First-sale tax collection under section 206C does not extend to licence fees or later-stage liquor buyers.

Section 206C was applied as a first-sale tax collection mechanism for specified goods, so a purchaser at the later stage of the liquor trade was not treated as a buyer for that levy. The authority granting an L-14A licence was not regarded as a seller of alcoholic liquor, because it only conferred a right to vend the goods. The monthly licence fee was held not to form part of the "amount payable" for tax collection, as that expression refers to the sale price of the goods, not the fee for holding the licence. Notices demanding tax on the licence fee were therefore unsustainable.

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Issues: Whether an L-14A licence holder purchasing country liquor from wholesalers is a "buyer" within section 206C of the Income-tax Act, 1961, whether the Excise Department issuing the licence is a "seller" for that provision, and whether licence fee forms part of the "amount payable" on which tax is to be collected.

Analysis: Section 206C applies to a seller collecting tax from the buyer of specified goods, including alcoholic liquor for human consumption, and the Explanation excludes a buyer in the further sale of such goods. The licence holders purchased liquor only at the second stage, after the first sale by distillers to wholesalers, so they fell within the exclusion for subsequent buyers. The Departmental authority issuing the L-14A licence did not sell any goods covered by the provision, but only granted a right to vend liquor. The expression "amount payable" in the section refers to the price payable for the goods sold and does not include monthly licence fee paid for the privilege of holding the licence. The statutory circular relied on by the Court also supported the view that the provision operates only at the first sale.

Conclusion: The licence holders were not buyers within section 206C in respect of the transactions in question, the Excise Department was not the seller of the goods, and the licence fee could not be treated as the amount payable for tax collection under the provision.

Final Conclusion: The notices demanding collection of tax on the licence fee were unsustainable and the writ petitions succeeded.

Ratio Decidendi: Tax collection under section 206C applies only to the first sale of the specified goods, and the tax base is the sale price of those goods, not the licence fee paid for a right to vend them.

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