TaxTMI 
TaxTMI 
2025 (6) TMI 2019
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....e CIT (Appeals) in which following substantial question of law has been formulated: - "Whether provisions of Section 206C(1C) of the Income Tax Act, 1961 are applicable for collecting TCS from offenders who do illegal mining or transportation/storage without having lease or licence or have not entered into the contract for transfer of rights in Mines or Quarry and from whom Compounding Fine is collected as per provisions under Rule 71(5) of the Chhattisgarh Minor Mineral Rules, 2015". 2. The aforesaid question of law arises for consideration on the following factual backdrop: - 3. On 24-9-2018, TDS Survey under Section 133A(2A) of the IT Act was conducted in the office of the District Mining Officer, Bastar Jagdalpur, which is the Mining Department of the State of Chhattisgarh. During the course of aforesaid proceeding, the Income Tax Officers came across certain issues, viz., the assessee i.e. the appellant herein by not collecting tax at source (TCS) on the amount of compounding fees/fine that was recovered from illegal miners and transporters of minerals had violated the provisions contained in Section 206C(1C) of the IT Act, and two other issues, which was not be....
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....ct or not having any personal right or interest. He would also submit that the amount to be paid is not in the form of royalty but a fine to drop the prosecution against the offender and as such compounding fees has been charged by virtue of the provision contained in Section 23A of the Mines and Minerals (Development and Regulation) Act, 1957 (for short, 'the MMDR Act') read with Rule 71(5) of the Chhattisgarh Minor Mineral Rules, 2015, therefore, the mandate of tax collection at source as contained in Section 206C(1C) of the IT Act would not be applicable in the case of illegal mining lease and as such, the appellant/assessee cannot be branded as 'assessee in default' and raising demand with interest is completely illegal, arbitrary and beyond the scope of Section 206C(1C) of the IT Act. In the circumstances, the order impugned is liable to be set aside and the appeal deserves to be allowed. 6. Mr. Amit Chaudhari, learned counsel appearing for the respondent/Revenue, would submit that the provisions contained in Section 260C(1C) of the IT Act would also be applicable for collecting TCS from offenders who do illegal mining or transportation/storage without having lease or licen....
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....nce 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." 10. A careful perusal of the aforesaid provision would show that tax at the rate of 2% has to be collected by the assessee from the lease holder or license holder or with whom the assessee has entered into contract or otherwise transferred any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry, on the amount of payment made by them to the appellant herein. The person must be lease holder or license holder or with whom the assessee has entered into contract or otherwise transferred any right or interest in the mines or fields, meaning thereby the person from whom the TCS is collectable must be the person to whom the lease or license or otherwise any express contract, right or interest has been transferred by the....
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.... date as may be specified in the notification. 12. Section 23A of the MMDR Act provides for compounding of offences, which states as under: - "23A. Compounding of offences.-(1) Any offence punishable under this Act or any rule made thereunder may, either before or after the institution of the prosecution, be compounded by the person authorised under section 22 to make a complaint to the court with respect to that offence, on payment to that person, for credit to the Government, of such sum as that person may specify: Provided that in the case of an offence punishable with fine only, no such sum shall exceed the maximum amount of fine which may be imposed for that offence. (2) Where an offence is compounded under sub-section (1), no proceeding or further proceeding, as the case may be, shall be taken against the offender in respect of the offence so compounded, and the offender, if in custody, shall be released forthwith." 13. By virtue of sub-section (1) of Section 23A of the MMDR Act, any offence punishable under this Act or any rule made thereunder may, either before or after the institution of the prosecution, can be compoundable by the person au....
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....urisdiction to try such offence. (4) The property so seized under sub-rule (2) shall be released by the officer who seized such property on execution of a bond to the satisfaction of the officer by the persons from whose possession such property was seized. It shall be produced at such time and place when production is asked for by such officer : Provided that where a report has been made to a Magistrate under sub-rule (3) then the seized property shall be released only under the orders of such Magistrate. (5) The Collector/Joint Director/Deputy Director/Mining Officer or any officer authorised by Zila Panchayat/Janpad Panchayat/Gram Panchayats may, either before or after the institution of the prosecution, compound the offence so committed under sub-rule (1) on payment of market value of mineral so extracted or transported and such fine which may extend to double the market value of mineral so extracted or transported, but in no case it shall be less than five thousand rupees or ten times of royalty of minerals so extracted whichever is higher : Provided that in case of continuing contravention, the Collector/Deputy Director/Mining Officer may, ....
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....eir Lordships observed as under: - "28. This Court in Tata Consultancy Services v. State of A.P. [(2005) 1 SCC 308] has ascribed plain meaning to the terms "computer" and "computer programme" in a fiscal statute and reiterating the proposition laid down in IRC case [IRC v. Rossminster Ltd., (1980) 1 All ER 80 (HL)], observed that a court should not be overzealous in searching ambiguities or obscurities in words which are plain. 29. In Prakash Nath Khanna v. CIT [(2004) 9 SCC 686], this Court has explained that the language employed in a statute is the determinative factor of the legislative intent. The legislature is presumed to have made no mistake. The presumption is that it intended to say what it has said. Assuming there is a defect or an omission in the words used by the legislature, the Court cannot correct or make up the deficiency. Where the legislative intent is clear from the language, the Court should give effect to it. (Delhi Financial Corpn. v. Rajiv Anand [(2004) 11 SCC 625] and State of A.P. v. Road Rollers Owners Welfare Assn. [(2004) 6 SCC 210]) 30. In B. Premanand v. Mohan Koikal [(2011) 4 SCC 266 : (2011) 1 SCC (L&S) 676] this Court has....
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....ng the subject within the letter of the law, the subject is free, however, apparently within the spirit of the law the case might otherwise appear to be." 21. Reverting to the facts of the present case in light of the aforesaid principles of law laid down by their Lordships of the Supreme Court the above-mentioned judgments (supra), the fact remains that Section 206C(1C) of the IT Act only obliges the assessee to collect tax at source from the person to whom such right has been conferred and by whom royalty is payable to the State Government through the District Mining Officer and obligation to collect tax under Section 206C(1C) cannot be extended to the person involved in illegal mining or transporting illegal minerals. Section 206C(1C) of the IT Act specifically obliges to collect tax by the assessee from the lease holder or license holder or with whom the assessee has entered into contract or otherwise transferred any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry. Similarly, there is no legislative mandate to collect tax at source from the person who is involved in illegal mining or illegal transportation of minerals and simil....