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2023 (8) TMI 31
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.... lead matter and the order therein passed shall 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. Ground....
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....ii) there being a skeletal staff available in the office for looking after the multi-tasks 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....
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....me a/w. an affidavit of the Assistant Mining Officer deposing the said facts. On a careful perusal of 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 sub....
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....etings called for by the Collector from time to time a/w. preparation of replies to the questions which were raised 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....
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.... also TDS matters was transferred to Kanker and was relieved on 14.10.2022. In his place Shri Rohan Kamble joined on 12.10.2022. He was new to working 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 Mini....
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....isical approach on their part, therefore, we deem it fit to condone the same without imposing any cost. Once again, as a word of caution, we may herein observe that 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 amo....
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....the illegal miners and transporters of minerals, therefore, it was to be held as an "assessee-in-default" within the meaning of sub-sections (6) and (6A) of Section 206C of 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 1....
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..... The AO observed that as per Section 206C of the Act the assessee remained under a statutory obligation to collect tax at source on any "Amount Payable" by the lease holders and 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....
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....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 the issue 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 ev....
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....is appeal and may be agitated in a separate appeal. Reliance is placed on the following cases- a. IN THE ITAT AGRA BENCH in case of Agra Development Authority vs. Assistant Commissioner of Income-tax (TDS) Agra [2012] 25 taxmann.com 187 (Agra) held as 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 parkin....
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....e)-Assessment year 2008-09-Whether furnishing of Form No.27C by buyer at the time when collection of tax at source is contemplated under section 206C, has to be construed as mandatory-Held Yeas-whether therefore, where assessee failed to collect tax at source from buyers of Lisa without receipt of Form 27Cs at the time of debiting 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 secti....
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....rnment. Thus, in case of failure to effect the TCS, becomes the liability of the collector of such tax and he is mandatorily required to pay the same to the Central Government as the word used in the said section is "shall". Under section 206C(6) we are basically concerned with the liability of the assessee-collector and not with the liability of the assessee from whom tax 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(....
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....rpose of business 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 the issue 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: 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,....
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.... 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 of any such license, contract or lease of the nature specified, a sum equal to the percentage i.e. @ 2%. 19. Being guided by the rule of strict literal interpretation and on carefully scrutinizing the aforesaid statutory provision, it transpires that an obligation to collect 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 prov....
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....cquisition thereof under any law; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock- in- trade of a business carried on by him, such conversion or treatment;] 6 or] (v)^7 any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 1 (4 of 1882 ); or (vi) any transaction (whether by 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 in....
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.... Kothari (supra) were seized and handed over to the police department, Page 26 of APB. Also, as observed by us hereinabove, the aforesaid illegal miner viz. Shri Dinesh Kothari (supra) had as per Section 71(5) of the CMMR, 2015, inter alia, proposed to deposit compounding fees of Rs. 90,000/- (supra). Also the aforesaid person had proposed that his vehicles JCB machine and hywa (CG 25 D 6212) that were seized and handed over to the police authorities may also be released on payment of an amount of Rs. 6200/-, Page 26 of APB. We find on a perusal 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) (+....
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....ation of prosecution on payment of market value of mineral so extracted or transported, and such fine may though extend to double the market value of minerals so extracted or transported, but in no case the same would be less than Rs. 5000/- or 10 times of royalty of minerals so extracted, whichever was higher. 25. The Ld. AR on the basis of the aforesaid facts had tried to impress upon us that not only the assessee i.e. DMO had transferred any right in the mine to the illegal miners/transporters of minerals, but in fact as carrying out of any such 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 s....
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....oad meaning of the term "transfer" as had been made available on the statute vide the Finance Act, 2012 w.r.e.f 01.04.1962, we shall now look into the aspect that as to whether or not the assessee i.e. DMO had transferred to the illegal miners/transporters of minerals any interest in the mine. 30. Although it is the claim of the Ld. AR that there is no transfer either of the asset i.e. land or any interest in the same by the assessee i.e. DMO in favour of the illegal miners/transporters of minerals, but a careful perusal of the manner of computing and receipt 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 p....
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....source (TCS) on the amounts received from the illegal miners/transporters of minerals being devoid and bereft of any substance is liable to be rejected. We, thus, in terms of our aforesaid observations, finding no infirmity in the view taken by the lower authorities that the assessee who was liable to collect tax at source (TCS) on the amounts received from illegal miners/transporters, having failed to do so, was to be treated as 'assessee-in-default' u/s. 206C(6) of the Act, uphold the same. Thus, the Ground of appeal No.1 raised by the assessee is dismissed in 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....
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....is equivalent to such percentage of the royalty paid in terms of the "Second Schedule" not exceeding one third of such royalty, as may be prescribed by the Central Government. It transpires on a careful perusal of the aforesaid statutory provision that an obligation is cast upon the lease holders to pay an amount to DMF, which, though is to be computed at a specified percentage of the amount of royalty as may be prescribed by the Central Government. Nothing is discernible from a bare reading of the aforesaid statutory provision that the lease holders were required to make payment of the aforesaid amounts to the assessee, 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 is....
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.... Section 9B of the Mines and Minerals (Development and Regulation) Act, 1957, therefore, in our considered view the matter in all fairness requires to be revisited by the A.O. The A.O is directed to verify as to whether the assessee was in receipt of contributions towards DMF from the leaseholders; or as claimed by the assessee the amounts were paid by the respective lease holders directly to the DMF. In case the claim of the assessee i.e. the lease holders were directly making payments to DMF is found to be in order, then as observed by us hereinabove no obligation would be cast upon the assessee to collect tax at source (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 G....
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....t itself it could not have been saddled with any obligation for collecting any tax at source on the said amount. Admittedly, a pit-pass would be issued by the assessee to the lease holder only after he produced evidence of having paid the amount of royalty a/w. payments towards DMF/NMET, but on the said standalone fact de-hors satisfaction of the requisite conditions contemplated in sub-section (1C) of Section 206C no obligation could have been saddled upon the assessee to collect tax at source (TCS) on the amount of NMET paid by the lease holders. 37. Although we are principally clear that as per Sec. 9C of the Mines and Minerals (Development and Regulation) 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, P....
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....rtly allowed for statistical purposes in terms of our aforesaid observations. 41. In the combined result, all the appeals of the captioned assessees are partly allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in open court on 21^st day of July, 2023. ============= Document 1 ।। कारà¥à¤¯à¤¾à¤²à¤¯ कलेकà¥à¤Ÿà¤° जिला बेमेतरा (छ.ग.) ।। कमांक / 87 / खनिज / 2018, पà¥à¤°à¤¤à¤¿, थाना पà¥à¤°à¤à¤¾à¤°à¥€, परपोड़ी, जिला- बेमेतरा. जà¥à¤žà¤¾à¤ªà¤¨ बेमेतरा, दिनांक /12/01/2018 विषय :- जपà¥à¤¤à¤¶à¥à¤¦à¤¾ वाहन कà¥à¤°à¤®à¤¾à¤‚क सी.जी. 25 डी 6212 à¤à¤µ....