M/s Girijan Co-op Corporation Ltd., Visakhapatnam V. The ACIT, Range-2(TDS), Visakhapatnam

ITA 187/VIZ/2009

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6913 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Keywords: Recovery proceedings
• Section: 201(1)

Judgement Text

ITA NO 187 OF 09 GIRIJAN COOP CORPORATION LTD VIZAG PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 187/VIZAG/2009 ASSESSMENT YEAR:2005-06 GIRIJAN COOP CORPORATION LTD., VISAKHAPATNAM VS. ACIT RANGE-2(TDS) VISAKHAPATNAM (APPELLANT) PAN NO: AAACG 8090 K (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI G. MALLIKARJUNA, SR.DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18.03.2009 PASSED BY LEARNED CIT(A), VISAKHAPATNAM AND IT RELATES TO THE FINANCIAL YEAR 2004-05 RELEVANT TO THE ASSESSMENT Y EAR 2005-06. 2. THE DEMAND RAISED UPON THE ASSESSEE BY THE ASSTT . COMMISSIONER OF INCOME TAX (TDS) UNDER SECTION 206C(6) AND 206C(7) O F THE ACT, HAVING BEEN CONFIRMED BY THE LEARNED CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING FOLLOWING GROUNDS: 1. GROUND NO.1: APPELLANT SUBMITS THAT THE COMMISS IONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN HOLDING THA T THE APPELLANT IS LIABLE FOR COLLECTION OF TAX UNDER THE PROVISIONS OF SECTION 206C OF THE INCOME TAX ACT. APPELLANT SUBMIT S THAT IT NOT BEING COVERED BY THE PROVISIONS OF SECTION 206C REQUIRING COLLECTION OF TAX FROM THE BUYERS OF ITS PRODUCTS A ND THAT THE PROVISIONS OF SECTION 206C ARE NEITHER ATTRACTED IN ITS CASE NOR APPLICABLE TO IT. 2. GROUND NO.2 WITHOUT PREJUDICE TO THE ABOVE, APPE LLANT SUBMITS THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) IS NOT JUSTIFIED IN REJECTING THE APPELLANTS CONTENTI ON THAT AS PART OF THE PRODUCTS WERE SOLD TO MANUFACTURERS FOR USE OF ITA NO 187 OF 09 GIRIJAN COOP CORPORATION LTD VIZAG PAGE 2 OF 11 ITEMS PURCHASED IN THE MANUFACTURING PROCESS AND NO T FOR RESALE, THE QUESTION OF EFFECTING TCS UNDER SECTION 206C DOES NOT ARISE. 3. GROUND NO.3. WITHOUT PREJUDICE TO THE ABOVE CONT ENTIONS, APPELLANT SUBMITS THAT THE COMMISSIONER OF INCOME T AX (APPEALS) IS NOT JUSTIFIED IN REJECTING THE APPELLA NTS CONTENTION THAT IN RESPECT OF THE SALES MADE TO BUY ERS WHO HAVE ALREADY BEEN ASSESSED TO TAX AND WHO HAVE FILE D THEIR INCOME TAX RETURNS DISCLOSING THE IMPUGNED TRANSACT IONS, THE PROVISIONS OF SECTION 206C ARE NOT ATTRACTED. 3. THE FACTS RELATING TO THE ISSUES ARE STATED IN B RIEF. THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN COLLECTION OF FOREST PRODUCE AND SELLING THEM TO VARIOUS ORGANIZATIONS/PERSONS. DURING THE FINANC IAL YEAR 2004-05, THE ASSESSEE HAS SOLD THE MINOR FOREST PRODUCE (MFP) TO THE TUNE OF RS.21.72 CRORES AND AGRICULTURAL PRODUCE TO THE TUNE OF RS.1 .61 CRORES. THE ASSTT. COMMISSIONER OF INCOME TAX (TDS) (HERE IN AFTER ASS ESSING OFFICER) NOTICED THAT THE PRODUCTS SOLD BY THE ASSESSEE FALL S UNDER THE CATEGORY OF FOREST PRODUCE AND HENCE THE ASSESSEE IS REQUIRED TO COLLECT TAX AT SOURCE (TCS) AS PER THE PROVISIONS OF SEC. 206C OF THE ACT ON THE SALES EFFECTED BY IT. SINCE THE ASSESSEE HAS FAILED TO SO COLLECT TH E TCS, HE ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE. IN RESPONSE THERETO TH E ASSESSEE ARGUED THAT THE EXEMPTION PROVIDED UNDER SUB CLAUSE (1A) AND (1 B) OF SEC. 206C IS APPLICABLE WITH REGARD TO THE SALE OF GUM AFFECTED BY IT. HOWEVER, THE ASSESSING OFFICER REJECTED THE SAID EXPLANATION OF THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS: THE CORPORATION ARGUED THAT WITH REGARD TO SALE OF GUM, THE MERCHANTS WHO HAVE PURCHASED THE STOCKS HA VE FURTHER PROCESSED AND EXPORTING TO FOREIGN COUNTRIE S AND HENCE THEY ARE EXEMPT FROM COLLECTION OF TCS. SUB C LAUSE (1A) & (1B) OF SECTION 206C OF THE I.T.ACT 1961 IS C LEARLY MENTIONED THE PROCEDURE TO BE FOLLOWED BY THE BUYER AND SELLER BEFORE THE SALE CONSIDERATION TAKEN PLACE TO GET THE EXEMPTION FOR NON COLLECTION OF TCS. THE SUB CLAUSE S ARE REPRODUCED HEREUNDER FOR READY REFERENCE. ITA NO 187 OF 09 GIRIJAN COOP CORPORATION LTD VIZAG PAGE 3 OF 11 (1A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECT ION (1), NO COLLECTION OF TAX SHALL BE MADE IN THE CASE OF A BUYER, WHO IS RESIDENT IN INDIA, IF SUCH BUYER FURNISHED TO TH E PERSON RESPONSIBLE FOR COLLECTING TAX, A DECLARATION IN WR ITING IN DUPLICATE IN THE PRESCRIBED FORM AND VERIFIED IN TH E PRESCRIBED MANNER TO THE EFFECT THAT THE GOODS REFERRED TO IN COLUMN (2) OF THE AFORESAID TABLE ARE TO BE UTILIZED FOR THE P URPOSES OF MANUFACTURING, PROCESSING OR PRODUCING ARTICLES OR THINGS AND NOT FOR TRADING PURPOSES. (1B) THE PERSON RESPONSIBLE FOR COLLECTING TAX UNDE R THIS SECTION SHALL DELIVER OR CAUSE TO BE DELIVERED TO T HE CHIEF COMMISSIONER OR COMMISSIONER ONE COPY OF THE DECLAR ATION REFERRED TO IN SUB-SECTION (1A) ON OR BEFORE THE SE VENTH DAY OF THE MONEY NEXT FOLLOWING THE MONTH IN WHICH THE DECLARATION IS FURNISHED TO HIM. THE CORPORATION HAS FAILED TO OBTAIN THE REQUISITE FORMS IN FORM NO.27C AND SUBMIT THE SAME TO THE COMMISSIONER OF INCOME TAX WITHIN THE STIPULATED TIME. NOW THE CORPO RATION HAS STATED THAT THE FORM NO.27C ISSUED BY THE VARIO US FIRMS ARE ENCLOSED TO THEIR LETTER. NO SUCH FORMS HAVE BE EN ENCLOSED WITH THE LETTER AND IT IS NOT POSSIBLE WHE THER THEY HAVE FILED WITHIN THE STIPULATED TIME AND THE CORPO RATION HAS ALSO NOT FURNISHED ANY EVIDENCE THAT THEY HAVE BEEN SUBMITTED TO THE CIT WITHIN THE STIPULATED TIME. 4. THE ASSESSEE ALSO CONTENDED THAT THE PARTIES WHO HAVE PURCHASED THE GOODS FROM THE ASSESSEE HAVE DULY RECORDED THE SAME IN THEIR RESPECTIVE BOOKS OF ACCOUNT AND HAVE ALSO FILED THE INCOME TAX RETURNS. HOWEVER, SINCE THE ASSESSEE DID NOT FILE ANY EVIDEN CE IN SUPPORT OF THE SAID CONTENTIONS, THE ASSESSING OFFICER REJECTED THE SAM E. THE ASSESSEE ALSO CLAIMED THAT THE MEDICAL HERBS SOLD BY IT WILL NOT COME UNDER THE DEFINITION OF FOREST PRODUCE AND HENCE THEY ARE EXEMPT FROM TC S. THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE SAID EXPLANATION ALSO. ACCORDINGLY THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS LIABLE TO COLLECT TAX AT SOURCE @ 2.5% OF THE SALES AFFECTED BY IT AS PER THE PROVISI ONS OF SEC. 206C OF THE ACT. SINCE THE ASSESSEE HAS FAILED TO COLLECT THE TCS, THE ASSESSING OFFICER RAISED A DEMAND OF RS.58,26,028/- UNDER SECTION 206 C(6) OF THE ACT AND ITA NO 187 OF 09 GIRIJAN COOP CORPORATION LTD VIZAG PAGE 4 OF 11 INTEREST OF RS.7,21,633/- UNDER SECTION 206C (7) OF THE ACT. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LEARNE D CIT(A). THE FIRST APPELLATE AUTHORITY GRANTED RELIEF IN RESPECT OF SA LE OF AGRICULTURAL PRODUCE BY HOLDING THAT THE SALE OF AGRICULTURAL PRODUCE DO ES NOT FALL WITHIN THE SCOPE OF SEC. 206C. HOWEVER, HE CONFIRMED THE ORDE R OF THE ASSESSING OFFICER IN RESPECT OF MINOR FOREST PRODUCE. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WITH REGARD TO THE FIRST GROUND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBAL PEOPLE ARE THE FIRST SELL ERS OF THE FOREST PRODUCE AND THE ASSESSEE IS A BUYER AND ACCORDINGLY CONTEND ED THAT THE ASSESSEE, BEING THE FIRST BUYER, IS NOT COVERED BY THE PROVIS IONS OF SEC. 206C OF THE ACT. ON THE OTHER HAND, THE LEARNED D.R CONTENDED THAT THE ASSESSEE HEREIN IS SQUARELY COVERED BY SEC. 206C AND IN THAT REGARD, HE RELIED UPON THE DECISION OF LEARNED CIT(A) ON THIS ISSUE. 5.1 WE NOTICE FROM THE ORDER OF LEARNED CIT(A) THAT THE ASSESSEE HAS PLACED RELIANCE UPON THE LETTER OF CBDT IN F.NO.275 /17/93-IT(D) DATED 10- 01-96 ADDRESSED TO THE JOINT SECRETARY, SOCIAL WELF ARE (TW) DEPARTMENT, GOVERNMENT OF ANDHRA PRADESH, WHICH READS AS UNDER: I AM DIRECTED TO REFER TO YOUR OFFICE LETTER NO.73 26/S2/92-6, DATED 15 TH NOVEMBER, 1995 ON THE ABOVE SUBJECT. THE MATTER HAS BEEN CONSIDERED BY THE BOARD AND IT IS CLARIFIED THAT NO TAX WILL BE DEDUCTED AT FIRST STA GE, IN WHICH THE TRIBALS ARE THE SELLERS OF MINOR FOREST PRODUCE AND THE CORPORATION IS THE BUYER, THE PROVISIONS OF SEC.206 C ARE NOT APPLICABLE AT THIS STAGE. HOWEVER, AT THE SECOND ST AGE, WHEN CORPORATION SELLS THE GOODS, THE TAX WILL HAVE TO B E DEDUCTED UNLESS THE BUYER IS COVERED BY ANY ONE OF THE THREE EXCEPTIONS GIVEN IN CLAUSE (A) OF THE EXPLANATION T O SEC. 206C. ACCORDINGLY IT WAS CONTENDED THAT THE TERM BUYER DOES NOT INCLUDE A BUYER IN THE FURTHER SALE OF SUCH GOODS IN PURSUANC E OF SUCH SALE. HOWEVER, ITA NO 187 OF 09 GIRIJAN COOP CORPORATION LTD VIZAG PAGE 5 OF 11 THE LEARNED CIT(A) HAS REJECTED THE SAID CONTENTION S OF THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS:- 5.1 I HAVE CAREFULLY EXAMINED THE ISSUE. THE ABOVE CLARIFICATION WAS ISSUED BY THE CBDT VIDE LETTER DT . 10-01-96 ON THE BASIS OF THE PROVISIONS OF SEC.206C AS WAS E XISTING THEN IN THE ACT. AS PER THE LAW EXISTING THEN, THE DEFINITION OF BUYER AS GIVEN IN EXPLANATION (A) TO SEC.206C DID NOT INCLUDE (I) A PUBLIC SECTOR COMPANY (II) A BUYER IN THE FUR THER SALE OF SUCH GOODS OBTAINED IN PURSUANCE OF SUCH SALE OF (I II) A BUYER WHERE THE GOODS ARE NOT OBTAINED BY HIM BY WAY OF A UCTION AND WHERE THE SALE PRICE OF SUCH GOODS TO BE SOLD B Y THE BUYER IS FIXED BY OR UNDER ANY STATE ACT. THE SAID EXPLANATION WAS AMENDED BY THE FINANCE ACT, 2003 W.E.F. 01-06-2 003 AS PER WHICH THE DEFINITION OF BUYER DID NOT INCLUDE ( I) A PUBLIC SECTOR COMPANY OR (II) A BUYER IN THE RETAIL SALE O F SUCH GOODS OBTAINED IN PURSUANCE OF SUCH SALE. THE SAID EXPLAN ATION WAS FURTHER AMENDED BY THE TAXATION LAWS (AMENDMENT) AC T, 2003 W.E.F. 08-09-2003 WHEREIN IT WAS PROVIDED THAT THE DEFINITION OF BUYER DID NOT INCLUDE (I) A PUBLIC SE CTOR COMPANY, A CENTRAL GOVERNMENT, A STATE GOVERNMENT AND AN EMB ASSY, A HIGH COMMISSION, LEGATION, COMMISSION, CONSULATE AND THE TRADE REPRESENTATION OF A FOREIGN STATE AND A CLUB OR (II) A BUYER IN THE RETAIL SALE OF SUCH GOODS PURCHASED BY HIM FOR PERSONAL CONSUMPTION. FOR THE FINANCIAL YEAR 2004-0 5 WITH WHICH WE ARE CONCERNED IN THE PRESENT APPEAL, THE L AW RELATING TO THE DEFINITION OF BUYER WAS AS PER THE TAXATION LAWS (AMENDMENT) ACT W.E.F. 08-09-2003. THE APPELLA NT OBVIOUSLY DO NOT FALL IN SUB CLAUSE (II) OR CLAUSE (A) OF THE EXPLANATION TO SEC.206C. GOING BY THE SPIRIT OF THE LETTER, DT. 10-01-96 OF THE BOARD AS STATED ABOVE, THE APPELLAN T WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE IF IT FALLS IN ANY OF THE EXCEPTIONS PROVIDED IN CLAUSE (A) OF EXPLANATION TO SEC.206C. AS STATED EARLIER, THE APPELLANT DOES NOT FALL IN A NY OF THE EXCEPTIONS. HENCE, THE APPELLANTS ARGUMENT THAT PR OVISIONS OF SEC.206C ARE NOT APPLICABLE FOR THE SALES MADE B Y IT, IS NOT ACCEPTABLE AND THIS GROUND OF APPEAL IS DISMISSED. ON A CAREFUL READING OF THE DECISION OF LEARNED CIT (A), WE NOTICE THAT THE FIRST APPELLATE AUTHORITY HAS ANALYSED THE PROVISIO NS AS AMENDED FROM TIME TO TIME AND HAS TAKEN A RATIONAL VIEW OF THE MATTER , WITH WHICH WE ARE CONVINCED WITH. HENCE WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF ITA NO 187 OF 09 GIRIJAN COOP CORPORATION LTD VIZAG PAGE 6 OF 11 LEARNED CIT(A) ON THIS ISSUE AND ACCORDINGLY REJECT THIS GROUND OF THE ASSESSEE. 6. WITH REGARD TO GROUND NUMBER 2, THE LEARNED AUTH ORISED REPRESENTATIVE SUBMITTED THAT SOME OF THE PURCHASER S HAVE UTILIZED THE PRODUCTS IN MANUFACTURING PROCESS AND HENCE THE IMP UGNED PROVISIONS ARE NOT APPLICABLE TO THAT KIND OF SALES. HOWEVER, WE NOTICE THAT THE LEARNED CIT(A) HAS POINTED OUT THAT THE ASSESSEE HAS NOT FO LLOWED THE PROCEDURE PRESCRIBED IN THIS REGARD. ACCORDINGLY THE LEARNED CIT(A) HAS REJECTED THE CONTENTION OF THE ASSESSEE WITH THE FOLLOWING OBSER VATIONS: GROUND NO.3: IT WAS SUBMITTED BY THE APPELLANT THAT PART OF THE PRODUCTS WERE SOLD TO CERTAIN PURCHASERS WHO UT ILIZED THE SAME IN THE MANUFACTURING PROCESS. THE SAME WAS NOT RESOLD BY SUCH PURCHASERS. SUCH PURCHASERS ISSUED FORM NO. 27C. ONCE FORM NO.27C IS OBTAINED, THERE IS NO QUESTION OF COLLECTION OF TAX AT SOURCE UNDER SECTION 206C OF T HE ACT. IN THIS CONTEXT, IT IS OBSERVED THAT WHERE THE ASSESSI NG OFFICER, ON AN APPLICATION MADE BY THE BUYER, GIVES A CERTIF ICATE IN THE PRESCRIBED FORM I.E. FORM NO.27C THAT, TO THE BEST ON HIS BELIEF, ANY OF THE GOODS REFERRED TO IN SEC.206C AR E TO BE UTILIZED FOR THE PURPOSE OF MANUFACTURING, PROCESSI NG OR PRODUCING ARTICLES OR THINGS AND NOT FOR TRADING PU RPOSES, THE PROVISIONS OF SEC.206C SHALL NOT APPLY SO LONG AS T HE CERTIFICATE REMAINS IN FORCE. RULE 37C FURTHER PROV IDES THAT THE DECLARATION IN FORM NO.27C SHALL BE FURNISHED IN DU PLICATE TO THE PERSON RESPONSIBLE FOR COLLECTING TAX AT SOURCE AND SUCH PERSON SHALL DELIVER OR CAUSE TO BE DELIVERED TO TH E CHIEF COMMISSIONER OR COMMISSIONER, ONE COPY OF SUCH DECL ARATION ON OR BEFORE THE 7 TH DAY OF THE MONTH NEXT FOLLOWING THE MONTH IN WHICH THE DECLARATION IS FURNISHED TO HIM. IN THE INSTANT CASE, THE APPELLANT HAS NEITHER FURNISHED T HE DETAILS OF THE BUYERS WHO FURNISHED SUCH FORM NO.27C NOR FURNI SHED THE EVIDENCE RELATING TO THE FACT THAT COPIES OF SU CH DECLARATIONS WERE DELIVERED TO THE CHIEF COMMISSION ER OR COMMISSIONER. IN THE ABSENCE OF SUCH EVIDENCE, THE ABOVE CONTENTION OF THE APPELLANT CANNOT BE ENTERTAINED A ND HENCE THIS GROUND OF APPEAL IS DISMISSED . ITA NO 187 OF 09 GIRIJAN COOP CORPORATION LTD VIZAG PAGE 7 OF 11 BEFORE US ALSO, THE ASSESSEE DID NOT PRODUCE ANY EV IDENCE TO SHOW THAT IT HAS COMPLIED WITH THE PROCEDURES PRESCRIBED UNDER T HE ACT AND RULES IN ORDER TO GET EXEMPTION FROM COMPLYING WITH THE PROV ISIONS OF SEC. 206C OF THE ACT. HENCE WE DO NOT FIND ANY REASON TO INTERF ERE WITH THE DECISION OF LEARNED CIT(A) ON THIS ISSUE. 7. WITH REGARD TO THE THIRD GROUND, THE LEARNED A.R SUBMITTED THAT THE TCS IS A METHOD OF COLLECTION OF TAX FROM THE PURCH ASERS AND THE SAID PURCHASERS ARE ENTITLED TO CLAIM TAX CREDIT OF TCS AGAINST THE TAX PAYABLE BY THEM. THUS THE TCS IS AKIN TO THE TDS. THE ONLY D IFFERENCE IS THAT IN THE CASE OF TDS, THE PAYER HAS TO DEDUCT TDS AND PAY ON LY THE NET AMOUNT, WHILE IN THE CASE OF TCS, THE COLLECTOR HAS TO COLL ECT TCS AMOUNT ALSO FROM THE PURCHASERS IN ADDITION TO THE SALE AMOUNT. HE F URTHER SUBMITTED THAT MOST OF THE PURCHASERS TO WHOM THE FOREST PRODUCE W ERE SOLD HAVE ALREADY FILED THEIR RESPECTIVE RETURNS OF INCOME BY DULY DE CLARING THE IMPUGNED PURCHASES AND THUS THEY HAVE BEEN ASSESSED TO TAX I N RESPECT OF THE PURCHASES MADE BY THEM FROM THE ASSESSEE. ACCORDIN GLY, HE CONTENTED THAT THE ASSESSEE SHOULD NOT BE MADE LIABLE TO PAY THE TCS AGAIN ON THE IMPUGNED SALES, SINCE THE PURCHASERS HAVE ALREADY P AID THE TAX THERE ON. IN THIS REGARD, HE RELIED UPON THE DECISION OF HON'B LE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD REPO RTED IN 293 ITR 226, WHICH WAS RENDERED IN THE CONTEXT OF THE PROVISIONS OF SEC. 201 OF THE ACT RELATING TO THE FAILURE TO COMPLY WITH THE TDS PROV ISIONS. THE LEARNED A.R SUBMITTED THAT THE PROVISIONS OF TCS ARE AKIN TO TD S PROVISIONS AND HENCE THE RATIO OF SUPREME COURTS DECISION CITED ABOVE S HOULD BE APPLIED ON THE IMPUGNED ISSUE ALSO. HOWEVER, THE LEARNED DEPARTME NTAL REPRESENTATIVE DISPUTED THE SAID CLAIM OF THE ASSESSEE AND SUBMITT ED THAT THE THOUGH THE OBJECT OF DEDUCTION/COLLECTION OF TDS/ TCS IS SAME, THE LIABILITY IMPOSED UPON THE ASSESSEE UNDER TCS PROVISIONS (I.E. UNDER SECTION 206C) IS FAR DIFFERENT FROM THE LIABILITY IMPOSED UNDER TDS PROV ISIONS (SEC. 201). THE LEARNED D.R FURTHER SUBMITTED THAT THE LEARNED CIT( A) HAS CLEARLY BROUGHT ITA NO 187 OF 09 GIRIJAN COOP CORPORATION LTD VIZAG PAGE 8 OF 11 OUT THE FINE DISTINCTION BETWEEN THE TDS AND TCS PR OVISIONS AND ACCORDINGLY PLEADED THAT THE ORDER OF LEARNED CIT(A ) SHOULD BE UPHELD. 8. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AND CAREFULLY PERUSED THE RECORD. THE LEARNED A.R HAS PLACED REL IANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD., (SUPRA) AND AS STATED EARLIER, IT WAS RENDERE D IN THE CONTEXT OF SEC. 201 OF THE ACT. AS PER THE PROVISIONS OF SEC. 201( 1), IF A PERSON WHO IS REQUIRED TO DEDUCT ANY SUM IN ACCORDANCE WITH THE P ROVISIONS OF THE ACT FAILS TO DEDUCT TAX OR FAILS TO PAY THE TAX SO DEDU CTED, HE SHALL BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX. IN THIS CONTEXT, THE CBDT HAS ISSUED A CIRCULAR NO.275/201/95-IT(B) DATED 29 TH JANUARY 1997, WHEREIN IT WAS CLARIFIED THAT NO DEMAND VISUALIZED UNDER S ECTION 201(1) OF THE ACT SHOULD BE ENFORCED AFTER THE TAX DEDUCTOR HAS SATIS FIED THE OFFICER IN CHARGE OF TDS THAT THE TAX DUE HAS BEEN PAID BY THE DEDUCT EE ASSESSEE. THE HON'BLE SUPREME COURT TOOK INTO CONSIDERATION THE A BOVE SAID CIRCULAR OF CBDT WHILE RENDERING THE DECISION THAT THE RECOVERY OF TAX CANNOT BE MADE ONCE AGAIN, IF THE PAYEES HAVE ALREADY PAID TAX ON THE INCOME ON WHICH THERE WAS NO DEDUCTION/SHORT DEDUCTION OF TAX. 8.1 HOWEVER, UNDER THE PROVISIONS OF SEC.206C, A LIABILITY TO COLLECT TAX AT SOURCE (TCS) AT THE SPECIFIED PERCENTAGE ON THE SAL ES EFFECTED IS IMPOSED UPON EVERY PERSON, BEING A SELLER OF SPECIFIED GOOD S MENTIONED IN THAT SECTION. THE NATURE OF GOODS MENTIONED IS (A) ALCOHOLIC LIQUOR FOR HUMAN CONSUMPTION. (B) TENDU LEAVES (C) TIMBER OBTAINED UNDER A FOREST LEASE. (D) TIMBER OBTAINED BY ANY MODE OTHER THAN UNDER A FOREST LEASE. (E) ANY OTHER FOREST PRODUCE NOT BEING TIMBER OR T ENDU LEAVES. (F) SCRAP. AS PER THE PROVISIONS OF SEC.206C(6), ANY PERSON WH O IS RESPONSIBLE FOR COLLECTING THE TAX (TCS) SHALL BE LIABLE TO PAY THE TCS AMOUNT EVEN IF HE ITA NO 187 OF 09 GIRIJAN COOP CORPORATION LTD VIZAG PAGE 9 OF 11 FAILS TO COLLECT THE TAX FROM THE BUYERS. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE PROVISIONS OF SEC. 206C(6): (6) ANY PERSON RESPONSIBLE FOR COLLECTING THE TAX WHO FAILS TO COLLECT THE TAX IN ACCORDANCE WITH THE PROVISIONS O F THIS SECTION, SHALL, NOTWITHSTANDING SUCH FAILURE, BE LI ABLE TO PAY THE TAX TO THE CREDIT OF THE CENTRAL GOVERNMENT IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (3). THUS, AS PER THE PROVISIONS OF SEC. 206C(6), THE PE RSON, BEING THE SELLER OF SPECIFIED GOODS, IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT, BUT IS MADE LIABLE TO PAY THE TCS AMOUNT. THUS THE ENTIRE LIAB ILITY IN RESPECT OF TCS IS FASTENED UPON HIM WHETHER OR NOT HE COLLECTS THE TC S AS PER THE PROVISIONS OF SEC. 206C(1) OF THE ACT. THIS IS IN CONTRAST WI TH THE PROVISIONS OF SEC. 201(1), WHERE THE PERSON LIABLE TO DEDUCT TAX AT SO URCE (TDS) IS DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF THE SAID TD S AMOUNT. IT IS ALSO PERTINENT TO NOTE THAT THE FINANCE ACT, 2006 HAS IN SERTED SUB SECTION (6A) IN SEC. 206C, AS PER WHICH, THE PERSON IS ALSO DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF TCS AMOUNT. THE SAID SECTION 206C(6A) IS AKIN TO SEC. 201(1) OF THE ACT. 8.2 HOWEVER, IN THE INSTANT CASE, THE DEMAND HA S BEEN RAISED UNDER SECTION 206C(6) OF THE ACT. HENCE THE LEARNED CIT( A) DREW A DISTINCTION BETWEEN THIS SECTION AND SEC. 201(1). THE OBSERVAT IONS OF LEARNED CIT(A) ARE EXTRACTED BELOW. IN THIS CONTEXT, EVIDENCES WERE FURNISHED WITH RES PECT TO 34 BUYERS WHO HAD PURCHASED MFP TO THE EXTENT OF RS.15,82,98,388/- AND WHO HAD FILED THEIR RETURNS O F INCOME INCORPORATING THE PURCHASES MADE BY THEM FROM THE A PPELLANT IN THE STATEMENT OF ACCOUNTS FURNISHED ALONG WITH S UCH RETURNS OF INCOME. IT WAS ARGUED THAT THE SAID AMOUN T SHOULD BE DEDUCTED FROM THE TOTAL SALE OF MFP MADE BY THE APPELLANT ON WHICH NO TCS WAS EFFECTED. IN THIS CONTEXT, IT IS OBSERVED THAT WITH REFERENCE TO SEC.201 OF THE ACT WHERE AN ASSESSEE IS DEEMED TO BE AN ASSESSEE IN DEFAULT IN CASE OF F AILURE TO DEDUCT TAX AT SOURCE ON PAYMENTS MADE BY HIM ON WHI CH HE WAS LIABLE TO DEDUCT TAX THAT THE HON'BLE SUPREME C OURT IN ITA NO 187 OF 09 GIRIJAN COOP CORPORATION LTD VIZAG PAGE 10 OF 11 THE CASE OF HINDUSTAN COCACOLA BEVERAGES PVT. LTD V . CIT REPORTED IN 293 ITR 226 UNEQUIVOCALLY STATED THAT W HERE THE PAYEES HAVE ALREADY PAID TAX ON THE INCOME ON WHICH THERE WAS A SHORT DEDUCTION OF TAX AT SOURCE, RECOVERY OF TAX CANNOT BE MADE ONCE AGAIN FROM THE TAX DEDUCTOR. WHILE REN DERING THE ABOVE DECISION, THE HON'BLE SUPREME COURT TOOK INTO ACCOUNT CIRCULAR NO.275/201/95-IT(B), DT. 29 TH JANUARY, 1997 ISSUED BY THE CBDT WHEREIN IT WAS CLARIFIED NO DEM AND VISUALIZED UNDER SECTION 201(1) OF THE IT ACT SHOUL D BE ENFORCED AFTER THE TAX DEDUCTGOR HAS SATISFIED THE OFFICER INCHARGE OF TDS, THE TAXES DUE HAVE BEEN PAID BY TH E DEDUCTEE ASSESSEE. HOWEVER, THIS WILL NOT ALTER T HE LIABILITY TO CHARGE INTEREST UNDER SECTION 201(1A) OF THE ACT TILL THE DATE OF PAYMENT OF TAXES BY THE DEDUCTEE ASSESSEE O R THE LIABILITY FOR PENALTY UNDER SECTION 271C OF THE IT ACT. HOWEVER, THIS IS THE POSITION OF LAW IN SO FAR AS T HE PROVISIONS OF SEC.201(1) AND 201 (1A) ARE CONCERNED. SEC. 206C (6) AND SEC.201(1) ARE NOT SIMILARLY WORDED. WHILE SEC.201( 1) TREATS AN ASSESSEE WHO FAILS TO DEDUCT THE TAX AT SOURCE O R AFTER DEDUCTION, DOES NOT PAY THE SAME TO THE GOVERNMENT AS AN ASSESSEE IN DEFAULT, SEC.206C(6) CLEARLY PROVIDES T HAT ANY PERSON RESPONSIBLE FOR COLLECTING THE TAX WHO FAILS TO COLLECT THE TAX IN ACCORDANCE TO THE PROVISIONS OF THE SAID SECTION, SHALL, NOT WITHSTANDING SUCH FAILURE, BE LIABLE TO PAY THE TAX TO THE CREDIT OF THE CENTRAL GOVERNMENT. THUS, IN CASE OF FAILURE TO EFFECT THE TCS, BECOMES THE LIABILITY OF THE COL LECTOR OF SUCH TAX AND HE IS MANDATORILY REQUIRED TO PAY THE SAME TO THE CENTRAL GOVERNMENT AS THE WORD USED IN THE SAID SEC TION IS SHALL. UNDER SEC.206C(6) WE ARE BASICALLY CONCERN ED WITH THE LIABILITY OF THE ASSESSEE COLLECTOR AND NOT W ITH THE LIABILITY OF THE ASSESSEE FROM WHOM TAX WAS LIABLE TO BE COLLECTED. FURTHER, IN CASE OF FAILURE TO DEDUCT TA X AT SOURCE ON CERTAIN PAYMENTS, SUCH PAYMENTS BECOME RECEIPTS IN THE HANDS OF THE PERSONS, WHEREAS IN THE CASE OF TAX CO LLECTION AT SOURCE ON CERTAIN SALES, THE SAME BECOME AN EXPENDI TURE IN THE HANDS OF THE PERSONS WHO PURCHASE SUCH GOODS. THEREFORE, THE CASE LAW RELATING TO SEC.201(1) WOUL D NOT BE APPLICABLE TO THE CASES COVERED UNDER SECTION 206C( 6) OF THE ACT. IN VIEW OF THE ABOVE, THIS ARGUMENT OF THE APP ELLANT IS NOT ACCEPTED AND THIS GROUND OF APPEAL IS DISMISSED . IN VIEW OF THE FOREGOING DISCUSSION, WE ARE ALSO OF THE VIEW THAT THE RATIO OF DECISION OF HON'BLE SUPREME COURT IN THE CASE OF HI NDUSTAN COCO COLA BEVERAGES PVT. LTD. (SUPRA) CANNOT BE APPLIED TO TH E FACTS OF THE INSTANT ITA NO 187 OF 09 GIRIJAN COOP CORPORATION LTD VIZAG PAGE 11 OF 11 CASE. FURTHER THE PROVISIONS OF SEC. 206(6) ARE V ERY SPECIFIC AND WE HAVE ALREADY DISCUSSED ABOUT THE EFFECT OF THAT SECTION. HENCE WE ARE IN AGREEMENT WITH THE DECISION OF LEARNED CIT(A) IN HO LDING THAT THE ASSESSEE IS LIABLE TO PAY THE DEMAND RAISED UNDER SECTION 2 06(6) OF THE ACT. ACCORDINGLY WE CONFIRM HIS ORDER ON THIS ISSUE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 2 ND JUNE, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 02-06-2011 COPY TO 1 GIRIJAN COOP CORPORATION LTD., OPP: VUDA PARK, EA ST POINT COLONY, VISAKHAPATNAM 2 THE ACIT RANGE-2(TDS) VISAKHAPATNAM 3 4. THE CIT (TDS) VISAKHAPATNAM THE CIT(A),VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM