TaxTMI 
TaxTMI 
2011 (3) TMI 1383
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....ssment Years 299 of 2000 1992-1993 269 of 2000 1997-1998 270 of 2000 1998-1999 301 of 2000 1994-1995 302 of 2000 1995-1996 303 of 2000 1991-1992 38 of 2001 1993-1994 41 of 2001 1996-1997 45 of 2001 1994-1995 48 of 2001 1995-1996 49 of 2001 1989-1990 26 of 2001 (Defective) 1990-1991 28 of 2001 (Defective) 1997-1998 4. The District Excise Officer is the assessee in all these appeals. He was under an obligation to collect the tax at source on the sale of alcoholic liquor for human consumption from the buyer under Section 206C. The District Excise Officer did collect the tax at source from the buyers but according to the department it was short. The stand of the department is that the District Excise Officer has collected the tax at source only on the cost of the country liquor but was required to collect the tax at source on basic licence fee and excise duty also. Thus, there was short collection of tax. 5. The assessee filed the returns from time to time disclosing the tax collected at source and deposited by it. The case of the assessee is that it was not responsible or obliged to collect the ....
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....efore, an order passed under Section 206C either under sub section (6) or under sub section (7) is not maintainable. 8. It was further submitted that Section 246 has been replaced by Section 246 A w.e.f. 1st of April, 1998. At the relevant point of time Section 246A (1) had sub sections (a) to (r) and the orders mentioned in sub clause (a) to (r) could be appealed. As the sub sections (6) and (7) of Section 206C did not find any place in any of these sub sections (a) to (r), the order was not appealable. 9. In reply, the learned counsel for the assessee contended that the Apex Court in the case of Union of India and another vs. M/s. Omprakash and another, JT 2001 (3) SC 274, has held that the assessee was liable to collect the tax at source only on the cost of the liquor. It was not liable to collect the tax on the price of licence fee. In other words, the assessee denied its liability to collect the tax on licence fee or excise duty, and the case of the assessee falls under the clause "an order against the assessee where the assessee denies his liability to be assessed under this Act" as finds place in Section 246A (1) (a) of the Act. The said provision was als....
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....ent of money for parting the privilege or the licence fee for doing trade in liquor is neither a tax nor a fee. It is a simple levy for granting exclusive right of the State. Reference can be made to State of Punjab vs. Devans Modern Breweries Limited, 2003 (1) JT SC (485). 13. Section 44B of U.P. Excise Act is titled as "Removal of Doubts". It provides that the State has exclusive right or privilege to manufacture and sell liquor and licence fee mentioned in Section 41(c) of the Excise Act is in substance rental consideration for grant of such right or privilege. 14. Section 206C was inserted in the Income Tax Act w.e.f. 1st of April, 1989 with a view to collect the tax at source on the heads such as from liquor contractors, scrap dealers, dealers in forest products etc. as defined therein. Aims and objects of the enactment of the said provision discloses that it was introduced with a view to collect the tax at source from such persons as the revenue was feeling considerable difficulty in the past in making assessment of income of these persons. 15. In Union of India and another vs. A. Sanyasi Rao and others, (1996) 219 ITR 330 the constitutional vali....
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....ction 206C amounts assessment and therefore the order is appealable under section 246(1) (a) or under section 246A (1) of the Act. 20. In the above back drop the controversy whether such an order is appealable under sub section (1) of Section 246A(mentioned as Section 246 in the question framed, before insertion of 246A) be considered. The relevant portion of the said Section 246A for the sake of convenience is reproduced below: [246A. Appealable orders before Commissioner (Appeals) (1) Any assessee aggrieved by any of the following orders (whether made before or after the appointed day) may appeal to the Commissioner (Appeals) against- (a) an order against the assessee where the assessee denies his liability to be assessed under this Act or an intimation under sub-section(1) or sub-section (1B) of Section 143, where the assessee objects to the making of adjustments, or any order of assessment under sub-section (3) of section 143 or section 144, to the income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed; xx xx xx xx xx .......................................
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....ssary notice of demand and challan of Rs.1,84,19,216/- for payment within a week of receipt of this order, failing which, necessary action will be taken to recover the said demand. Penalty show cause notice for failure to furnish half yearly returns for the half year ending 30.9.91 to 30.9.92 under section 272A(2)(c) has been issued separately and also penalty show cause notice u/s271C for failure to deduct tax at source to the above extend has been issued seperately." 23. In our considered view, in the proceedings so undetaken by the Department for fastening the liability on the assessee, the assessee is assessed under the Act and it is in the nature of assessment proceedings. It may be noted that Section 246A was inserted by Finance Act No.2 of 1998 w.e.f. 1st of April, 1998. Earlier, it was Section 246. The phrase relevant for our purposes namely "an order against the assessee where the assessee denies his liability to be assessed under this Act", was also there in Section 246. The said phrase was subject matter of interpretation by various High Courts from time to time with regard to the question of appealability of an order passed against the levy of interest under S....
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.... 27. The expression "assessed" used in Section 206C evidently has not been used in the sense of computation of income but has been used in the sense of either determination of the amount of tax payable or the whole procedure laid down in the Act for imposing the liability upon the tax payer. 28. Reference can be made to a judgment of the Apex Court in Central Provinces Manganese Ore Co. Ltd. vs. CIT (1986) 160 ITR 961 wherein also the above phrase was up for consideration with regard to the question of maintainability of an appeal in respect of an order passed under Sections 139 and 215 of the Act. The Apex Court has held as follows:- "It is, therefore, clear that levy of penal interest under sections 139 and 215 is part of the assessment. When such penal interest is levied, the assessee is 'assessed', meaning thereby, he is subjected to the procedure for ascertaining and imposing liability on him. If the assessee denies his liability to be assessed under the Act, he has a right of appeal to the Appellate Assistant Commissioner against the order of assessment. Where penal interest is levied under section 215 by the order of assessment, the assessee may altogethe....
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....l will lie only in the cases where registration is refused for the reasons set out in Section 184 (4) or 184 (7) of the Act. The Apex Court noticed that the question is regarding 'a right of appeal'. The view of the Allahabad High Court was upheld by the Apex Court in CIT vs. Ashoka Engineering Co. (1992) 194 ITR 645. The Apex Court has made the following observation: "......................It is true that there is no inherent right of appeal to any assessee and that it has to be spelt from the words of the statute, if any, providing for an appeal. But it is an equally well-settled proposition of law that, if there is a provision conferring a right of appeal, it should be read in a reasonable, practical and liberal manner. Having considered the two alternatives which have been placed before us, we agree with the cases which have been taken the view that the cases before us can be treated as cases where the application or declaration is not in order and is consequently rejected. This construction does not place any undue strain on the langauge of section 185(2) or (3). ............." 31. We are conscious of the fact that the right to file an appeal is statutory r....