TaxTMI 
TaxTMI 
2018 (12) TMI 2030
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....ke Industries (Pvt.) Ltd., M/s. Om Coke Industries, M/s. Pawan Udyog, M/s. S.J. Coke Industries Pv. Ltd., M/s. Bharechnagar Coke Manufacturing Company, M/s. East India Coal Corporation, M/s. Super Fuels, M/s. Arya Coke (Pvt.) Ltd., M/s. Ramco Coke Industries, M/s. Goyal Udhyog, M/s. Agarwal Coke Industries, M/s. Sri Balaji Coke Industries, M/s. Eastern Fuels Private Limited, M/s. Barelia Coke Industries (Pvt.) Ltd., M/s. Capital Fuel Company (Pvt.) Ltd, M/s. Krishna Coke and Minerals, M/s. Rahul Coke Industries (P) Ltd., M/s. Mongia Steel Ltd., Versus The Central Coalfields Limited., General Manager (M & S), Senior Manager (F-CSC) (M&S), Union of India, Deputy Commissioner of Income Tax (TDS) TDS Circle, Ranchi Hon'ble The Chief Justice And Hon'ble Mr. Justice B.B. Mangalmurti For the Petitioners : Mr. Debashish Bharuka, Advocate Mr. N.K. Pasari, Advocate Mr. Sumeet Gadodia, Advocate For the Respondent-C.C.L. : Mr. Anup Kumar Mehta, Advocate For the Respondent-Income Tax : Mr. Deepak Roshan, Advocate Aniruddha Bose, C.J. This batch of writ petitions involve legality of certain issues arising out of the provisions of Section 206C of the Income Tax Act, 1961. T....
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....other than Under a forest lease Two and one-half per cent (v) Any other forest produce not being timber or tendu leaves Two and one-half per cent (vi) Scrap One per cent] (vii) Minerals, being coal or lignite or iron ore One per cent:] [Provided that every person, being a seller shall at the time, during the period beginning on the 1st day of June, 2003 and ending on the day immediately preceding the date on which the Taxation Laws (Amendment) Act, 2003 comes into force, of debiting of the amount payable by the buyer to the account of the buyer or of receipt of such amount 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 sub-section (1), no collection of....
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....ferred to in sub-rule (1) shall be furnished in duplicate to the person responsible for collecting tax. (3) The person referred to in sub-rule (2) shall deliver or cause to be delivered to the Chief Commissioner or Commissioner, one copy of the declaration referred to in sub-rule (1) on or before the seventh day of the month next following the month in which the declaration is furnished to him." 5. The Form specified in which the declaration is to be given under the aforesaid Rule is Form 27C and the said Form has been made part of the said Rules. The Form in which declaration is to be made come in two parts, as specified in Rule 37C. The first part (Part I) requires a declaration to be made by the buyer whereas the second part (Part II) is meant for the seller. We reproduce below the said two part Form for proper appreciation of the content and purport thereof. Coal was brought within the range of specified goods in respect of which this statutory arrangement is to be followed on 1st July, 2012 by Finance Act, 2012. The disputes involved in this batch of writ petitions arose after that date. FORM No.27C [See rule 37C] Declaration under sub-section (1A) of sect....
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....ode (dd/mm/yyyy) Substituted by the Income-tax (Second Amendment) Rules, 2013 w.e.f. 19.2.2013. It was inserted by the Income-tax (Fourth Amendment) Rules, 1988, w.e.f. 1-6-1988 and substituted by the Income-tax (Twenty- second Amendment), Rules, 2003, w.e.f. 30-9-2003. Declaration u/s 206C(1A) Forwarded to the Chief Commissioner or Commissioner of Income tax ...................... Place ................... Date.................... ................................. Signature of the person responsible for collecting tax at the time of the sale of the goods referred to in column no.21 of Part 1 Notes: 1. The declaration should be furnished in duplicate. 2. *Delete whichever is not applicable. 3. ** Indicate the capacity in which the declaration is furnished on behalf of a HUF, AOP, firm, company, etc. 4. *** 1=Company; 2=Firm; 3=AOP/BOI; 4=HUF; 5 = individual; 6 others 5. Before signing the verification, the declarant should satisfy himself that the information furnished in the declaration is true, correct and complete in all respects. Any person making a false statement in the declaration shall be liable to prosecu....
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....ith the Form 27C submitted by customers, it is informed to all concern that henceforth Delivery Order of coal will be issued to the customer only after deposit of TCS @ 1% of the Value by them. In case the customer does not deposit the TCS, it will be deducted from their deposited amount and quantity will be reduced accordingly. This is implemented with immediate effect. 7. The notice of 14th December, 2017 reads :- Notice "A notice of demand u/s 156 for an amount of Rs. 122.39 crs along with the order u/s 206C of the I.T. Act, 1961 both dated 15.11.2017 was issued by DCIT, TDS Circle, Ranchi. This demand notice of Rs. 122.36 crs was of TCS with interest against all those customers of CSC, M&S, CCL who have submitted Form 27 C to CCL for onwards submission to Income Tax Department, in place of depositing TCS since 2012-13 to July 2017. Against this notice of Demand, an appeal was filed by CCL before CIT (A) on 18.11.2017 and simultaneously a petition for stay of demand was also filed before DCIT, TDS Circle, Ranchi on 20.11.17 which was rejected by him vide letter no.961 dated 23/27.11.2017 and it was advised by CCI to CCL to deposit the same amount....
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....f the writ petitioners are not the end users of coal purchased from them and in some cases the First Part of the declaration in Form 27C had also not been furnished by the purchasers of coal. As a consequence thereof, C.C.L. was issued notice by the income tax authorities. According to Mr. Mehta such notice was camouflaged as advice by the income tax authority. A copy of this notice dated 31st October, 2017 has been disclosed in the counter affidavit on behalf of the C.C.L. which has been filed today in Court in W.P.(C) No.46 of 2018. This affidavit was affirmed on 29th November, 2018. We take on record this affidavit. The said notice issued by Principal Commissioner of Income Tax, Ranchi reads :- Sir, Sub: Collection of Tax at source (TCS) u/s 206 of Income tax Act, 1961- regarding. Please refer to the above captioned subject. With reference to the above, your attention is invited to Section 206 C of the Income Tax Act, 1961, relating to collection of tax at source which reads as under :- "Every person being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt o....
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....mic affairs. In Mc. Dowell's case, the Apex Court has held that public servants are expected not to wear blinkers while performing their official duties. On the contrary they are expected to pierce the corporate veil to unearth the real behind the apparent. Your attention is also kindly drawn to the provisions of section 278 of the I.T. Act, 1961 which prescribes Prosecution of the Principal Officers of the Company for abetment of false statements, declaration, returns etc. You are therefore advised, as a matter of abundant precaution, to either satisfy yourself that form 27C filed by the assessee is correct in letter and in spirit Or, if you are not so satisfied, it is incumbent upon you to collect TCS at the rates prescribed u/s 206C of the I.T. Act, 1961. 11. The notice refers to a particular purchaser of coal who according to the income tax authorities, have not been utilizing the same for self-consumption though it had furnished Form 27 C. Mr. Mehta's submission is that it is not possible for his client to factually ascertain the manner in which coal purchased from his clients is being utilized in each and every case. He argues that to prevent brea....
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.... from the coal company or not. He has analysed different provisions of the statute before us and his submission is that in the absence of any form of material which disclosed use of coal was not for self-consumption, a blanket order requiring deposit of one per cent of the price of coal as TCS would not be as per the statutory provisions in relation to goods specified in the Table to Section 206C (1) of the Act, if there was otherwise compliance of the provisions of Rule 37C. 14. Mr. Gadodia as well as Mr. Bharuka have also argued that so far as the writ petitioners covered by Fuel Supply Agreements are concerned, there is specific stipulation in the standard form contract that buyers of coal would themselves have to consume the coal purchased and this factor requires monitoring of user pattern by the concerned coal company in respect of coal supplied to individual consumers under the Supply Agreement. No such provision has been shown so far as buyers of coal not covered by Fuel Supply Agreements are concerned. But in these writ petitions we are not to adjudicate individual cases in respect of which there has been breach of end use requirement specified in the 1961 Act. We are e....
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....fact, the letter of Income Tax authorities dated 31st October, 2017, which we have reproduced in the earlier part of this judgment, contains an advise in that manner only in the last paragraph thereof. 17. Mr. Mehta has argued that his client, C.C.L. does not have adequate mechanism to monitor the manner in which the coal buyers claiming the benefit under Rule 37C are actually consuming coal and whether they are selling the coal in open market or not. But this is an administrative problem which is being highlighted by Mr. Mehta. This problem cannot permit the seller to override the provisions of Section 206C (1A) of the Act, where the conditions for obtaining relaxation from the TCS requirement have been spelt out in detail. 18. Mr. Gadodia appearing for some of the writ petitioners has relied on a decision of the Hon'ble Supreme Court in the case of State of Madras Versus Radio and Electricals Ltd. (AIR 1967 SC 234) to contend that seller has no obligation to verify the end consumption of coal in the event the declarations specified in the statute are furnished. But in this set of writ petitions, we are not required to give a finding on that point. That question does not....