TaxTMI 
TaxTMI 
2023 (11) TMI 586
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....ebited an amount of Rs. 19,64,52,986/- towards purchase of packing materials from six parties. On further verification, the above parties had done job work for printing and packing materials, according to the specification given by the assessee. Thus according to A.O. the above transactions made with the six parties were in the nature of "works contract" within the meaning of Section 194C of the Act and the assessee failed to Deduct Tax at Source (TDS). Therefore the Assessing Officer passed an order u/s. 201(1) of the Act treating the assessee in default for non-TDS an amount of Rs. 46,68,151/-. Further the A.O. noticed that the assessee company provides various types of discounts such as trade discount/quantity discount expiry discount, scheme discount etc to its dealers amounting to Rs. 39,36,687/- to twelve parties. These discounts were offered by way of credit notes and not a direct discount on sale price, but the same is being given for enhancing sale in a particular area or achieving targets for sale. However the A.O. treated the above discount as that of a commission and assessee failed to make TDS u/s. 194H of the Act and made addition of Rs. 3,93,669/-. Similarly, the Ass....
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....l and also said packing material constitutes a purchase under State VAT law. Thus, it is a case of "Sale" of items/products by suppliers wherein the title of goods was transferred by them to appellant and delivery of printed material is given after they were made and not before. All the said parties who supplied such readymade packing material had paid Excise duty on the same as also VAT on independent production of a finished products carried out. In support of its claim, the appellant has also submitted sample bills from each of the parties, wherefrom the aforesaid fact can be verified that the invoices contain description of goods and there was no payment of labour job charges by appellant. It clearly shows that what was purchased, are the entire flexible laminated packaging material. It is also held by Hon'ble courts that the particulars printed on the said flexible packaging as per specifications or containing appellant's name or particulars of the products thereon does not signify that a jobwork was ordered. Thus, section 194C is not applicable on the purchase made by the appellant. 6.3.2 Further, the Girnar case (supra) decision has also taken into account of all B....
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....le to deduct tax. Explanation (1) to section 194H defines "Commission or Brokerage which includes any payment received or receivable, directly or indirectly by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying and selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities. On the facts of the present case, as per the tripartite agreement entered into between the assessee and the dealer, there is no service provided by the dealer to the assessee in the course of buying or selling goods, inasmuch as, the assessee directly sells goods to the dealer and the dealer makes the payment after collecting it from the consumers and, therefore, it is a transaction on principal to principal basis and, therefore, the payment made by the dealer is not liable for any deduction of tax by the assessee company Therefore, in the facts of the case, the provisions of section 40(a)(ia) of the Act cannot be applied as the dealer cannot be said to be a commission agent of the assessee company" 7.3.1 I also find that the facts narrated in above decisio....
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....ncelled and that of the Assessing Officer may be restored to the above fact. 6. Heard rival submissions and perused the materials available on record including the Paper Book filed by the assessee. The assessee made purchase of the printed packing materials from six parties as mentioned in the assessment order. It is not a case of the Revenue that assessee's own material given to the suppliers for getting any particular work or a job or printing done from them. Further there is no agreement between the assessee and suppliers of goods as being in the nature of job work. Thus it is not a works contract, but it is an outright purchase which is not hit by Section 194C of the Act. The entire material of flexi packaging were purchased by the suppliers on their own and paid Excise Duty and VAT. The assessee submitted sample bills from each of the suppliers, wherein the above facts are proved which is not disputed by the Assessing Officer. Further the above issue was considered by Jurisdictional High Court in the case of Girnar Food (cited supra) and clearly held that it is a case of sale and not "works contract" and section 194C will not be applicable. Respectfully following the above de....