M/s Ramnagar Pachai & C. S. (S) Shop, Burdwan V. ITO, WD-2(3), ASANSOL, Asansol

ITA 938/KOL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4211 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 15-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 04-05-2016
• Court: TRIBUNAL
• Department Lawyers: R K KUREEL
• Assessee Lawyers: R N RAM
• Section: 40A(3); 143(3)

Judgement Text

1 ITA NO.938/KOL/2016 RAMNAGAR PACHAI & C.S(S) SHOP, AY 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S. S. VISWAN ETHRA RAVI, JM] I.T.A NO. 938/KOL/2016 ASSESSMENT YEAR: 2011-12 RAMNAGAR PACHAI & C.S(S) SHOP VS. INCOME-TAX OFFI CER, WD-2(3), ASANSOL (PAN: AACFR8748L) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 15.11.2016 DATE OF PRONOUNCEMENT: 18.11.2016 FOR THE APPELLANT: SHRI R. N. RAM, AR FOR THE RESPONDENT: SHRI R. K. KUREEL, JCIT ORDER PER SHRI M. BALAGANESH, AM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A), ASANSOL VIDE APPEAL NO. 63/CIT(A)/ASL/W-2(3)/ASL/14-15 DATED 22.02.2016. AS SESSMENT WAS FRAMED BY ITO, WARD- 2(3), ASANSOL U/S. 143(3) OF THE INCOME TAX ACT, 19 61 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2011-12 VIDE HIS ORDER DATED 21.03.2014. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA IS JUSTIFIED IN UPHOLDING THE DISALLOWANCE MADE U/S 40A(3) OF THE A CT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE ASSESSEE IS CARRYING ON BUSINESS AS LICENSE E OF COUNTRY SPIRIT SHOP. THE COUNTRY LIQUOR IS AN EXCISABLE COMMODITY. ITS PURCHASE AND SALE ARE STRICTLY CONTROLLED BY THE STATE GOVERNMENT. PREVIOUSLY, THE RETAIL DEALERS LIKE THE ASSESSEE USED TO DEPOSIT THE COST PRICE, EXCISE DUTY, BOTTLING CHARGES ETC. IN THE TREASURY AGAINST FORM TR-7 IN CASH FOR GETTING SUPPLIES FROM THE WHOLESALE LICENSEE. SUBSEQUENTLY, THE EXCISE DEPARTMENT BY A NOTIFICATION DATED 29.08.2005 CHANGED THE PROCEDURE . AS PER THE REVISED PROCEDURE PRESCRIBED BY THE EXCISE DEPARTMENT, FOR LIFTING CO UNTRY SPIRIT, THE ASSESSEE, WHO IS A RETAIL VENDOR, WAS REQUIRED TO MAKE THE ENTIRE PAYMENT CON SISTING OF COST OF THE STOCK-IN-TRADE, EXCISE DUTY AND BOTTLING CHARGES ETC. ONLY TO THE W HOLESALE LICENSEE APPOINTED BY THE STATE 2 ITA NO.938/KOL/2016 RAMNAGAR PACHAI & C.S(S) SHOP, AY 2011-12 GOVERNMENT. FOLLOWING THE REVISED PROCEDURE, THE AS SESSEE MADE PAYMENTS BY CASH DEPOSITS IN THE BANK A/C OF ITS SUPPLIER I.E. M/S. ASANSOL BOTTLING AND PACKAGING CO. PVT. LTD. MAINTAINED IN THE STATE BANK OF INDIA. WHILE C OMPLETING THE ASSESSMENTS OF THE ASSESSEE, THE LD. A.O. DISALLOWED THE CASH PAYMENTS (IN EXCESS OF RS.20,000 ON EACH OCCASION) MADE IN THE BANK A/C OF THE SUPPLIER MAIN TAINED IN THE STATE BANK OF INDIA IN TERMS OF SEC.40A(3) OF THE I. T. ACT IN THE SUM OF RS. 29,73,086/-. APART FROM THIS, THE LD AO OBSERVED THAT THE ASSESSEE HAD MADE CASH PAYMENT S IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT TO M/S UNITED SPIRITS LTD FOR PUR CHASE OF BEERS TO THE TUNE OF RS. 3,48,392/- WHICH WAS DISALLOWED IN THE ASSESSMENT. 4. THE ASSESSEE FILED AN APPEAL AGAINST THE AFORESA ID DISALLOWANCE. SEVERAL ARGUMENTS WERE ADVANCED BY THE A.R. OF THE ASSESSEE BEFORE TH E LD.CIT(A). THE TWO MOST IMPORTANT ARGUMENTS WERE THAT SINCE THE ASSESSEE DEPOSITED CA SH IN THE STATE BANK OF INDIA, NO DISALLOWANCE U/S. 40A(3) OF THE ACT IS CALLED FOR I N VIEW OF THE EXEMPTION ALLOWED UNDER RULE 6DD(A)(II) OF THE I. T. RULES. THE SECOND IMPO RTANT SUBMISSION MADE BY THE A.R. OF THE ASSESSEE BEFORE THE LD.CIT(A) WAS THAT BY THE N OTIFICATION DATED 29.08.2005, THE WHOLESALE LICENSEES WERE APPOINTED BY THE STATE GOV ERNMENT FOR COLLECTING THE COST PRICE, EXCISE DUTY, BOTTLING CHARGES ETC. IT WAS CLAIMED T HAT IN SUCH A SITUATION, THE CASH PAYMENTS MADE TO THE BANK A/C OF M/S. ASANSOL BOTTLING & PAC KAGING CO. PVT. LTD. SHOULD BE TREATED AS PAYMENTS MADE TO THE GOVERNMENT AND HENCE NO DIS ALLOWANCE IS CALLED FOR IN VIEW OF PROVISIONS OF RULE 6DD(B) OF THE I. T. RULES WHICH PROVIDES THAT WHERE THE PAYMENT IS MADE TO THE GOVERNMENT, NO DISALLOWANCE U/S 40A(3) IS REQUIRED. THE LD.CIT(A) HAS REJECTED THE VARIOUS ARGUMENTS OF THE ASSESSEE AND HELD THAT THE ASSESSEES CASE DOES NOT FALL UNDER THE EXCEPTIONS PROVIDED IN RULE 6DD OF THE RU LES. ACCORDINGLY, HE CONFIRMED THE DISALLOWANCE MADE U/S 40A(3) OF THE ACT FOR DISALLO WANCE IN THE SUM OF RS. 29,73,086/-. WITH REGARD TO THE CASH PAYMENTS MADE TO UNITED SPI RITS LTD IN THE SUM OF RS. 3,48,392/-, THE LD CITA UPHELD THE ACTION OF THE LD AO AS THE S AID PAYMENT WAS IN GROSS VIOLATION OF SECTION 40A(3) OF THE ACT. AGGRIEVED, THE ASSESSEE IS NOW IN SECOND APPEAL BEFORE US. 5. THE LD AR PLACED RELIANCE ON THE DECISION OF TH E CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 148/KOL/2015 ; ITA N OS. 185-186/KOL/2014 FOR THE ASST YEARS 2007-08 , 2008-09 & 2010-11 RESPECTIVELY DATE D 5.8.2016 , WHEREIN ON SIMILAR FACTS, 3 ITA NO.938/KOL/2016 RAMNAGAR PACHAI & C.S(S) SHOP, AY 2011-12 THIS TRIBUNAL HAD HELD THAT THE ASSESSEES CASE FAL LS UNDER THE EXCEPTIONS PROVIDED IN RULE 6DD(B) AND RULE 6DD(K) OF THE RULES AND ACCORDINGLY DELETED THE DISALLOWANCE U/S 40A(3) OF THE ACT. HE STATED THAT THIS ORDER HAD DULY CO NSIDERED THE VARIOUS DECISIONS ON THE IMPUGNED ISSUE AND THE NOTIFICATION BY THE EXCISE D EPARTMENT OF GOVERNMENT OF WEST BENGAL. ACCORDINGLY HE PLEADED FOR DELETION OF DI SALLOWANCE MADE IN THE SUM OF RS 29,73,086/-. HOWEVER, IN RESPECT OF OTHER CASH PAY MENTS IN THE SUM OF RS. 3,48,392/- MADE TO M/S UNITED SPIRITS LTD, HE FAIRLY CONCEDED THAT THE SAME IS IN VIOLATION OF SECTION 40A93) OF THE ACT AND ACCORDINGLY DISALLOWANCE THEREON DES ERVES TO BE CONFIRMED. IN RESPONSE TO THIS,THE LD DR PLACED RELIANCE ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE PROVISIONS OF THE WES T BENGAL EXCISE RULES 2005 AND THE BENGAL EXCISE ACT, 1909. THE FACTS STATED HEREINAB OVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FOR THE SAKE OF BREVITY. AT THE OUTSET, WE DEEM IT NECESSARY TO INCORPORATE THE FOLLOWING CLAUSES FROM THE NOTIFICA TION 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 SUPERSESSION OF TH E RULES PUBLISHED WITH THIS DEPARTMENT NOTIFICATION NO. 122-EX/O/1R-1/2000 DATED 23.2.2000 , AS SUBSEQUENTLY AMENDED, THE GOVERNOR IS PLEASED HEREBY TO MAKE THE FOLLOWING RU LES REGULATING THE ISSUE AND REMOVAL OF COUNTRY SPIRIT ON PAYMENT OF DUTY IN LABELLED AND C APSULED BOTTLES FROM COUNTRY SPIRIT BOTTLING 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 OCTOBER, 2005. 2. DEFINITIONS. (1) IN THESE RULES, UNLESS THERE IS ANYTHING 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 THE CO LLECTOR; 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; 4 ITA NO.938/KOL/2016 RAMNAGAR PACHAI & C.S(S) SHOP, AY 2011-12 (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 PER SON TO WHOM THE EXCLUSIVE PRIVILEGE OF SUPPLYING OR SELLING COUNTRY SPIRIT BY WHOLESALE HAS BEEN GRANTED UNDER SECTION 22 OF THE ACT, OR OF A LICENSED WHOLE SALE 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 N OT DEFINED, BUT DEFINED IN THE ACT, SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO TH EM 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 FROM A COUN TRY SPIRIT BOTTLING PLANT. NO COUNTRY SPIRIT IN BULK SHALL BE ISSUED WITHOUT PAYM ENT 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 T IME FOR THE PURPOSE OF MAINTAINING AN ACCOUNTCURRENT OF THE DUTIES PAYABLE BY THE WHO LESALE LICENSEE FOR THE ISSUES OF COUNTRY SPIRIT TO THE RETAIL VENDORS OR TRANSPORT O N PAYMENT OF DUTY FROM THE CONCERNED COUNTRY SPIRIT BOTTLING PLANT OR WAREHOUS E. 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 DUTY FOR DA ILY ISSUES OF COUNTRY SPIRIT FROM THE COUNTRY SPIRIT BOTTLING PLANT OR WAREHOUSE MAY BE D EBITED 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 DU PLICATE COPY SHALL BE KEPT IN THE CUSTODY OF THE EXCISE OFFICER-IN-CHARGE FOR HIS OFF ICIAL 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 THERE BE ANY, AT TH E PRESCRIBED RATE AND OTHER IMPOSITION, AS MAY BE PRESCRIBED BY LAW, SHALL BE P AID BY THE RETAIL VENDOR TO THE CREDIT OF THE WHOLESALE LICENSEE 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 SHALL THEN S UBMIT REQUISITION IN DUPLICATE IN FORM II APPENDED TO THESE RULES TO THE EXCISE OFFIC ER-IN-CHARGE OF THE WAREHOUSE SEPARATELY FOR EACH OF THE RETAIL VENDORS TO WHOM C OUNTRY SPIRIT IS TO BE ISSUED ON THE DAY. (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 AUTHORIZED REPRESENTATIVE OF THE WHOLESALE LICENSEE AFTER THE ISSUE HAS BEEN MADE. 5 ITA NO.938/KOL/2016 RAMNAGAR PACHAI & C.S(S) SHOP, AY 2011-12 (5) THE EXCISE OFFICER-IN-CHARGE OF THE WAREHOUSE SHALL ISSUE TRANSPORT PASS TO THE RETAIL VENDOR IN FORM III APPENDED TO THESE RULES. (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 PAISE PER BOTTLE IRRESPECTIVE OF MEASURE FROM THE BOTTLING CHARGE TO THE RETAIL COUNTRY SPIR IT LICENSEES WHOSE LICENSED PREMISES ARE LOCATED AT A DISTANCE OF 50 KILOMETRES OR MORE BY THE SHORTEST ROUTE FROM THE ISSUING WAREHOUSE ON THE BASIS 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 A MOUNT GRANTED AS REBATE. THE OFFICER-IN-CHARGE SHALL, ON RECEIPT OF THE BILL , REFUND THE AMOUNT CLAIMED AFTER VERIFYING HIS RECORDS THROUGH ADJUSTMENT IN THE PER SONAL LEDGER ACCOUNT MAINTAINED FOR THE PURPOSE OF PRIVILEGE FEE. IN CASE THERE IS NO PERSONAL LEDGER ACCOUNT FOR PRIVILEGE FEE AT THE WAREHOUSE, THE OFFICER-IN-CHAR GE SHALL SEND A COPY OF THE CLAIM WITH HIS COMMENTS TO THE OFFICER-IN-CHARGE OF THE S UPPLIER BOTTLING PLANT, WHO SHALL REFUND THE AMOUNT RECOMMENDED TO THE WHOLESALER THR OUGH ADJUSTMENT IN THE PERSONAL LEDGER ACCOUNT MAINTAINED FOR PRIVILEGE FE E. 7. WE FIND THAT THE RELIANCE PLACED ON THE DECISI ON OF CO-ORDINATE BENCH OF BANGALORE TRIBUNAL IN THE CASE OF SRI RENUKESWARA RICE 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 THEREBY FULFILLING THE CRI TERION 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 DEPOSITIN G 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 WHOLESALE LICE NSEE. 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 EXCISE RULES AND BENGAL EXCISE ACT, CASE LAWS ON THE IMPUG NED ISSUE AND ULTIMATELY HELD AS BELOW:- 6 ITA NO.938/KOL/2016 RAMNAGAR PACHAI & C.S(S) SHOP, AY 2011-12 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 UNDER 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 VE NDORS, ESTABLISHED AT CONVENIENT PLACES BY THE COMMISSIONER AT THE EXPENS E OF THE STATE GOVERNMENT, OR AT THE EXPENSE OF A PERSON TO WHOM T HE EXCLUSIVE PRIVILEGE OF SUPPLYING OR SELLING COUNTRY SPIRIT BY WHOLESALE HA S BEEN GRANTED UNDER SECTION 22 OF THE ACT, OR OF A LICENSED WHOLESALE V ENDOR 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 ESTABLISHED 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 H AS BEEN SPECIFICALLY ESTABLISHED FOR SUPPLY OF COUNTRY SPIRIT TO RETAIL VENDORS (ASSESSE E HEREIN) 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 BEN GAL 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 PRIV ILEGE (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.938/KOL/2016 RAMNAGAR PACHAI & C.S(S) SHOP, AY 2011-12 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 B Y ANY PERSON RESIDING WITHIN THE AREA AFFECTED SHALL BE CONSIDERED BEFORE AN EXC LUSIVE PRIVILEGE IS 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 B EHALF FROM THE COLLECTOR 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 MEAN ING OF RULE 2(VII) OF THE EXCISE RULES 2005 AND SAID WAREHOUSE IS A STATE GOVERNMENT ESTABLISHMENT, ESTABLISHED AND CONTROLLED BY THE EXCISE COMMISSIONER . IT WOUL D BE RELEVANT TO REPRODUCE 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 DIREC TLY INTO THE BANK ACCOUNT OF M/S ABPL AS PER RULE 6(2) OF THE EXCISE RULES 2005 , IT HAS TO BE CONSTRUED AS PAYMENT MADE TO THE STATE GOVERNMENT AUTHORITY AND ACCORDIN GLY FALLS UNDER THE 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 SUP PLY OF COUNTRY LIQUOR TO THE RETAIL VENDOR AS PER THE REGULATIONS OF THE EXCISE DEPARTM ENT , GOVERNMENT OF WEST BENGAL. AT THE COST OF REPETITION, WE WOULD LIKE T O STATE THAT THE SAID REGULATION MANDATED THE PAYMENTS TO BE MADE DIRECTLY INTO THE BANK ACCOUNT OF THE SAID WHOLESALE LICENSEE BY THE RETAIL VENDOR (I.E ASSESS EE HEREIN) FOR STRICT AND EFFECTIVE REGULATION OF THE COUNTRY LIQUOR AND FOR PREVENTION OF SPURIOUS STOCKS AND BLACK MARKETING TRANSACTIONS FROM THE SAME. HENCE IT COU LD BE SAFELY CONCLUDED THAT THE SAID WHOLESALE LICENSEE HAD ACTED AT THE INSTANCE O F THE STATE GOVERNMENT. ONCE THIS IS SO, THEN THE SAID WHOLESALE LICENSEE COULD BE C ONSTRUED AS AN AGENT OF THE STATE GOVERNMENT. FOR THE SAKE OF CONVENIENCE, THE RELE VANT 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 RELAT IONSHIP BETWEEN THE ASSESSEE (AUTHORIZED RETAILER) AND GOVERNMENT OF WEST BENGAL (THE SUPPLIER) ACTING UNDER WEST BENGAL EXCISE RULES THROUGH ITS AUTHORISED WHO LESALER LICENSEE (AGENT), BOTH 8 ITA NO.938/KOL/2016 RAMNAGAR PACHAI & C.S(S) SHOP, AY 2011-12 DEFACTO AND DEJURE , IS ONE OF PRINCIPAL AND AGE NT. WE HOLD THAT THE ASSESSEE RETAIL VENDOR HAD MADE PAYMENT TO THE SAID AGENT (W HOLSESALE LICENSEE) WOULD FALL UNDER THE EXCEPTION PROVIDED IN RULE 6DD(K) OF THE RULES. 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 ALL OWED. 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 G ROUND 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 TOWARDS PURCHASE OF BEER, AS FAI RLY CONCEDED BY THE LD AR , THE SAME IS IN VIOLATION OF SECTION 40A(3) OF THE ACT AND HENCE TH E GROUND RAISED IN THIS REGARD IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.11.2016 SD/- SD/- (S.S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 18TH NOVEMBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT RAMNAGAR PACHAI & C.S (S) SHOP, P.O. BA RAKAR, DIST. BURDWAN, PIN-713324 2 RESPONDENT ITO, WARD-2(3), ASANSOL 3 . THE CIT(A), ASANSOL 4. 5. CIT , ASANSOL DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .