Broad reading of "seller" under tax law extends source-collection duty to a firm using an individual excise licence.

A firm carrying on business under an excise licence standing in the name of one individual is a "seller" for section 206C of the Income-tax Act, 1961, where the firm is in fact conducting the business and is assessed and registered under the Act. The Court read "seller" broadly and rejected the argument that the firm was outside the collection-at-source provision merely because the licence was not in the firm's name. It also held that a person who helped constitute the firm and benefited from the Income-tax Act could not rely on an alleged excise-law irregularity to avoid section 206C compliance. The challenge to the vires of sections 44AC and 206C was not decided.

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Issues: Whether a firm carrying on the business under a licence obtained in the name of an individual licensee is a "seller" within section 206C of the Income-tax Act, 1961, and therefore liable to collect income-tax at source.

Analysis: The challenge to the vires of sections 44AC and 206C was not decided, as that question was already pending before the Supreme Court. On the issue actually decided, the Court held that section 206C defines "seller" broadly and does not exclude a firm merely because the excise licence stands in the name of one individual. Where the business is being carried on by a firm and the firm is assessed and registered under the Income-tax Act, the firm falls within the statutory ambit of section 206C. The Court further held that a licensee who joins in constituting the firm and takes advantage of the Income-tax Act cannot later contend that the firm is outside the provision because of alleged contravention of excise law.

Conclusion: The firm is a "seller" for the purposes of section 206C and is liable to comply with the collection provisions; the contention to the contrary fails.

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