Octroi is not a toll plaza collection for tax collection at source; section 206C(1C) does not apply to municipal octroi.

Octroi collected by a municipal corporation through its agent was held to be distinct from a toll plaza arrangement for purposes of tax collection at source. The reasoning turned on the legal difference between octroi, which is a tax on entry of goods into a local area under the municipal law, and toll, which is a charge linked to passage, use of roads or bridges, or temporary use of land. On that basis, the collection of octroi did not fall within the contractual or licensing categories covered by section 206C(1C) of the Income-tax Act, 1961, and no obligation arose to collect tax at source on such amounts.

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Issues: Whether octroi collected by the municipal corporation through its agent fell within the expression "toll plaza" so as to attract the obligation to collect tax under section 206C(1C) of the Income-tax Act, 1961.

Analysis: The levy of octroi under section 127 of the Bombay Provincial Municipal Corporation Act, 1949 was examined against the constitutional and statutory meaning of "toll". The distinction between octroi and toll was drawn from the separate constitutional entries for entry tax and toll, the scheme of the municipal statute, and the nature of toll under the Tolls Act, 1851. Toll was treated as a charge connected with passage, use of roads or bridges, or temporary use of land, whereas octroi was a tax on entry of goods into a local area. On that basis, octroi collection by the municipal agent was held not to be a contract or licence in respect of a parking lot, toll plaza, mine, or quarry.

Conclusion: The obligation under section 206C(1C) did not apply to the collection of octroi, and the assessee had no liability to collect tax at source on that amount.

Ratio Decidendi: Octroi collection by a municipal agent is distinct from a toll plaza arrangement and does not attract tax collection at source under section 206C(1C) of the Income-tax Act, 1961.

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