what is referred as the Price Support Scheme (PSS) opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the copra, ensure that the farmers lawfully entitled to MSP get the benefit. ♦ NAFED will supply gunny bags for packing copra procured. ♦ Storage charges are not payable to the procuring societies. ♦ Procuring Societies have to maintain proper records regarding payments made. ♦ Annexure-C to the Agreement gives the service charges that NAFED will pay to KSCMFL and societies that procure copra over and above the MSP. They include:- (a) Handling charges (for sorting, filling, weighing, stitching charges of gunny bags, stacking, loading into truck, etc.); (b) Transportation charges; (c) Gunny bags cost; (d) Market committee cess; & (e) Service charges. 7. In these appeals, the issue to be decided is as to whether the payment on account of service charges by NAFED to KSCMFL or procuring societies is in the nature of "commission" within the meaning of section 194H of the Act. If it is "commission" within the meaning of section 194H, then whether NAFED ought to have deducted tax at source on the component of payment made to KSCMFL or procuring societies; and failure to do so will result in NAFED being treated as an assessee in default u/s. 201( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilseeds Marketing Fedn. Ltd. 1862173 11173 Total TDS for F.Y. 2008-09 is 6,937 12,769 Total payable is Rs.19,706 Grand Total Tax payable Rs.1128111/- 10. Aggrieved by the order of the CIT(Appeals), the assessee has preferred the present appeals before the Tribunal. 11. We have heard the rival submissions. The ld. counsel for the assessee submitted that the substance of the transactions with the SLAs are as follows:- (i) The State Level Co-operatives purchase the goods from the farmers in its own name and discharges the price to the farmer from its own funds. During this process, it discharges the liabilities towards Market/Mandi fee and local VAT/Purhcase tax, if any, to the State Commercial Tax department in its own capacity. It then gets the produce sorted and packed at its own cost. (ii) NAFED purchases the goods from the District/State Level Co-operatives against their sales bill/invoice which would show the break-up of the costs and the mark-up allowed to the Society in accordance with the Scheme of the GOI and makes the payment as per the invoice amount. (Sample copies of some of the invoices are filed). It was submitted, thus the transaction between NAFED and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 194H, the payment must be by a "person acting on behalf of another person". The element of "agency" has necessarily to be there. If the dealings between the parties is not on a "principal to agent" basis, then section 194H does not get attracted. 15. The ld. DR relied on the order of the CIT(Appeals). 16. We have considered the rival submissions. As already seen, clause (i) of Explanation to section 194H of the Act defines what is commission/brokerage for the purpose of section 194H of the Act. It lays down that commission/brokerage means any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities. 17. Further, clause 16 of the agreement dated 11.04.2008 lays down as follows:- "16. The SLA understands that the Price Support Operations of Ball/Milling Copra is in the account and on behalf of the Ministry of Agriculture, Government of India. They shall ensure that the same is undertaken by them on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are mentioned as a purchasing party. The name of the assessee no where appears in this register. (c) After purchase of goods by the societies but before delivery of the same to the specified warehouse of the assessee, if there is any shortage/pilferage or damage to the goods it is on account of the societies and not of the assessee. It becomes the property of the assessee only after goods are deposited in the warehouse. (d) The societies declare the goods which are mentioned in there VAT Invoice (in which societies commission is reflected) as sales in there books of accounts and the assessee declare the same as purchase in its books of accounts. Thus the transaction is of purchase and sales and not a payment of commission. The societies commission is thus only the disclosed margin of profit of the societies. It is just like profit plus agreement/arrangement for purchase of goods. (e) In the VAT Invoice raised by the societies they separately disclose the naked cost of the goods purchased by them, the Mandi Tax paid by them. the expenses incurred by them for bringing the goods to the specified warehouse of the assessee and their profit margin named as societies commission/ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er it was found to be part of the cost at which the food grains were to he transferred by the procurement agencies to the assessee. With these facts, it was found that as the assessee had not paid any amount to the procurement agencies on account of transportation, interest or storage charges as such, accordingly there was no liability for deduction of tax. The contention of the learned Counsel for the Revenue that in fact all these factors had been taken care of while fixing the price at which the food grain was to be billed to the assessee, carries no weight. If expenses incurred by a person on account of transportation, interest, storage etc. are added to the cost of the goods, it cannot be inferred that the person who is billed had paid certain amount on account of those services separately as the same becomes part of the commodity so sold. For the reasons mentioned above, we do not find any substantial question of law arises in the present appeal. The same is accordingly dismissed.'' Placing reliance on the above decision and the facts and circumstances discussed in foregoing paragraphs, we are of the view that the finding of lower authorities that society commission cha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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