Grasim Industries Limited v. Principal Commissioner of Income-tax, Ranchi / Central Coalfields Ltd
[Citation -2019-LL-0220-63]

Citation 2019-LL-0220-63
Appellant Name Grasim Industries Limited
Respondent Name Principal Commissioner of Income-tax, Ranchi / Central Coalfields Ltd
Court HIGH COURT OF JHARKHAND AT RANCHI
Relevant Act Income-tax
Date of Order 20/02/2019
Judgment View Judgment
Keyword Tags statutory requirement • stay of demand • purchase price • demand notice • tds • tax collected at source
Bot Summary: The controversy involved in this writ petition is over Tax Collection at Source in terms of the provisions of Section 206C of the Income Tax Act, 1961. Under the aforesaid provision, the bulk seller of certain specified items which include coal, is required to realize 1 additional sum over and above the purchase price as income tax from the buyer itself, which is subsequently credited to buyer s income tax payment. CCL/MS/CSC/2017-18/TCS/13227-34 dated 2nd November, 2017 and CCL/MS/CSC/2017-18/15377-80 dated 14th December, 2017 would not ipso facto be applicable to all the writ petitioners in the event they comply with the provisions of Sub-section 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 of the Act. So far as the sum collected in pursuance of the two notices issued by the Central Coalfields Limited as TCS is concerned, in the event it is found that in individual cases the buyers were not required to deposit such sum it shall be adjusted by the Income Tax authorities against future payment of income tax by such buyers. If tax has been deposited under the TCS scheme by a coal 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. If there is finding to the effect that there has been misdeclaration by any of the writ petitioners, then it shall be open to the Income Tax authorities as also C.C.L. to take steps against them as may be permissible under the law. The course mandated in our judgment of 3rd December, 2018 in relation to the collection of TCS from bulk purchasers of coal shall prevail in the case of the writ petitioner also.


-1- IN HIGH COURT OF JHARKHAND AT RANCHI W.P.(T) No. 2918 of 2018 ---- Grasim Industries Limited, Company registered under Companies Act, 1956, having its registered office P.O. & P.S. Birlagram, Nagda, District Ujjain-456331 (M.P.), and having its manufacturing units at Garhwa Road, P.O. & P.S. Rehla Dist. Palamau 822124 (Jharkhand) and at P.O. & P.S. Renukoot, Dist. Sonebhadra 231217 (Uttar Pradesh) through its Authorized Signatory, Sri Akash Mishra, son of Late Ram Mohan Mishra, aged about 47 years, resident of Grasim Industries Limited, Garhwa Road, P.O. & P.s. Rehla, District Palamau 822124 (Jharkhand) Petitioner Versus 1. Principal Commissioner of Income Tax, Ranchi having its office at Central Revenue Building, 5A, Main Road, P.O. G.P.O. Ranchi 834001, P.S. Hindpiri, District Ranchi in state of Jharkhand 2. Central Coalfields Ltd., Darbhanga House, Office of General Manager (Finance), Opp. Governor House, P.O. Kutchery, P.S. Kotwali, District Ranchi 834 001, in state of Jharkhand Respondents ---- CORAM : HON BLE CHIEF JUSTICE HON BLE MR. JUSTICE SANJAY KUMAR DWIVEDI ---- For Petitioner : Mr. Deepak Sinha, Advocate Mr. Manav Poddar, Advocate Ms. Rakhi Sharma, Advocate For Respondent CCL : Mr. Anoop Kumar Mehta, Advocate For Respondent IT : Ms. Amrita Sinha & Haidar Zoya, Advocates ---- th Order No. 07 : Dated 20 February, 2019 Aniruddha Bose, C.J. writ petitioner is bulk purchaser of coal from Central Coalfields Limited. Contention of writ petitioner is that such coal is used for self consumption, to operate its own captive power plant in respect of their manufacturing activities of Viscose Staple Fibers, Chemicals etc. controversy involved in this writ petition is over Tax Collection at Source (TCS) in terms of provisions of Section 206C of Income Tax Act, 1961. Under aforesaid provision, bulk seller of certain specified items which include coal, is required to realize 1% additional sum over and above purchase price as income tax from buyer itself, which is subsequently credited to buyer s income tax payment. 2. Under Sub-section (1A) of Section 206C of Act however certain -2- exceptions have been provided to such blanket collection and conditions under which buyer can remain out of such TCS regime has been specified in aforesaid Sub-section read with Rule 37C of Income Tax Rules, 1962. 3. In this writ petition, complaint of writ petitioner is that in spite of fulfilling conditions specified in Sub-section (1A) of Section 206C of 1961 Act, Central Coalfields Limited is demanding 1% TCS. Though there are various prayers made in this writ petition, learned counsel for writ petitioner has primarily sought quashing of circular letter issued by coal company dated 14th December, 2017 in which petitioner has been asked to deposit TCS. said notice reads :- notice of demand u/s 156 for amount of Rs.122.39 crs along with order u/s 206C of 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, appeal was filed by CCL before CIT(A) on 18.11.2017 and simultaneously petition for stay of demand was also filed before DCIT, TDS Circle, Ranchi on 20.11.2017 which was rejected by him vide letter no.961 dated 23/27.11.2017 and it was advised by CCIT to CCL to deposit same amount after collecting from customers by 30th Dec 2017. Therefore, all such customers are advised to deposit amount of TCS with interest, as indicated in enclosed annexure, through their registered account into designated account of CCL in PNB, S.N.Ganguly Road Branch, Ranchi within fortnight, i.e. on or before 28.12.2017 as per order of Income Tax Department. Otherwise it will be construed as -3- concurrence for recovering amount from balance available amount with CCL. 4. petitioner has also questioned legality of another circular letter issued by coal company on 2nd November, 2017 bearing No.CCL/M&S/CSC/2017-18/TCS/13227-34. 5. This Court had occasion to deal with this very question, which was raised by several other bulk purchasers of coal whose complaint was against such blanket collection of TCS. That issue was dealt with by this Court in W.P.(C) No. 46 of 2018, which was disposed of with following directions:- 19. We accordingly hold, while disposing of these writ petitions:- (a) two notices issued by C.C.L. bearing no.CCL/M&S/CSC/2017-18/TCS/13227-34 dated 2nd November, 2017 and CCL/M&S/CSC/2017-18/15377-80 dated 14th December, 2017 would not ipso facto be applicable to all writ petitioners in event they comply with provisions of Sub-section (1A) of Section 206 C of Income Tax Act, 1961 read with Rule 37C thereof by furnishing declaration in Form 27C. In such situation, buyers shall be entitled to benefits contemplated in provision of Section 206C (1A) of Act. (b) In event such forms are not furnished as per statutory requirement, it shall be open to C.C.L. to insist on TCS as per statutory provisions. (c) If C.C.L. has any doubt that coal is not being used for self-consumption by any of buyers claiming relaxation in terms of Section 206C (1A) of Act, it would be open to C.C.L. to take up matter with individual buyers and insist on TCS if circumstances justify such insistence. But to deny benefits contemplated in Section 206C(1A) of Act, so far as individual writ petitioners are concerned, it would have to be examined first if as buyers or any of them have furnished -4- declarations or verifications under Form 27C or not. If declarations are filed and there is no material to conclude that such declaration is false, then provisions of Section 206C (1A) would be applicable. On other hand, if C.C.L. finds that any misdeclaration is made by any individual buyer, then it shall be open to them to take such steps as may be permissible in law. (d) So far as sum collected in pursuance of two notices issued by Central Coalfields Limited as TCS is concerned, in event it is found that in individual cases buyers were not required to deposit such sum it shall be adjusted by Income Tax authorities against future payment of income tax by such buyers. If tax has been deposited under TCS scheme by coal buyer who otherwise does not fulfil requirement of waiver or relaxation from TCS scheme, then amount so deposited shall be dealt with as payment of income tax in accordance with law. In those cases, coal company shall issue TCS certificate in terms of provisions of Income Tax Act. Such certificates shall be issued on application made by individual buyers within period of eight weeks from date of making of application. (e) If there is finding to effect that there has been misdeclaration by any of writ petitioners, then it shall be open to Income Tax authorities as also C.C.L. to take steps against them as may be permissible under law. It shall be open to Income Tax authorities as also C.C.L. to make enquiries in respect of individual writ petitioners to ascertain if there has been any wrong or misdeclartion on their part. By same judgment, several other writ petitions were also disposed of on 3rd December, 2018. 6. As would be evident from directions issued by this Court in judgment delivered in W.P.(C) No. 46 of 2018, specific observations have been made in relation to circular letters of coal company dated 2nd November, 2017 and 14th December, 2017. No other argument has been raised on behalf of either Income Tax authorities or coal company which -5- could persuade us to take contrary view. We accordingly dispose of this writ petition with same directions as contained in aforesaid judgment of 3rd December, 2018 and quoted earlier in this judgment. course mandated in our judgment of 3rd December, 2018 in relation to collection of TCS from bulk purchasers of coal shall prevail in case of writ petitioner also. To this extent, Rule is made absolute. 7. There shall be no order as to costs. (Aniruddha Bose, C.J.) (Sanjay Kumar Dwivedi, J.) Birendra/ Grasim Industries Limited v. Principal Commissioner of Income-tax, Ranchi / Central Coalfields Ltd
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