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TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 31
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....ll apply mutatis-mutandis to the remaining cases. The assessee has assailed the impugned order on the following grounds of appeal before us: "Grounds of appeal 1. That under the facts and the law, the learned Commissioner of Income Tax (Appeals), NFAC erred in dismissing the Appeal ex-parte though Application for Adjournment was filed, the Appellant is a Department of Chhattisgarh Government and is a regulatory authority for mining in the district., the Ld. CIT(A), NFAC further erred in not considering the material available with him on statement of facts, grounds of appeal and Assessment order. Prayed to cancel the demand of Rs. 35,100/- raised u/s. 206C (1C), (6) & (7). Grounds of Appeal 2. That under the facts and the law, the learned Commissioner of Income Tax (Appeals) further erred in confirming the Order of the Ld. AO who raised demand of Rs. 2,927/- including interest at Rs. 903/-, dismissing the explanation that there was no liability u/s 206C (1 C) on the Appellant to collect tax at source on Compounding Fee received on illegal mining. Prayed that there was no liability and demand be cancelled. Grounds of appeal 3. That under the facts and the law, the learned Commi....
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....asks therein assigned, viz two clerks and one inspector; (iii) substantial time was devoted by the officers/staff in the cases relating to illegal mining and transportation of minerals and compounding of the same; (iv) substantial time was exhausted for preparing of replies to the various queries raised during Vidhan Sabha Session; (v) the officers/staff having remained busy during the period i.e. November to January as regards the work that was assigned to them regarding checking of procurement of paddy of co-operative societies; (vi) change in the email-id by the earlier mining officer without making necessary information available to the Income-tax department, a fact which was not to the knowledge of the assessee, due to which the assessee remained unaware of the orders uploaded by the CIT(Appeals), NFAC; (vii) staff members of the assessee not being computer savvy had remained unaware of the Income tax proceedings; and (viii) that the fact about the order having been passed by the CIT(Appeals), NFAC, Delhi dated 25.11.2022 came to the notice of the assessee only when its counsel had opened the portal on 18.02.2023. For the sake of clarity the reasons leading of the delay mentio....
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....the aforesaid application, it transpires that it is the claim of the assessee that the delay had occasioned for multi-facet reasons, viz. (i) shuffling of the concerned staff members who were responsible for filing of the appeals; (ii) the concerned staff members not being computer savvy remained unaware of operating the income tax portal; (iii) the office of the assessee was situated in a Naxal infested area in South Bastar with poor rail and road connectivity; (iv) the concerned staff members who were responsible for filing of the appeals had remained busy in visiting various mines, inspection of illegal mining, preparation of replies to the queries raised by Vidhan Sabha, arranging protocol of the ministers etc; and (v) staff members during the relevant period remained busy in one "Jan Sunwai (Public Hearing)" carried during the year which had turned violent and was followed by stalling of working in the mines for a period of 3 days. For the sake of clarity, the reasons given by the assessee appellant for the aforesaid delay are culled out as under (extract): "5. As submitted earlier, Shri Yogendra Singh wh0 was earlier holding the post as Mining Officer was transferred to Rai....
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....ised by the Members of Legislative Assembly in the State Assembly; (iii) the officers/staff members of the assessee were not conversant with the newly introduced faceless appeal system and were not computer savvy due to which the order of the CIT(Appeals), NFAC did not come to their notice; (iv) shuffling of the staff members specifically transfer of Shri Rakesh Thakur i.e. computer operator and Assistant Programmer who was looking after the TDS matters to Kanker on 14.10.2022 followed by appointment of a new incumbent; (v) disturbance of working during the relevant period due to strike of the staff; (vi) income tax raid at the premises of Deputy Director (Mineral Administration), viz. Shri Shiv Shankar Nag on 08.09.2022 due to which he remained very much disturbed and did not attend the office for a long period; (vii) proceedings initiated by the Enforcement Directorate against Shri Shiv Shankar Nag (supra) on 21/22.11.2022, pursuant whereto he was arrested on 25.01.2023, as a result of which, an atmosphere of fear and apprehension remained in the mind of the officers and the sub-ordinates; (viii) taking over the charge of the assessee's office by Shri Haresh Mandavi, Additional C....
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....king of this office. 7) The Income tax department raided the premises of above Shri Shiv Shankar Nag on 08.09.2022, as published in News Papers. Therefore, Shri Shiv Shankar Nag became very much disturbed and puzzled. He also did not attend the office, for long time. Thereafter, the Enforcement Directorate also proceeded against him and raided his office as well as residence of Shiv Shankar Nag on 21st and 22nd November 2022. Subsequently he was arrested by Enforcement Directorate on 25.01.2023. These all proceedings created atmosphere of fear and apprehension in the minds of officers and subordinates. He is still under detention. Thereafter, Shri Haresh Mandavi, Additional Collector, Jagdalpur took additional charge on 02.02.2023. This was additional charge to the Additional Collector. He was also having additional charges of other departments namely Additional District Magistrate, Nazul officer, P.O. Tribe Department and was Officer in charge (OIC) of various departments numbering 39. Post at Jagdalpur of District Mining Officer is Class II Post. Apart from looking after above charges additional collector was also busy continuously in maintaining law-and-order and other day-t....
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.... the officers/staff members in the times to come should remain extra vigilant about affecting compliance to the statutory requirements/obligations within the prescribed time period contemplated under law. ON FACTS: 6. Succinctly stated, the office of the assessee, i.e. District Mining Officer ("DMO", for short), a department of the State Government of Chhattisgarh was subjected to a TDS survey u/s. 133A(2A) of the Act on 24.09.2018. 7. During the course of aforesaid proceedings the survey officials came across certain issues, viz. (i) the assessee by not collecting tax at source (TCS) on the amount of compounding fees that was received from illegal miners and transporters of minerals had violated the provisions of Section 206C(1C) of the Act; (ii) the assessee had failed to collect tax at source (TCS) as per Sec. 206C of the Act on the amount deposited by the lease holders in the District Mining Fund (DMF); and (iii) the assessee had failed to collect tax at source (TCS) as per Section 206C of the Act on the amount deposited by lease holders in the National Minerals Exploration Trust (NMET). 8. On being queried about its failure to collect tax at source on the compounding fees ....
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.... the Act. Accordingly, the A.O raised a consequential demand towards collection of tax at source (a/w. interest) w.r.t amounts collected by the assessee from the illegal miners and transporters of Rs. 32,564.81/- [Rs. 2927.09 (TCS a/w. interest as regards the compounding fees collected w.r.t illegal mining) (+) Rs. 29,637.72/-(TCS a/w. interest as regards the compounding fees collected w.r.t illegal transportation)]. 9. It was further observed by the A.O that the State and Central funds were created in each mining district of the state. It was observed by him that the Central Government in exercise of the powers conferred by sub- section (5) & (6) of Section 9B of the Mining and Minerals (Development and Regulation) Act, 1957 had pursuant to Notification F. No.16/7/2015- M.VI dated 17.09.2015 created "District Mineral Foundation" ("DMF", for short) in December 2015. Also, it was observed by him that the Ministry of Coal in exercise of powers conferred by sub-section (2), (3) and (4) of Section 9C and Section 13 of the Mining and Minerals (Development and Regulation) Act, 1957, had vide Notification F. No.11/8/2015-M.I dated 14.08.2015 created "National Minerals Exploration Trust" ....
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.... it was not to be restricted only to the amount of royalty. Elaborating further, the A.O observed that the "Amount Payable" as envisaged in Section 206C(1C) of the Act was well defined in Section 9 of the Mining Act and took within its sweep royalty, fine, penalty, dead rent and any amount authorized by State or Central notification. The AO held a conviction that as the amounts collected from the lease holders for funding DMF and NMET were on the basis of the State and Central notifications and in accordance with the provisions of Section 9 of the Mining Act, therefore, the same fell within the meaning of the term "Amount Payable" provided in Section 206C of the Act, and thus, were exigible for collection of tax at source. 12. The A.O held a conviction that as the additional amounts collected from the leaseholders i.e. towards their respective contributions to DMF and NMET were a part of the value of mineral explored and the income of the mining department, therefore, the same being a revenue receipt was liable for being subjected to collection of tax at source under Section 206C of the Act. Referring to the provisions of Section 206C of the Act, it was observed by the A.O that as....
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.... of a cheque or draft or by any other mode, whichever is earlier, collect from the licensee or lessee of any such licence, contract or lease of the nature specified in column (2) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax" From a plain reading of the above section there is an onus on "every person", who grants a lease or a license or enters into a contract for the purpose of business B & U, (emphasis supplied) at the time of debiting of the amount payable by the licensee or assessee to the account of the license or assessee or at the time of receipt of such amount from the license or assessee in cash or by the issue of a cheque or draft or by any other made, whichever is earlier, collect from the licensee or assessee in cash or by the issue of a cheque or draft or by any other mode, a sum equal to the percentage specified, The above section clearly provides that every person as stated above is responsible for collecting the tax at the prescribed rates. This is mandatory and there stands no element of discretion in law. Also in this particular case the mining office of the ....
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....s under: Even where these is no written contract, liability to TCS arises- Even where assessee city development authority allotted contractors parking lots to run same without executing any written contracts between them, it would not affect liability of assessee to make collection of tax at source under section 206C(1C) "Section 206C of the Income Tax Act, 1961, read with Section 2(h) and 10 of the Contract Act, 1872-Collection of tax at source-Assessment year 2007-08 to 2009- 10-Assessee, City development authority, auctioned for running of parking lots and allotted same to different persons-As assessee defaulted in collecting taxes at source, Assessing Officer raised demand under Section 206C(1C) along with interest-Assessee pleased that though auction was held for parking lots, but no contract was executed in terms of auction and contractors did not sigh any contract and continued to charge parking charges and therefore, provisions of Section 206C(1C) could not be applied-Whether since an agreement could be oral in view of Section 2(h) and Section 10 of Contract Act, plea of assessee was be upheld- Held yes [in favour of the Revenue] b. In the High Court of Madhya Pradesh....
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....g their accounts or receiving amounts, whichever was earlier, it was to be regarded as assessee-in-default in terms of Section 206C(6A)- Held yes [Para 6.2. and 9) (in favour of revenue). The appellant has quoted the case of the Hindustan Coca Cola Beverage (P.) Ltd. Vs. Commissioner of Income Tax [2007] 163 Taxman 355(SC). "Circular No. 275/201/95/1T(B), dated 29.1.1997 issued by the Central Board of Direct Taxes would put an end to the controversy. The circular declares that no demand visualized under section 201(1) should be enforced after the tax deductor has satisfied the officer- in- charge of TDS That taxes due have been paid by the deductee- assessee. However, this will not alter the liability to charge interest under section 201(1A) till the date of payment of taxes by the deductee-assessee or the liability for penalty under section 271C. In the instant case, the assessee had paid the interest under section 201(1A) and there was no dispute that the tax due had been paid by 'P' it was not disputed that the circular was applicable to the facts situation at hand[para11]. Thus it is clear that the satisfaction of the TDS officer in charge has been upheld. Relia....
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....ax was liable to be collected. Further, in case of failure to deduct tax at source on certain payments, such payments become receipts in the hands of persons, whereas in the case of tax collection at source on certain sales, the same become an expenditure in the hands of the persons who purchase such goods. Therefore, the case law relating to section 201(1) would not be applicable to the cases covered under section 206C(6) of the Act. In view of the above, this argument of the appellant is not accepted and this ground of appeal is dismissed". In view of the foregoing discussion, we are also of the view that the ratio of decision of Hon'ble Supreme Court in the case of Hindustan Coco Cola Beverages (P) Ltd. (supra) cannot be applied to the facts of the instant case. Further the provisions of section 206(6) are very specific and we have already discussed about the effect of that section. Hence we are in agreement with the decision of Learned CIT(A) in holding that the assessee is liable to pay the demand raised under section 206(6) of the Act. Accordingly, we confirm his order on this issue. Thus, in the above facts and circumstances of appellant case, the completion of asses....
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....Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax: TABLE Sl. No. Nature of contract or licence or lease, etc. Percentage (1) (2) (3) (i) Parking lot Two per cent (ii) Toll plaza Two per cent (iii) Mining and quarrying Two per cent. Explanation 1.-For the purposes of this sub-section, "mining and quarrying" shall not include mining and quarrying of mineral oil. Explanation 2.-For the purposes of Explanation 1, "mineral oil" includes petroleum and natural gas. (1D) [***] (1E) [***] (1F) Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding ten lakh rupees, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to one per cent of the sale consideration as income-tax. 90[(1G) Every person,- (a) being an authorised dealer, who receives an amount, for remittance out of India from a buyer, being a person remitting such amount out of India under the Liberalised Remittance Scheme of the Reserve Bank of India; (b) being a seller of an overseas tour program package, who receives....
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....tax at source is not only to be restricted to cases where lease or license or contract had been entered into between the parties; but would clearly be applicable in a case where a person had even otherwise transferred any right or interest, either in whole or in part, inter alia, in a mine to another person for use of such mine for the purpose of business. Also, it would be relevant and pertinent to point out that any person to whom either whole or any part of right or interest in a mine is transferred, whether granted on the basis of a lease or license or entering into contract or otherwise, are as per the legislative intent to be similarly construed and have been collectively referred to in the aforesaid statutory provision as "licensee or lessee". 20. On the basis of the aforesaid mandate of law, we are of the considered view that the obligation cast upon an assessee to collect tax at source (TCS) u/s 206C(1C) of the Act does not presupposes the existence of a lease or license or a contract, but would also be applicable to a case where a person had transferred any right or interest, either in whole or in part, inter alia, in a mine to another person. Claim of the Ld. AR that as....
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.... way of becoming a member of, or acquiring shares in, a co- operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. [Explanation.-1] For the purposes of sub- clauses (v) and (vi)," immovable property" shall have the same meaning as in clause (d) of section 269UA;] [Explanation-2]- For the removal of doubts, it is hereby clarified that "transfer" includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India]". (emphasis supplied by us) Before analysing the scope and gamut of the term "transfer" in so far the facts inv....
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....al of the record that working of compounding charges for releasing the aforesaid seized vehicles against payment of Rs. 6200/- (supra) was, inter alia, worked out by taking royalty on the quantity of mineral seized as a basis i.e. 5 times of the amount of royalty of the quantity of minerals that were seized from the said vehicle a/w. fine of Rs. 5000/-, Page 33 of APB. The Ld. AR had also taken us through respective challans which were deposited by the aforesaid illegal miner/transporter of minerals towards compounding fees for carrying out the illegal mining/transportation of minerals i.e Rs. 96,200/- [Rs. 90,000/- (towards illegal mining) (+) Rs. 6,200/- (towards transportation of minerals)], Page 38-39 of APB. Further, the Ld. AR had taken us through a letter dated 12.01.2018 that was issued by the Deputy Collector, District-Bemetara, i.e. a letter of the assessee addressed to the police officer, P.S.-Parpaudi, District-Bemetara wherein it was stated that as the illegal miner/transporter, viz. Shri Dinesh Kothari (supra) had deposited the amount of royalty/fine, therefore, his vehicles viz. Hywa (CG 25 D 6212) and JCB machine may be released and handed over to him, Page 40 of AP....
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....ch unauthorized mining/transportation of minerals was an offence, therefore, the amount collected on compounding of the said offence cannot be construed as a royalty. To sum up, it was the claim of the Ld. AR that as the compounding fees received from illegal miners/transporters of minerals was not royalty, therefore, no obligation was cast upon the assessee to collect tax at source (TCS) on the said amounts u/s. 206C(1C) of the Act. 26. Considering the aforesaid multi-facet contentions of Shri G.S. Agrawal, Ld. AR, we shall now deal with the issue that as to whether or not any obligation was cast upon the assessee to collect tax at source (TCS) on the amounts that were received by it as compounding fees (as claimed by the assessee) from the illegal miners/transporters of minerals in the backdrop of the mandate of Section 206C(1C) of the Act r.w. Section 2(47) of the Act, i.e. definition of the term "transfer". 27. At the very outset, it may be observed that what is relevant and determinative as regards the obligation of the assessee, i.e. DMO to collect tax at source (TCS) u/s. 206C(1C) of the Act, is as to whether any right or interest, either in whole or in part in the mine wa....
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....ipt of compounding fees by the assessee from such illegal miners/transporters of minerals clearly militates against the said claim. As observed by us hereinabove the report of the Mining Officer, Bemetara w.r.t a person, viz. Shri. Dinesh Kothari (supra) who was found extracting and transporting minerals in contravention of the provisions of CMMR in itself reveals that the illegal miner/transporter of minerals was called upon by the assessee to pay 10 times of the amount of royalty in the form of compounding fees. In sum and substance the illegal miner/transporter of minerals as per Rule 71(5) of the CMMR was required to make payment of market value of mineral so extracted or transported a/w such fine which may extend to double the market value of minerals so extracted or transported but the same in no case was to be less than Rs. 5000/- or 10 times of royalty of minerals so extracted, whichever was higher. As per Rule 71(5) of the CMMR an amount i.e. 10 times of royalty of minerals so extracted is collected by the assessee from the illegal miners/transporters of minerals. Our observation is fortified by the aforesaid instance referred to by the Ld. AR wherein an amount of Rs. 90,0....
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....n terms of our aforesaid observations. 32. Apropos the observation of the A.O that the assessee was obligated to have collected tax at source (TCS) on the amounts deposited by the lease holders towards DMF, it would be relevant to refer to Section 9B of the Mines and Minerals (Development and Regulation) Act, 1957 which reads as under: "[9B. District Mineral Foundation.-(1) In any district affected by mining related operations, the State Government shall, by notification, establish a as a non-profit body, to be called the District Mineral Foundation. (2) The object of the District Mineral Foundation shall be to work for interest and benefit of persons, and areas affected by mining related operations in such manner as may be prescribed by the State Government. (3) The composition and functions of the District Mineral Foundation shall be such as may be prescribed by the State Government: [Provided that the Central Government may give directions regard-_ composition and utilisation of fund by the District Mineral Foundation.] (4) The State Government while making rules under sub-sections (2) and shall be guided by the provisions contained in article 244 read with Fifth and ....
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...., i.e. DMO; nor there is anything which would reveal that it was the assessee i.e. DMO who had deposited the aforesaid amounts with the DMF. In sum and substance, we are of the considered view that now when the lease holders had made the payments towards DMF, therefore, in absence of satisfaction of the pre-condition set out in Section 206C(1C) of the Act, i.e. "...shall, at the time of debiting of the amount payable by the licensee or lessee to the account of the licensee or lessee or at the time of receipt of such amount from the licensee or lessee in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, collect from the licensee or lessee............, an obligation to collect tax at source would stand triggered either at the stage of debiting of the amount payable to the account of the licensee or lessee; or at the time of receipt of such amount by the issue of a cheque or draft or by any other mode, whichever is earlier. To sum up, now when the assessee i.e. DMO had neither debited any amount of lessees contributions towards DMF to the account of the lease holders; nor at any stage received any amount of contribution towards DMF from the lease holder....
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.... (TCS) on the contributions made by the lease holders to DMF. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee. 35. Apropos the observation of the A.O that the assessee was obligated to have collected tax at source (TCS) on the contributions made by the lease holders towards NMET, it would be relevant to refer to Section 9C of the Mines and Minerals (Development and Regulation) Act, 1957 which reads as under: "9C. National Mineral Exploration Trust. (1) The central Government shall by notification establish a trust, as a [non-profit autonomous body], to be called the National Mineral Exploration Trust. (2) The object of the trust shall be to use the funds accrued to the Trust for the purpose of regional and detailed exploration in such manner as may be prescribed by the central government. (3) The composition and functions of the Trust shall be such as may be prescribed by the central government. (4) The holder of a mining lease or a [composite license] shall pay to the Trust, a sum equivalent to two per cent of the royalty paid in terms of the second schedule, in such manner as may be ....
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....lation) Act, 1957 the lease holders remained under an obligation to pay the specified amount of the NMET, and no involvement of the assessee can be traced in the scheme of the MMDR Act, but we are afraid that the said factual position cannot be gathered on a perusal of the accounts of the assessee as had been placed before us. We, say so, for the reason that a perusal of the "Receipts and Payments account" of the assessee i.e. DMO for the year ending 31.03.2017 reveals reference of "District Mineral Foundation Trust" on the same, Page 38 to 41 of APB. Also, a similar position prevails in the audited accounts of the assessee for the immediately succeeding year ending 31.03.2018. Apart from that, we find that in the accounts of the assessee i.e. DMO for the immediately succeeding year i.e. F.Y.2017-18 the payments made by the lease holders towards "Contribution funds" are therein reflected. As the accounts of the assessee prim-facie militates against the aforesaid observations arrived at by us by looking into the provisions of Section 9C of the Mines and Minerals (Development and Regulation) Act, 1957, therefore, in our considered view the matter in all fairness requires to be restor....