Electrosteel Steels Limited V. Deputy Commissioner of Income Tax, TDS Circle, Ranchi and Rungta Mines Ltd.

WPC/7756/2017

AI Insights

The case involves Electrosteel Steels Limited, which filed a writ petition against the Deputy Commissioner of Income Tax, TDS Circle, Ranchi, and Rungta Mines Ltd. The petitioner challenged the direction issued by the Deputy Commissioner to Rungta Mines Ltd. to collect Tax Collected at Source (TCS) on the sale of iron ore, which the petitioner had been purchasing without TCS by furnishing Form 27C. The court referenced a similar case involving M/s. Atibir Industries Co. Ltd. vs. Central Coalfields Limited, where it was decided that if the buyer furnishes Form 27C, they are entitled to benefits under Section 206C(1A) of the Income Tax Act, 1961. The court's decision aligned with this precedent, allowing the petitioner to avoid TCS if they comply with the statutory requirements.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 681965 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 13-02-2020
• Assessment Year: misc
• Other Referred Cases: M/s. Atibir Industries Co. Ltd. vs. Central Coalfields Limited
• Laws Referred To: Income Tax Act 1961, Companies Act 1956, Income Tax Rules 1962
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AMRITA SINHA
• Assessee Lawyers: BIREN PODDAR; DARSHNA PODDAR MISHRA
• Keywords: Form 27C; Income Tax; Iron ore; Jurisdiction; Tax Collection; TCS
• Section: 206C; 37C; 206C(1A)

Judgement Text

"1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(T) No. 7756 of 2017 Electrosteel Steels Limited, a Company registered under the Companies Act, 1956, having its registered office at 801, Uma Shanti Apartments, Kanke Road, Ranchi, P.O. Kanke, P.S. Gonda, District Ranchi and its principal place of business at Vill-Siyaljori, P.O. Jogidih, Opp-Bangaria, P.S. Chandankiary, Bokaro, through its General Manager (F & A), Mr. Anuj Jaiswal, S/o Late Shri Rajeshwar Prasad Jaiswal, resident of Mahaveer Vatika, Flat no.502, Dharamshala More, Main Road, Chas, Tara Nagar, Bokaro-827013, P.O. and P.S.Chas, District Bokaro. .…… Petitioner Versus 1.Deputy Commissioner of Income Tax, TDS Circle, Ranchi having its office at Central Revenue Building (Annexe), Main Road, P.O. Ranchi, P.S. Hindpiri, District Ranchi in the State of Jharkhand. 2.Rungta Mines Ltd., Rungta House, P.O. Chaibasa, P.S.Mufassil, District Singhbhum (West) in the State of Jharkhand. …… Respondents --------- CORAM: HON’BLE THE CHIEF JUSTICE HON’BLE MR. JUSTICE SUJIT NARAYAN PRASAD ---------- For the Petitioner : Mr. Biren Poddar, Sr. Advocate Mrs. Darshna Poddar Mishra, Advocate For the Respondents : Ms. Amrita Sinha, Advocate ----------- Oral Judgment: Order No.7/Dated: 13th February, 2020 1. The writ petition is under Article 226 of the Constitution of India, wherein the following prayers have been made: “(i) For quashing the general direction issued by Deputy Commissioner of Income Tax, TDS Circle, Ranchi (Respondent no.1) to Rungta Mines Limited (Respondent no.2) vide its letter dated 29.11.2017 (Annexure-3) directing it to collect tax (TCS) from the parties under section 206C of the Income Tax Act 1961 on the sale of iron ore on the basis of Form 27C and consequently on the basis of the said letter dated 29.11.2017 (Annexure-3), said Rungta Mines Ltd. vide its email dated 7.12.2017 (Annexure-2) sent to the petitioner has refused to sell iron ore to the petitioner without collection of tax (TCS) @ 1% of iron ore value, although the 2 petitioner has been purchasing Iron ore from said Rungta Mines Ltd (Respondent no.2) on furnishing Form 27C without payment of TCS @ 1% in view of mandatory provisions of sub-section (1A) of section 206C of the Income Tax Act, 1961 read with Rule 37C of the Income Tax Rules, 1962, which iron ore is being utilized by the petitioner for the purposes of manufacturing, processing or producing Pig Iron, Billets, TMT Bars, Wire Rods and Ductile Iron Pipe etc. and has informed the petitioner that from December, 2017 onwards, said Rungta Mines will raise debit note towards TCS at the end of the month for total bill amount issued throughout that month and requested the petitioner not to send any Form 27C henceforth towards those bills. (ii) For a declaration that the aforesaid general direction issued by Deputy Commissioner of Income Tax, TDS Circle, Ranchi (Respondent no.1) to Rungta Mines Limited (Respondent no.2) directing it to collect tax at the rates prescribed under section 206C of the Income Tax Act, 1961 on the sale of iron ore is wholly without jurisdiction and also contrary to the mandatory provisions of sub-section (1A) of section 206C of the Income Tax Act, 1961 read with Rule 37C of the Income Tax Rules, 1962.” 2. The brief facts of the case, as per the pleading made in the writ petition, which requires to be referred herein below stand enumerated hereunder: That the petitioner is a company, duly registered under the provisions of the Companies Act, 1956, carrying out business from the place situated at village Siyaljori, P.O. Jogidih, P.S. Chandankiary, Bokaro. The petitioner- company product range includes Pig Iron, Billets, TMT Bars, Wire Rods and Ductile Iron Pipes etc. 3 The petitioner-company, for the purpose of its manufacturing activities and production of Pig Iron, Billets, TMT Bars, Wire Rods and Ductile Iron Pipes etc., has been purchasing various raw materials including Iron Ore from Rungta Mines Ltd. (Respondent No.2) without payment (TCS) @ 1% on the value of such iron ore after furnishing Form 27C in view of sub section (1A) of section 206C of the Income Tax Act, 1961 read with Rule 37C of the Income Tax Rules, 1962. The authorities of the Income Tax Department has issued a communication on 29.11.2017 addressed to the respondent no.2, in pursuance to Notification No.SO2793(E) dated 31.12.2014 as amended by Notification No.SO2829(E) dated 14.10.2015 of the Central Board of Direct Taxes and further vide Notification No.1 of 2014 dated 15.11.2014 of the Joint Commissioner of Income Tax, TDS Range-2, Ranchi communicating to collect TCS from the parties in the light of provision of section 206C of the Income Tax Act, 1961. The writ petitioner being aggrieved with the same is before this Court by way of the instant writ petition. 3. Ms. Amrita Sinha, learned counsel for the respondent- Income Tax Department at the outset, has submitted that similar issue has been dealt with by Division Bench of this Court in a batch of writ petitions being W.P.(C) No.46 of 2018 and other analogous cases i.e. in the case of M/s. Atibir Industries Co. Ltd. vs. Central Coalfields Limited, wherein the Hon’ble Court has been pleased to pass order, although with respect to the coal, but similar direction may also be passed in this case by disposing of the writ petition. 4. Mr. Biren Poddar, Senior Counsel appearing for the petitioner has not disputed the submission advanced on behalf of the respondent-Income Tax Department, rather he has fairly submitted that relying upon the judgment rendered by this Court in the case of M/s. Atibir Industries Co. Ltd. vs. 4 Central Coalfields Limited (W.P.(C) No.46 of 2018 and analogous cases), another order has already been passed by the Division Bench of this Court in W.P.(T) No.7643 of 2017 and, therefore, similar order may be passed in this case. 5. This Court having heard learned counsel for the parties and after considering the fact that similar issue has been dealt with by this Court as indicated above, is also disposing of the instant writ petition in pursuance to the direction and observation passed in W.P.(C) No.46 of 2018 and analogous cases, as indicated herein below: (a) The notice issued by the authority would not ipso facto be applicable to the writ petitioner, in the event the writ petitioner will comply with the provisions of sub section (1A) of section 206 C of the Income Tax Act, 1961 read with Rule 37C thereof by furnishing the declaration in Form 27C. In such a situation, the buyers shall be entitled to the benefits contemplated in the provision of Section 206C (1A) of the Act. (b) In the event such forms are not furnished as per the statutory requirement, it shall be open to respondent no.2 to insist on TCS as per the statutory provisions. (c) If respondent no.2 has any doubt that the iron ore is not being used for self-consumption by the buyer claiming relaxation in terms of Section 206C (1A) of the Act, it would be open to respondent no.2 to take up the matter with individual buyer and insist on TCS if circumstances justify such insistence. But to deny the benefits contemplated in Section 206C (1A) of the Act, so far as writ petitioner is concerned, it would have to be examined first whether the buyer as furnished declaration or verification under Form 27C or not. If declarations are filed and there is no material to conclude that such declaration is false, then the provisions of Section 206C (1A) would be applicable. On the other hand, if respondent no.2 finds that any misdeclaration 5 is made by writ petitioner, then it shall be open to them to take such steps as may be permissible in law. (d) So far as the sum collected in pursuance of the notice as TCS is concerned, in the event it is found that the buyer was not required to deposit such sum, it shall be adjusted by the Income Tax authorities against future payment of income tax by the buyer. If tax has been deposited under the TCS scheme by the buyer who otherwise does not fulfil the requirement of waiver or relaxation from the TCS scheme, then the amount so deposited shall be dealt with as payment of income tax in accordance with law. In such case, the respondent no.2 shall issue TCS certificate in terms of the provisions of Income Tax Act. Such certificate would be issued to the writ petitioner within a period of eight weeks from the date of the application. (e) If there is finding to the effect that there has been misdeclaration by the writ petitioner, then it shall be open to the Income Tax authorities as also the respondent no.2 to take steps against the petitioner as permissible under the law. It shall be open to the Income Tax authorities as also the respondent no.2 to make enquiry in respect of the writ petitioner to ascertain if there has been any wrong or misdeclaration on its part. 6. The writ petition stands disposed of in the above terms. (Dr. Ravi Ranjan, C.J.) (Sujit Narayan Prasad, J.) Saket/- N.A.F.R. "