TaxTMI 
TaxTMI 
2013 (7) TMI 1
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....n further directing the AO(TDS) to recover the tax as deductible u/s 194C on the transmission charges ignoring the fact that tax has already been paid by the deductee (GAIL) on the payment received from the assessee, and thereafter directing the A.O.(TDS) to recover interest u/s 201(1A) from the assessee on such tax when assessee denies its liability to deduct any tax. 3. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in holding that the circular no. 9/2012[F.No. 275/11/2012-IT(B)] dated 17.10.2012 issued by the C.B.D.T., having binding effect over the departmental authorities, is not applicable to the assessee. 4. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in holding that the decision of Hon'ble Gujarat High Court in CIT(TDS) vs. Krishak Bharati Co- op. LTD [2012] 211 TAXMAN 236 (GUJ.)/[2012] 349 ITR 68 (GUJ) is not applicable on the assessee. 5. On the facts and circumstances of the case and in law it is judicially improper on the part of Ld. CIT(A) to interpret the judgment of the High Court and the Board's Circular and come to a conclusion that a particular point has not been decided or considered by the High Court ....
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.... was subject to TDS u/s 194I at the rate under that section ignoring the fact that there was an order u/s 197 issued by the ACIT (TDS), Patna for deduction of tax at a lower rates instead of rates prescribed u/s 194C & 1941 respectively. 13. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in not giving a clear finding whether tax u/s 194C is required to be recovered from the assessee along with interest u/s 201(1A) or only the interest u/s 201(1A) is required to be recovered on the alleged non-deducted tax u/s 194C in the case of purchase of gas from GAIL. 14. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in not giving a clear finding whether tax u/s 194C & 1941 is required to be recovered from the assessee along with interest u/s 201(1A) or only the interest u/s 201(1A) is required to be recovered on the alleged non-deducted tax u/s 194C/ 194I in the case of payment to Bihar State Warehousing Corporation. 5 15. On the facts and circumstances of the case and in law, Ld. CIT(A) erred in ignoring following facts material for the decision: (i) Ownership over the gas does not pass to the assessee during transmission period. ....
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....ction of tax and raised the demand of Rs. 16,90,22,280/- each for the assessment years 2007-08, 2008-09 and 2009-2010. While raising the demand vide impugned order u/s 201(1)/201(1A) dated 30/03/2011, the Assessing Officer has held that the assessee company had paid total amount of Rs. 53,11,09,031/- in one assessment year as transmission charges but tax had not been deducted on it. Therefore, the assessee company is liable to be held as defaulter for non deducting TDS on the payment of transmission charges for transmission of gas purchased from GAIL. While holding so the Assessing Officer has observed from the agreement dated 17/03/2006 executed between the seller and purchaser for purchase and transmission of natural gas that the agreement was for sale, purchase and transmission of natural gas between GAIL as seller and transporter and Kribhco Shyam Fertilizers Limited as buyer. The transmission charges are specified at page 20 of the agreement. The Assessing Officer has also observed that separate invoices for transmission charges were issued by GAIL to the assessee on which the assessee should have deducted tax on its payment to GAIL but assessee did not do so. The Assessing Of....
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....contract of sale of goods. Therefore, the application of section 194C of the Act did not arise. 5.1 The learned Counsel for the assessee further invited our attention to the order of the Tribunal in which the facts of the case are clearly specified, according to which the assessee has purchased the gas from the GAIL and as per the agreement the assessee had to pay the transportation charges besides the cost of gas purchased. The facts of the case are almost similar to the present case and in that case it was categorically held that the contract was for the purchase of gas and not for transmission of gas. The transmission of gas was only a step forward towards execution of contract for sale of gas. The learned Counsel for the assessee Shri R. B. Shukla further invited our attention to the agreement executed between the parties with the submission that it was the duty of the seller to provide the pipeline and paraphernalia for transmission of gas upto the delivery point. Thereafter it was the responsibility of the assessee to transport the gas upto the point of consumption. The transmission charges at specified rate are to be charged on the basis of quantity of gas supplied to the....
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....sessee further invited our attention to section 44AE(7) read with section 2(14) of the Motor Vehicle Act for definition of "goods carriage". According to it „goods carriage‟ means any motor vehicle constructed or adopted when used for the carriage of goods. The expression „carriage‟ refers to means of conveyance especially a wheeled vehicle whereas the expression „transmission‟ is conceptually different and refers to conveying tangible and intangible things by a mode other than vehicle. That being so, the process of transmitting does not come within the purview of „work‟ with reference to „carriage of goods‟. Therefore, if the facts are looked into from any corner, the assessee cannot be held to be in default and the order of the CIT(A) deserves to be set aside. 6. The learned D.R. Shri Alok Mitra, besides placing heavy reliance upon the orders of the lower authorities, has contended that as per the agreement executed between the parties i.e. GAIL and the assessee appellant, the assessee was required to pay the transmission charges apart from the sale price of the gas. For the transmission charges the GAIL has raised th....
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....1(1A) of the Act. 6.2 The learned D.R. further invited our attention to the Circular No. 9 of 2012 issued by the CBDT with the submission that through its last para the Board has clarified that transportation charges paid to a third party transporter of gas, either by the owner/seller of the gas or purchaser of the gas or any other person, shall continue to be governed by the appropriate provisions of the Act and TDS shall be deductible on such payment to the third party at the applicable rates. 7. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the material available on record, we find that the assessee company, engaged in manufacturing of fertilizers, had purchased natural gas from GAIL and the same was transported to the manufacturing unit of the assessee through the pipeline of GAIL for which the assessee had paid the transmission charges to GAIL. According to the Assessing Officer, the transmission charges paid to GAIL are in the nature of rent and the assessee was required to deduct TDS on such payment to GAIL u/s194I of the Act. He accordingly held the assessee to be in default and raised a demand of the TDS u/s201(1) of t....
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....ereunder for the sake of reference: "17. A combined reading of the terms and conditions noted hereinabove would reveal that the gas had to be delivered by the seller to the buyer through pipelines and equipment laid down, owned and maintained by the seller. The seller also had the right to use such pipeline for distribution of gas in favour of other purchasers. Most significantly, paragraph 4.6 of the agreement provided that the title of gas shall pass from the seller to the buyer at the point of delivery of gas. The delivery point shall be at the downstream flange of the pipeline at the outlet of the gas metering station. 18. It thus becomes clear that in the contract itself it was envisaged between the assessee and GAIL that gas would be supplied by GAIL to the assessee at the receiving point of the assessee's factory. For such purpose, GAIL would be laying down its pipelines and other equipment and would maintain such paraphernalia. GAIL would also have the right to use such pipelines and equipment for the purpose of distributing gas to other gas consumers. As already recorded, most significantly, the ownership of the gas passed on from GAIL to the assessee only at the poi....
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....2012 clarifying the controversy arisen out of this judgment of Hon'ble Gujarat High Court and it has been clarified that in case the owner/seller of the gas sells as well as transports the gas to the purchaser till the point of delivery, where the ownership of gas to the purchaser is simultaneously transferred, the manner of raising the sale bill (whether the transportation charges are embedded in the cost of gas or shown separately) does not alter the basic nature of such contract which remains essentially a contract for sale and not a works contract as envisaged in section 194C of the Act. For the sake of reference we extract the contents of the Circular No. 9 of 2012 as under: C.B.D.T. Circulars Circular No. 9 of 2012, dated October 17, 2012 Sub: Deduction of tax at source on payment of gas transportation charges by the purchaser of natural gas to the seller of gas - regarding Representations have been received from various sections of the Industry on the difficulties faced in the matter of Tax Deduction at Source on Gas Transportation Charges paid by the purchasers of Natural gas to the sellers of gas. 2. The Hon'ble Gujarat High Court in the case of CIT (TDS) v.....
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....ction 194C of the Act. Hence in such circumstances, provisions of Chapter XVII-B of the Act are not applicable on the component of Gas Transportation Charges paid by the purchaser to the Owner/Seller of the gas. The use of different modes of transportation of gas by Owner/Seller will not alter the position. 5. It is needless to mention that transportation charges paid to a third party transporter of gas, either by the Owner/Seller of the gas or purchaser of the gas or any other person, shall continue to be governed by the appropriate provisions of the Act and TDS shall be deductible on such payment to the third party at the applicable rates." 8. During the course of hearing, the learned D.R. as tried to distinguish certain facts of the impugned case with the facts of Krishak Bharati Co- operative Limited. The learned D.R. has submitted that in the case of Krishak Bharati Co-operative Limited, the assessee was required to pay a particular amount regularly per month as transmission charges whereas in the instant case the transmission charges depend upon the quantity of gas. Another distinguishable factor pointed out is that the transmission charges were raised in the consolidat....
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....aimed separately or along with the cost of gas in the sale bill and the nature of such contract essentially remains a contract for sale and not a works contract but wherever the transportation of gas is made by third person apart from the seller of the gas, the transportation charges or the transmission charges paid by the recipient/buyer to the transporter shall be governed by the appropriate provisions of the Act i.e. 194C of the Act and TDS shall be deductible on such payment to third party by the buyer at the applicable rates. 10. In the instant case, it has been also surfaced on record that the GAIL has not only supplied/transported the gas sold by it but also the gas purchased by the assessee from other sellers. In those cases the transmission charges paid by the assessee to GAIL certainly attracts the provisions of section 194C of the Act as per aforesaid circular of CBDT. From a careful perusal of the orders of the lower authorities, we find that the assessee has also admitted in his written submissions filed before the CIT(A) that it has also purchased the gas from other sellers i.e. Reliance Industries Ltd. apart from the GAIL but the same was transported by the GAIL a....