ITO, WD-2(2), DURGAPUR, Durgapur V. Pravat Kumar Gupta, Durgapur

ITA 1015/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1636 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 12-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & HONBLE S HRI S.S.VISWANETHRA RAVI, JM] I.T.A NO. 1015/KOL/20 16 ASSESSMENT YEAR : 2011-1 2 ITO, WARD-2(2), DURGAPUR -VS- PRAVAT KU MAR GUPTA [PAN: AHXPG 4117 A] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI ARINDAM BHATT ACHARJEE, ADDL. CIT FOR THE RESPONDENT : NONE DATE OF HEARING : 11.01.2018 DATE OF PRONOUNCEMENT : 02.02.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-DURGAPUR [IN SH ORT THE LD CIT(A)] IN APPEAL NO.35/CIT(A)/DGP/2014-15 DATED 17.02.2016 AG AINST THE ORDER PASSED BY THE ITO, WARD-2(2), DURGAPUR[ IN SHORT THE LD AO ] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATE D 27.03.2014 FOR THE ASSESSMENT YEAR 2011-12. 2. THE ONLY ISSUE TO BE DECIDED IN THE APPEAL OF T HE REVENUE IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE DISALLOWANCE MAD E U/S 40A(3) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.1015/KOL/2016 PRAVAT KUMAR GUPTA A.YR. 2011-12 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF RETAIL VENDING OF COUNTRY SPIRIT, BEER AND RUM, WHICH ARE EXCISABLE COMMODITIES. ITS PURCHASE AND SALE ARE STRICTLY CO NTROLLED BY THE STATE GOVERNMENT. PREVIOUSLY, THE RETAIL DEALERS LIKE THE ASSESSEE US ED TO DEPOSIT THE COST PRICE, EXCISE DUTY, BOTTLING CHARGES ETC IN THE TREASURY AGAINST FORM T R-7 IN CASH FOR GETTING SUPPLIES FROM THE WHOLESALE LICENSEE. SUBSEQUENTLY, THE EXCISE D EPARTMENT BY A NOTIFICATION DATED 29.8.2005 CHANGED THE PROCEDURE. AS PER THE REVISE D PROCEDURE PRESCRIBED BY THE EXCISE DEPARTMENT, FOR LIFTING COUNTRY SPIRIT , THE ASSESSEE , WHO IS A RETAIL VENDOR, WAS REQUIRED TO MAKE THE ENTIRE PAYMENT CONSISTING OF C OST OF THE STOCK IN TRADE, EXCISE DUTY AND BOTTLING CHARGES ETC ONLY TO THE WHOLESALE LICE NSEE APPOINTED BY THE STATE GOVERNMENT. FOLLOWING THE REVISED PROCEDURE, THE A SSESSEE MADE PAYMENTS TO M/S IFB AGRO INDUSTRIES LTD TOWARDS PURCHASES OF COUNTRY LI QUOR. AGAINST THE AFORESAID PURCHASES, THE ASSESSEE MADE PAYMENTS IN CASH BY DE POSITING MONEY DIRECTLY TO THE BANK ACCOUNT OF THE AFORESAID COMPANY. THE LD AO OBSERV ED THAT THE PAYMENT FOR PURCHASE WAS EXCEEDING RS 20,000/- RESULTING IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT AND ACCORDINGLY PROCEEDED TO DISALLOW A SUM OF RS 1,20,06,656/- IN THE ASSESSMENT. THIS DISALLOWANCE WAS DELETED BY THE LD CITA IN FIR ST APPEAL. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. COMMISSIONER OF INCOME TAX (APPEALS), DURGAPUR HAS ERRED IN ALLOWING RELIE F AGAINST ADDITION OF RS. 1,20,06,656/- MADE ON ACCOUNT OF VIOLATION OF SECTI ON 40A(3) DRAWING REFERENCE OF RULE 6DD(B) WITHOUT CONSIDERING THE FACT THAT CA SH PAYMENT MADE BY ASSESSEE TO M/S IFB AGRO INDUSTRIES LTD, PANAGARH IN ANY WAY CANNOT BE TREATED AS PAYMENT MADE TO THE GOVERNMENT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. COMMISSIONER OF INCOME TAX(APPEALS)-DURGAPUR ERRED TO RECOGNIZE THAT THERE WAS ANY BINDING/OBLIGATION ON THE ASSESSEE TO MAKE CASH PURCHASE ONLY. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY GROUNDS OF APPEAL ON OR B EFORE FINAL HEARING. 3 ITA NO.1015/KOL/2016 PRAVAT KUMAR GUPTA A.YR. 2011-12 3 4. NONE APPEARED ON BEHALF OF THE ASSESSEE. SINCE THIS IS A COVERED ISSUE, WE PROCEED TO DISPOSE OFF THIS APPEAL ON HEARING THE LD DR. THE LD DR VEHEMENTLY RELIED ON THE ORDER OF THE LD AO. WE HAVE HEARD THE LD DR. WE FIND T HAT THE ISSUE UNDER DISPUTE IS COVERED BY THE ORDER OF THIS TRIBUNAL IN THE CASE O F RAMNAGAR PACHAI & C.S. SHOP VS ITO IN ITA NO. 938/KOL/2016 FOR ASST YEAR 2011-12 D ATED 18.11.2016 WHEREIN IT WAS HELD AS UNDER:- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE PROVISIONS O F THE WEST BENGAL EXCISE RULES 2005 AND THE BENGAL EXCISE ACT, 1909. THE FACTS ST ATED HEREINABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FO R THE SAKE OF BREVITY. AT THE OUTSET, WE DEEM IT NECESSARY TO INCORPORATE THE FOLLOWING C LAUSES FROM THE NOTIFICATION ISSUED BY THE EXCISE DEPARTMENT, GOVERNMENT OF WEST BENGAL , DATED 29.8.2005 FOR THE SAKE OF BETTER UNDERSTANDING OF THE FACTS :- IN EXERCISE OF THE POWER CONFERRED BY SECTION 85 A ND SECTION 86 OF THE BENGAL EXCISE ACT, 1909 (BEN. ACT V OF 1909) AND IN SUPERS ESSION OF THE RULES PUBLISHED WITH THIS DEPARTMENT NOTIFICATION NO. 122-EX/O/1R-1 /2000 DATED 23.2.2000, AS SUBSEQUENTLY AMENDED, THE GOVERNOR IS PLEASED HEREB Y TO MAKE THE FOLLOWING RULES REGULATING THE ISSUE AND REMOVAL OF COUNTRY S PIRIT ON PAYMENT OF DUTY IN LABELLED AND CAPSULED BOTTLES FROM COUNTRY SPIRIT B OTTLING PLANTS AND IN BULK FROM WAREHOUSES BY THE LICENSED WHOLESALE VENDORS OF THE SAME FOR THE PURPOSE OF SELLING COUNTRY SPIRIT BY WHOLESALE: RULES 1. SHORT TITLE AND COMMENCEMENT.(1) THESE RULES MAY B E CALLED THE WEST BENGAL EXCISE (SUPPLY OF COUNTRY SPIRIT ON PAYMENT OF DUTY) RULES, 2005. (2) THESE RULES SHALL COME INTO FORCE FROM 19TH OCT OBER, 2005. 2. DEFINITIONS.(1) IN THESE RULES, UNLESS THERE IS AN YTHING REPUGNANT IN THE SUBJECT OR CONTEXT (I) COMMISSIONER MEANS THE EXCISE COMMISSIONER; (II) REQUISITION MEANS THE REQUISITION SUBMITTED BY TH E AUTHORIZED REPRESENTATIVE OF LICENSED WHOLESALE VENDOR OF COUN TRY SPIRIT IN FORM II APPENDED TO THESE RULES; (III) RETAIL VENDOR MEANS THE PERSON HOLDING LICENSE IN THE PRESCRIBED FORM FOR RETAIL VENDING OF COUNTRY SPIRIT, GRANTED BY TH E COLLECTOR; 189; (IV) STATE GOVERNMENT MEANS THE GOVERNMENT OF WEST BEN GAL; (V) THE ACT MEANS THE BENGAL EXCISE ACT, 1909 (BEN. A CT V OF 1909); (VI) TRANSPORT PASS MEANS THE TRANSPORT PASS ISSUED IN FORM III APPENDED TO THESE RULES; (VII) WAREHOUSE MEANS THE WAREHOUSE FOR SUPPLY OF COUNT RY SPIRIT TO RETAIL VENDORS, ESTABLISHED AT CONVENIENT PLACES BY THE CO MMISSIONER AT THE EXPENSE OF THE STATE GOVERNMENT, OR AT THE EXPENSE OF A PERSON TO WHOM 4 ITA NO.1015/KOL/2016 PRAVAT KUMAR GUPTA A.YR. 2011-12 4 THE EXCLUSIVE PRIVILEGE OF SUPPLYING OR SELLING COU NTRY SPIRIT BY WHOLESALE HAS BEEN GRANTED UNDER SECTION 22 OF THE ACT, OR OF A LICENSED WHOLESALE VENDOR OF COUNTRY SPIRIT; (VIII) WHOLESALE LICENSEE MEANS THE WHOLESALE VENDOR OF COUNTRY SPIRIT TO WHOM LICENSE HAS BEEN GRANTED IN WEST BENGAL EXCISE FORM NO. 26. 2. WORDS AND EXPRESSIONS USED IN THESE RULES AND NO T DEFINED, BUT DEFINED IN THE ACT, SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN THE ACT. 3. ISSUE ONLY ON PAYMENT OF DUTY.NO COUNTRY SPIRIT IN LABELLED AND CAPSULED BOTTLES SHALL BE ISSUED WITHOUT PAYMENT OF DUTY FRO M A COUNTRY SPIRIT BOTTLING PLANT. NO COUNTRY SPIRIT IN BULK SHALL BE ISSUED WI THOUT PAYMENT OF DUTY FROM A COUNTRY SPIRIT WAREHOUSE. 4. PERSONAL LEDGER ACCOUNT TO BE MAINTAINED BY THE WHOLESALE LICENSEE.THE WHOLESALE LICENSEE SHALL MAINTAIN A PERSONAL LEDGER ACCOUNT IN ACCORDANCE WITH THE DIRECTION ISSUED BY THE COMMISSIONER FROM TIME TO TIME FOR THE PURPOSE OF MAINTAINING AN ACCOUNTCURRENT OF THE DUTIES PAYABL E BY THE WHOLESALE LICENSEE FOR THE ISSUES OF COUNTRY SPIRIT TO THE RETAIL VEND ORS OR TRANSPORT ON PAYMENT OF DUTY FROM THE CONCERNED COUNTRY SPIRIT BOTTLING PLA NT OR WAREHOUSE. 5. MINIMUM BALANCE IN PERSONAL LEDGER ACCOUNT.THE COLLECTOR SHALL ISSUE DIRECTIONS FOR MAINTAINING THE MINIMUM AMOUNT OF B ALANCE IN THE AFORESAID PERSONAL LEDGER ACCOUNTS IN ORDER TO ENSURE THAT DU TY FOR DAILY ISSUES OF COUNTRY SPIRIT FROM THE COUNTRY SPIRIT BOTTLING PLANT OR WA REHOUSE MAY BE DEBITED FROM THE SAID ACCOUNT, LEAVING SUFFICIENT BALANCE AS MAY BE DETERMINED BY HIM. 6. PROCEDURE OF ISSUE OF COUNTRY SPIRIT.(1) THE R ETAIL VENDOR OR HIS AUTHORIZED REPRESENTATIVE SHALL SUBMIT TO THE REPRESENTATIVE O F THE WHOLESALE LICENSEE, THROUGH EXCISE OFFICER-IN-CHARGE OF THE WAREHOUSE, A DEMAND FOR ISSUE OF COUNTRY SPIRIT IN FORM I APPENDED TO THESE RULES IN DUPLICATE. THE DUPLICATE COPY SHALL BE KEPT IN THE CUSTODY OF THE EXCISE OFFICER- IN-CHARGE FOR HIS OFFICIAL RECORD. (2) NO RETAIL VENDOR OF COUNTRY SPIRIT SHALL DEPOSI T DUTY DIRECT INTO THE LOCAL TREASURY FOR ISSUE OF COUNTRY SPIRIT TO BE TAKEN BY HIM FROM THE WAREHOUSE CONCERNED. DUTY, COST PRICE, BOTTLING CHARGE, IF TH ERE BE ANY, AT THE PRESCRIBED RATE AND OTHER IMPOSITION, AS MAY BE PRESCRIBED BY LAW, SHALL BE PAID BY THE RETAIL VENDOR TO THE CREDIT OF THE WHOLESALE LICENS EE CONCERNED. (3) THE AUTHORIZED REPRESENTATIVE OF THE WHOLESALE LICENSEE SHALL REALIZE THE NECESSARY AMOUNT OF DUTY, COST PRICE AND BOTTLING C HARGE, IF THERE BE ANY, AT THE PRESCRIBED RATE AND SUCH OTHER IMPOSITION, AS MAY B E PRESCRIBED BY LAW, FROM THE RETAIL VENDOR TO WHOM COUNTRY SPIRIT IS TO BE ISSUE D FROM THE CONCERNED WAREHOUSE. THE AUTHORIZED REPRESENTATIVE AS ABOVE S HALL THEN SUBMIT REQUISITION IN DUPLICATE IN FORM II APPENDED TO THESE RULES TO THE EXCISE OFFICER-IN-CHARGE OF THE WAREHOUSE SEPARATELY FOR EACH OF THE RETAIL VENDORS TO WHOM COUNTRY SPIRIT IS TO BE ISSUED ON THE DAY. 5 ITA NO.1015/KOL/2016 PRAVAT KUMAR GUPTA A.YR. 2011-12 5 (4) ON RECEIPT OF THE REQUISITION IN FORM II, THE EXCISE OFFICER-IN-CHARGE OF THE WAREHOUSE SHALL ALLOW ISSUE OF COUNTRY SPIRIT FROM THE WAREHOUSE. DUPLICATE COPY OF THE REQUISITION SHALL BE RETURNED TO THE AUTHORI ZED REPRESENTATIVE OF THE WHOLESALE LICENSEE AFTER THE ISSUE HAS BEEN MADE. (5) THE EXCISE OFFICER-IN-CHARGE OF THE WAREHOUSE SHALL ISSUE TRANSPORT PASS TO THE RETAIL VENDOR IN FORM III APPENDED TO THESE RUL ES. (6) NOTWITHSTANDING ANYTHING CONTAINED IN ANY PROVI SIONS OF THE RULES, ORDERS AND NOTIFICATIONS IN THIS CONTEXT, THE WHOLESALE SUPPLI ERS OF COUNTRY SPIRIT IN LABELLED AND CAPSULED BOTTLES SHALL ALLOW A REBATE OF FIVE P AISE PER BOTTLE IRRESPECTIVE OF MEASURE FROM THE BOTTLING CHARGE TO THE RETAIL COUN TRY SPIRIT LICENSEES WHOSE LICENSED PREMISES ARE LOCATED AT A DISTANCE OF 50 K ILOMETRES OR MORE BY THE SHORTEST ROUTE FROM THE ISSUING WAREHOUSE ON THE BA SIS OF A CERTIFICATE TO BE ISSUED BY THE COLLECTOR IN RESPECT OF DISTANCE. AT THE END OF THE MONTH, THE WHOLESALER SHALL SUBMI T A BILL IN DUPLICATE TO THE OFFICER-IN-CHARGE OF THE WAREHOUSE CLAIMING REFUND OF THE AMOUNT GRANTED AS REBATE. THE OFFICER-IN-CHARGE SHALL, ON RECEIPT OF THE BILL , REFUND THE AMOUNT CLAIMED AFTER VERIFYING HIS RECORDS THROUGH ADJUSTMENT IN T HE PERSONAL LEDGER ACCOUNT MAINTAINED FOR THE PURPOSE OF PRIVILEGE FEE. IN CAS E THERE IS NO PERSONAL LEDGER ACCOUNT FOR PRIVILEGE FEE AT THE WAREHOUSE, THE OFF ICER-IN-CHARGE SHALL SEND A COPY OF THE CLAIM WITH HIS COMMENTS TO THE OFFICER- IN-CHARGE OF THE SUPPLIER BOTTLING PLANT, WHO SHALL REFUND THE AMOUNT RECOMME NDED TO THE WHOLESALER THROUGH ADJUSTMENT IN THE PERSONAL LEDGER ACCOUNT M AINTAINED FOR PRIVILEGE FEE. 7. WE FIND THAT THE RELIANCE PLACED ON THE DECISI ON OF CO-ORDINATE BENCH OF BANGALORE TRIBUNAL IN THE CASE OF SRI RENUKESWARA R ICE MILLS VS ITO REPORTED IN 93 ITD 263 (BANG TRIB.) IS WELL FOUNDED , WHEREIN, IT WAS HELD THAT THE C ASH PAYMENT IN THE BANK ACCOUNT OF THE PAYEE IS SUFFICIENT TO GET EXEMPTION IN TERMS OF RULE 6DD IN AS MUCH IT IS ENSURED THAT THE PAYEE AND PAYEE ALONE RECEIVES THE PAYMENT AND THE ORIGIN AND CONCLUSION OF THE TRANSACTION IS TRACEABLE THER EBY FULFILLING THE CRITERION FOR ENSURING THE OBJECT OF INTRODUCTION OF SECTION 40A( 3) OF THE ACT. 8. WE FIND THAT THE PAYMENTS WERE MADE TO THE M/S ASANSOL BOTTLING & PACKAGING CO. PVT. LTD (WHOLESALE LICENSEE) BY DIRECTLY DEPOS ITING THE CASH IN THEIR BANK ACCOUNT. MOREOVER, THE REGULATIONS OF THE WEST BENGAL GOVERN MENT PURSUANT TO NOTIFICATION FROM ITS EXCISE DEPARTMENT DATED 29.8.2005 ALSO MANDATES THE PAYMENT TO BE MADE BY WAY OF DIRECT DEPOSIT INTO THE BANK ACCOUNT OF THE WHOLESA LE LICENSEE. THIS FACT IS ALSO NOT DISPUTED BY THE REVENUE. 9. WE FIND THAT THIS TRIBUNAL HAD IN THE CASE RELI ED UPON BY THE LD AR SUPRA HAD ELABORATELY DEALT WITH THE IMPUGNED ISSUE WITH SPEC IFIC REFERENCE TO THE WEST BENGAL 6 ITA NO.1015/KOL/2016 PRAVAT KUMAR GUPTA A.YR. 2011-12 6 EXCISE RULES AND BENGAL EXCISE ACT, CASE LAWS ON TH E IMPUGNED ISSUE AND ULTIMATELY HELD AS BELOW:- 21. WE FIND THAT M/S ASANSOL BOTTLING & PACKAGING CO. PVT LTD IS A BOTTLING PLANT CUM WAREHOUSE UNDER RULE 2(VII) OF THE WEST BENGAL EXCISE RULES 2005 WITH PRIVILEGE GRANTED U/S 22 OF THE BENGAL EXCISE ACT, 1909. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO GO INTO THE DEFINITION OF WAREHOUSE AS PROVIDED UND ER THE STATE EXCISE RULES 2005 AS BELOW:- WAREHOUSE , UNDER RULE 2(VII) OF THE W.B.EXCISE R ULES 2005 , MEANS THE WAREHOUSE FOR SUPPLY OF COUNTRY SPIRIT TO RETAIL VENDORS, EST ABLISHED AT CONVENIENT PLACES BY THE COMMISSIONER AT THE EXPENSE OF THE STATE GOVERNMENT , OR AT THE EXPENSE OF A PERSON TO WHOM THE EXCLUSIVE PRIVILEGE OF SUPPLYING OR SELLIN G COUNTRY SPIRIT BY WHOLESALE HAS BEEN GRANTED UNDER SECTION 22 OF THE ACT, OR OF A L ICENSED WHOLESALE VENDOR OF COUNTRY SPIRIT. THE ABOVE DEFINITION MAKES IT CLEAR THAT THE WAREH OUSE REFERRED TO UNDER THE STATE EXCISE RULES IS UNDER THE DIRECT CONTROL AND AUTHOR ITY OF THE COMMISSIONER OF STATE EXCISE BECAUSE IT IS ESTABLISHED BY THE COMMISSIONE R OF STATE EXCISE AND AS SUCH IS A STATE GOVERNMENT ESTABLISHMENT. IT IS ALSO PERTINE NT TO NOTE THAT THE EXPENDITURE IN RELATION TO SUCH WAREHOUSE IS BORNE BY THE STATE GO VERNMENT OR BY THE LICENSEE TO WHOM THE EXCLUSIVE PRIVILEGE IS GRANTED U/S 22 OF T HE BENGAL EXCISE ACT, 1909. HENCE THERE COULD BE NO DOUBT THAT THE WAREHOUSE IS ESTAB LISHED BY THE STATE EXCISE COMMISSIONER. HENCE IT COULD BE SAFELY CONCLUDED T HAT THE WAREHOUSE SO ESTABLISHED BY THE STATE EXCISE COMMISSIONER IS A STATE GOVERN MENT ESTABLISHMENT. IT WOULD ALSO BE PERTINENT TO NOTE THAT THE SAID WAREHOUSE HAS BE EN SPECIFICALLY ESTABLISHED FOR SUPPLY OF COUNTRY SPIRIT TO RETAIL VENDORS (ASSESSEE HEREI N) ONLY AND NOT TO ANYBODY ELSE. IT WOULD BE PERTINENT TO LOOK INTO THE DEFINITION O F WHOLESALE LICENSEE AS PER RULE 2(VIII) OF THE EXCISE RULES 2005 AS BELOW:- RULE 2(VIII) WHOLESALE LICENSEE MEANS THE WHOLE SALE VENDOR OF COUNTRY SPIRIT TO WHOM LICENCE HAS BEEN GRANTED IN WEST BENGAL EXCISE FORM NO. 26. IT WOULD BE PERTINENT TO LOOK INTO SECTION 22 OF TH E BENGAL EXCISE ACT, 1909 AT THIS JUNCTURE AS BELOW:- SECTION 22 GRANT OF EXCLUSIVE PRIVILEGE OF MANUFA CTURE AND SALE OF COUNTRY LIQUOR OR INTOXICATING DRUGS (1) THE STATE GOVERNMENT MAY GRANT TO ANY PERSON, ON SU CH CONDITIONS AND FOR SUCH PERIOD AS IT MAY THINK FIT, THE EXCLUSIVE PRIVILEGE (A) OF MANUFACTURING, OR SUPPLYING BY WHOLESALE, OR (B) OF MANUFACTURING, AND SUPPLYING BY WHOLESALE, OR (C) OF SELLING, BY WHOLESALE OR RETAIL, OR (D) OF MANUFACTURING OR SUPPLYING BY WHOLESALE AND SELL ING RETAIL, OR (E) OF MANUFACTURING AND SUPPLYING BY WHOLESALE AND SEL LING RETAIL, 7 ITA NO.1015/KOL/2016 PRAVAT KUMAR GUPTA A.YR. 2011-12 7 ANY COUNTRY LIQUOR OR INTOXICATING DRUG WITHIN ANY SPECIFIED LOCAL AREA: PROVIDED THAT PUBLIC NOTICE SHALL BE GIVEN TO THE I NTENTION TO GRANT ANY SUCH EXCLUSIVE PRIVILEGE, AND THAT ANY OBJECTIONS MADE BY ANY PERS ON RESIDING WITHIN THE AREA AFFECTED SHALL BE CONSIDERED BEFORE AN EXCLUSIVE PRIVILEGE I S GRANTED. (2) NO GRANTEE OF ANY PRIVILEGE UNDER SUB-SECTION ( 1) SHALL EXERCISE THE SAME UNLESS OR UNTIL HE HAS RECEIVED A LICENSE IN THAT BEHALF FROM THE C OLLECTOR OR THE EXCISE COMMISSIONER. HENCE IT COULD BE SAFELY CONCLUDED THAT M/S ASANSOL BOTTLING & PACKAGING CO. PVT LTD (BOTTLING PLANT) IS A WAREHOUSE WITHIN THE MEANING OF RULE 2(VII) OF THE EXCISE RULES 2005 AND SAID WAREHOUSE IS A STATE GOVERNMENT ESTABLISHM ENT, ESTABLISHED AND CONTROLLED BY THE EXCISE COMMISSIONER . IT WOULD BE RELEVANT TO REPRO DUCE RULE 6DD(B) OF THE IT RULES AT THIS JUNCTURE :- (B) WHERE THE PAYMENT IS MADE TO THE GOVERNMENT AND , UNDER THE RULES FRAMED BY IT, SUCH PAYMENT IS REQUIRED TO BE MADE IN LEGAL TENDER. IN THE INSTANT CASE, THE ASSESSEE (RETAIL VENDOR) H AD MADE CASH PAYMENTS FOR PURCHASE OF COUNTRY SPIRIT BY DEPOSITING CASH DIRECTLY INTO THE BANK ACCOUNT OF M/S ABPL AS PER RULE 6(2) OF THE EXCISE RULES 2005 , IT HAS TO BE C ONSTRUED AS PAYMENT MADE TO THE STATE GOVERNMENT AUTHORITY AND ACCORDINGLY FALLS UNDER TH E EXCEPTION PROVIDED IN RULE 6DD(B) OF THE IT RULES. 22. IT IS NOT IN DISPUTE THAT M/S ASANSOL BOTTLIN G & PACKAGING CO. PVT LTD HAVE BEEN GRANTED LICENCE TO ACT AS A WHOLESALER FOR SUPPLY O F COUNTRY LIQUOR TO THE RETAIL VENDOR AS PER THE REGULATIONS OF THE EXCISE DEPARTMENT , G OVERNMENT OF WEST BENGAL. AT THE COST OF REPETITION, WE WOULD LIKE TO STATE THAT THE SAID REGULATION MANDATED THE PAYMENTS TO BE MADE DIRECTLY INTO THE BANK ACCOUNT OF THE SA ID WHOLESALE LICENSEE BY THE RETAIL VENDOR (I.E ASSESSEE HEREIN) FOR STRICT AND EFFECTI VE REGULATION OF THE COUNTRY LIQUOR AND FOR PREVENTION OF SPURIOUS STOCKS AND BLACK MARKETI NG TRANSACTIONS FROM THE SAME. HENCE IT COULD BE SAFELY CONCLUDED THAT THE SAID WH OLESALE LICENSEE HAD ACTED AT THE INSTANCE OF THE STATE GOVERNMENT. ONCE THIS IS SO, THEN THE SAID WHOLESALE LICENSEE COULD BE CONSTRUED AS AN AGENT OF THE STATE GOVERNM ENT. FOR THE SAKE OF CONVENIENCE, THE RELEVANT RULE IS REPRODUCED HEREUNDER:- RULE 6DD(K) WHERE THE PAYMENT IS MADE BY ANY PERS ON TO HIS AGENT WHO IS REQUIRED TO MAKE PAYMENT IN CASH FOR GOODS OR SERVI CES ON BEHALF OF SUCH PERSON. THE PAYMENT MADE BY THE ASSESSEE RETAIL VENDOR TO T HE PRINCIPAL, GOVERNMENT OF WEST BENGAL THROUGH ITS WHOLESALE AGENT. THE RELATIONSH IP BETWEEN THE ASSESSEE (AUTHORIZED RETAILER) AND GOVERNMENT OF WEST BENGAL (THE SUPPLI ER) ACTING UNDER WEST BENGAL EXCISE RULES THROUGH ITS AUTHORISED WHOLESALER LICE NSEE (AGENT), BOTH DEFACTO AND DEJURE , IS ONE OF PRINCIPAL AND AGENT. WE HO LD THAT THE ASSESSEE RETAIL VENDOR HAD MADE PAYMENT TO THE SAID AGENT (WHOLSESALE LICENSEE ) WOULD FALL UNDER THE EXCEPTION PROVIDED IN RULE 6DD(K) OF THE RULES. 8 ITA NO.1015/KOL/2016 PRAVAT KUMAR GUPTA A.YR. 2011-12 8 24. WE HOLD FROM THE AFORESAID FINDINGS THAT THE ASSESSEES CASE FALLS UNDER THE EXCEPTIONS PROVIDED IN RULE 6DD(B) AND RULE 6DD(K) OF THE RULES. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES AND RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HAVE NO HESITATION IN D ELETING THE DISALLOWANCE MADE U/S 40A(3) OF THE ACT IN ALL THE YEARS UNDER APPEAL. AC CORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE FOR ALL THE YEARS UNDER APPEAL ARE ALLOWED . 10. RESPECTFULLY FOLLOWING THE AFORESAID DECISION, WE HOLD THAT THE ASSESSEES CASE FALLS UNDER THE EXCEPTIONS PROVIDED IN RULE 6DD(B) AND (K) OF THE RULES AND ACCORDINGLY, NO DISALLOWANCE U/S 40A(3) OF THE ACT COULD BE MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE TO THE TUNE OF RS. 29,73, 086/-. ACCORDINGLY, THE GROUND RAISED IN THIS REGARD IS ALLOWED. HOWEVER, WITH REGARD TO ANOTHER CASH PAYMENT TO THE TUNE OF RS. 3,48,392/- MADE TO M/S UNITED SPIRITS LTD TOWAR DS PURCHASE OF BEER, AS FAIRLY CONCEDED BY THE LD AR , THE SAME IS IN VIOLATION OF SECTION 40A(3) OF THE ACT AND HENCE THE GROUND RAISED IN THIS REGARD IS DISMISSED. 5. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THIS TRIBUNAL, WE HOLD THAT THERE COULD BE NO DISALLOWANCE U/S 40A(3) OF THE ACT IN T HE FACTS AND CIRCUMSTANCES OF THE CASE AND ACCORDINGLY WE DIRECT THE LD AO TO DELETE THE SAME. ACCORDINGLY THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 02.02.2018 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BAL AGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 02.02.2018 SB, SR. PS 9 ITA NO.1015/KOL/2016 PRAVAT KUMAR GUPTA A.YR. 2011-12 9 COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-2(2), DURGAPUR,AAYAKAR BHAWAN ANNEXE, CITY CENTRE, DURGAPUR-16 2. PRAVAT KUMAR GUPTA, RAYDANGA, SB MORE AREA, DURG APUR-713201. 3..C.I.T.- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S