TCS exemption and interest recalculation: belated Form 27C declarations may be verified, while jurisdictional objections require fresh adjudication.

The ITAT Jaipur held that a jurisdictional objection to the assessing authority required specific adjudication and remitted that issue for fresh decision. It further directed recomputation of the TCS demand and interest, noting that tax collection liability could not be equated with the sale consideration and that interest under section 206C(7) had to follow the amended statutory period. The Tribunal also held that Form 27C declarations under section 206C(1A) are a substantive basis for exemption, so belated filing does not by itself defeat relief if genuineness and correlation are verifiable; the matter was remitted for verification. The Revenue's objections on additional evidence, Form 27BA, and TDS-based principles were rejected.

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Issues: (i) whether the assessee's challenge to jurisdiction of the assessing authority required adjudication and restoration; (ii) whether the TCS demand on the disputed sale amount and the levy of interest under section 206C(7) were sustainable in full; (iii) whether the assessee could claim relief under section 206C(1A) on the basis of belated Form 27C declarations and whether such declarations required verification; and (iv) whether the Revenue's objections regarding additional evidence, Form 27BA compliance, and the applicability of the TDS-based principle to TCS were tenable.

Issue (i): whether the assessee's challenge to jurisdiction of the assessing authority required adjudication and restoration.

Analysis: The jurisdictional objection had been raised before the first appellate authority, but it had not been independently dealt with on merits because it was treated along with the limitation objection. The limitation ground had in fact been stated to be not pressed, whereas the jurisdictional issue survived for decision. Since the objection went to the authority's competence to pass the order, it required a specific finding.

Conclusion: The jurisdictional issue was restored for fresh adjudication and the assessee succeeded on this point for statistical purposes.

Issue (ii): whether the TCS demand on the disputed sale amount and the levy of interest under section 206C(7) were sustainable in full.

Analysis: The appellate authority had treated the entire sale figure of Rs. 1,77,360/- as the TCS demand, although the liability could only be the tax collected at source on that sale and not the sale consideration itself. On interest, the statutory scheme under section 206C(7), as amended, makes interest payable from the date the tax was collectible to the date of furnishing of the buyer's return of income, and the amendment effective from 1.7.2012 governed the field for the relevant period. Interest was therefore not chargeable for the period prior to that effective date.

Conclusion: The quantum of TCS and consequential interest required verification and recomputation, and the assessee obtained partial relief.

Issue (iii): whether the assessee could claim relief under section 206C(1A) on the basis of belated Form 27C declarations and whether such declarations required verification.

Analysis: The proviso to section 206C(1A) treats the buyer's declaration in the prescribed form as the substantive condition for non-collection of tax where the goods are for manufacturing, processing, producing articles or things, or generation of power and not for trading. The time requirement under Rule 37C is procedural and does not by itself defeat the substantive exemption where the declaration is otherwise genuine and correlates with the sales. Since the declarations were produced for the first time before the Tribunal, the matter required verification by the Assessing Officer to test genuineness and correlation.

Conclusion: The matter was remitted for verification of the Form 27C declarations, and the assessee succeeded conditionally on this issue.

Issue (iv): whether the Revenue's objections regarding additional evidence, Form 27BA compliance, and the applicability of the TDS-based principle to TCS were tenable.

Analysis: The record showed that the certificates in Form 27BA and related documents had already been filed before the Assessing Officer and considered in the appellate proceedings; no new material was shown to have been improperly admitted. The prescription relating to interest particulars in Form 27BA was only informational and not a mandatory precondition to relief. The appellate direction to verify the buyers' returns did not amount to an impermissible setting aside. The principle that tax already paid by the buyer should not be recovered again from the collector was treated as equally applicable in the TCS context.

Conclusion: The Revenue's grounds were rejected.

Final Conclusion: The assessee obtained partial relief on jurisdiction, recomputation of TCS and interest, and statutory exemption verification, while the Revenue's appeal failed; the connected matters were disposed of in accordance with these directions.

Ratio Decidendi: For purposes of section 206C, the buyer's prescribed declaration under the exemption proviso is a substantive condition and belated compliance may be accepted if genuineness is verifiable, while interest under section 206C(7) is governed by the amended statutory period from the date tax was collectible to the date of the buyer's return.

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