TaxTMI 
TaxTMI 
2022 (7) TMI 1271
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....ng officer under Section 206C(6)/206C(7) of the Income Tax Act, 1961 ? ii) Whether on the facts and in the circumstances of the case the Learned Tribunal erred in law in holding that Swan timber is different from timber when there is no distinction drawn under Section 206C of the Income Tax Act, except in the case of timber obtained under forest lease ? iii) Whether on the facts and in the circumstances of the case the Learned Tribunal erred in law and in facts in giving relief to the assessee for no collecting TCS from the buyers without making any enquiry about the no filing of the required declaration in Form no.27C from the buyers which is mandatory for getting exemption under Section 206C of the Income Tax Act ? iv) Whether on the facts and in the circumstances of the case the Learned Tribunal erred in law and in facts in holding that liability under Section 206C of the Act does not arise in case of traders in Sawn timber ? We have heard Mr. Soumen Bhattacharyya, learned standing counsel for the appellant/revenue and Mr. J. P. Khaitan, learned senior counsel assisted by Mr. Ananda Sen, learned Advocate appearing for the respondent/assessee. An ....
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....ted in 1986 (23) ELT 293, Kar. which decision was affirmed by the Hon'ble Division Bench in the case of Collector of Central Excise, Bangalore-I vs. Y. Moideen Kunhi & Co. reported in (2004) 163 ELT 299, Kar.-DB. In the said decision, the decision of the Hon'ble Supreme Court in the case of State of Orissa & Ors. vs. Titaghur Paper Mills Co. Ltd. &b Anr. reported in AIR 1985 SC 1293 was referred to. This decision was pressed into service by the learned standing counsel for the department to state that the timber and sized or dressed logs are one and the same commercial commodity and, therefore, the assessee though stated to have dealt with sawn timber, it continues to remain as a timber and the assessing officer rightly treated the assessee as the assessee in default. On going through the decision in Y. Moideen Kunhi & Ors. (supra), we find that the facts in the said case are quite different and distinct from the facts before us. To justify our decision, we are required to refer to Section 206C of the Act. Since there has been amendments to the said provision, we are required to take note of the said amendments. The provision as it stood as on 1990 is as follows: "Profits ....
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.... from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table as it stood immediately before the 1st day of June, 2003 , a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax in accordance with the provisions of this section as they stood immediately before the 1st day of June, 2003. "[(1A) Notwithstanding anything contained in subsection (1), no collection of tax shall be made in the case of a buyer, who is resident in India, if such buyer furnishes to the person responsible for collecting tax, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the goods referred to in column (2) of the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things and not for trading purposes." Thereafter, the provision remained as such. The object for introducing the said provision namely, Section 206 of the Act by Finance Act, 1988 was intended to levy and coll....
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....nt/assessee had dealt with a forest produce and the test is not whether the timber and sawn timber are one and the same. In fact, such a test is not required to be applied in the case on hand as the same is not the subject-matter. In fact, the assessee, while submitting their reply to the show cause notice at the first instance, pointed out that collection of tax in terms of Section 206C would be applicable only in respect of timber obtained from forests. In effect, the assessee meant to say that they had not dealt with forest produce. Our view is duly supported by the decision of the Hon'ble Division Bench of the Andhra Pradesh High Court in the case of Andhra Pradesh Forest Development Corporation Ltd. vs. Assistant Commissioner of Income Tax & Anr. reported in 2005(2) ITR 245. The facts in the said case was also more or less identical and the only difference being the appellant/assessee, which was Forest Development Corporation of the State of Andhra Pradesh, took a stand that the product was an agricultural produce. Therefore, Section 206(1) of the Act would have no application to the case. The submission made on behalf of the assessee was accepted and it was held as follows: ....
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.... and converting them into logs would amount to production of a new commercial article or thing within the meaning of Sections 32AB, 80HH and 80J of the Act. This decision would be of relevance on account of the proviso as contained under Section 206C(1) which states that where the assessing officer, on an application made by the buyer, gives a certificate in the prescribed form that to the best of his belief any of the goods referred to in the table are to be utilised for the purpose of manufacturing, processing or producing articles or things and not for trading purposes, the provision of sub-Section (1) of Section 206 shall not apply so long as the certificate is in force. The effect of the said provision continue to remain the same even after the amendment in the year 2003 wherein the proviso stood substituted. However, this condition was inserted by way of sub-Section (1A) of the Act which states that notwithstanding anything contained in sub-Section (1) of Section 206C(1), no collection of tax shall be made in the case of a buyer who is a resident in India and if such buyer furnishes to the person responsible for collecting tax, a declaration in writing to the effect that good....