Case Note & Summary
The petitioner, Gondia Beedi Leaves Contractors Association, representing contractors of Tendu leaves (a forest produce), filed a writ petition before the Bombay High Court at Nagpur. The core issue was whether these contractors are entitled to claim exemption under sub-section (1A) of Section 206C of the Income Tax Act, 1961 from the collection of tax at source (TCS) by the seller, the Forest Department of Maharashtra. The contractors argued that they are not 'buyers' under Section 206C as they are engaged in trading of forest produce, and the Forest Department is not a 'seller' under the provision. They relied on Circular No. 23/2017 dated 19.07.2017 and CBDT Instruction No. 5/2016 dated 14.07.2016, which provide for exemption from TCS for certain categories. The respondents, including the Union of India and the Forest Department, opposed the petition. The court analyzed the provisions of Section 206C and the relevant circulars. It held that the contractors are not 'buyers' under Section 206C as they are engaged in trading of forest produce, and the Forest Department is not a 'seller' under the provision. Consequently, the court allowed the petition and directed the respondents to consider the application for exemption in light of the circular and instruction. The judgment was delivered by a division bench comprising Justices R.K. Deshpande and Vinay Joshi on 19th September 2019.
Headnote
A) Income Tax - Tax Collection at Source - Section 206C(1A) of Income Tax Act, 1961 - Exemption - The issue was whether Tendu leaves contractors are entitled to exemption from tax collection at source under Section 206C(1A) - The court held that the contractors are not 'buyers' under Section 206C as they are engaged in trading of forest produce and the Forest Department is not a 'seller' - The court directed the respondents to consider the application for exemption in light of the circular and instruction - Held that the contractors are entitled to exemption from tax collection at source (Paras 1-10).
Issue of Consideration
Whether the members of the petitioner-association, who are contractors of Tendu leaves (a forest produce), are entitled to claim exemption under sub-section (1A) of Section 206C of the Income Tax Act, 1961 from the collection of tax at source from them by the seller, namely, the Forest Department of the State of Maharashtra?
Final Decision
The court allowed the writ petition and directed the respondents to consider the application for exemption under Section 206C(1A) of the Income Tax Act, 1961 in light of Circular No. 23/2017 dated 19.07.2017 and CBDT Instruction No. 5/2016 dated 14.07.2016.
Law Points
- Exemption from tax collection at source under Section 206C(1A) of Income Tax Act
- 1961
- Tendu leaves contractors are not 'buyers' under Section 206C
- Forest Department is not a 'seller' under Section 206C
- Circular No. 23/2017 dated 19.07.2017
- CBDT Instruction No. 5/2016 dated 14.07.2016
Case Details
2019 LawText (BOM) (09) 166
WRIT PETITION NO.956 OF 2019
R.K. Deshpande, Vinay Joshi
C.S. Kaptan (Senior Advocate) assisted by R.S. Kalangiwale for Petitioner, Anand Parchure for Respondent Nos.1 to 3 and 9, A.M. Deshpande (Additional Government Pleader) for Respondent Nos.4 to 8
Gondia Beedi Leaves Contractors Association
Union of India, Principal Chief Commissioner of Income Tax, Joint Commissioner of Income Tax (TDS), State of Maharashtra, Principal Chief Conservator of Forests, Additional Principal Chief Conservator of Forests, Deputy Conservator of Forests (Gadchiroli), Deputy Conservator of Forests (Brahmapuri), Commissioner of Income Tax (TDS)
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Nature of Litigation
Writ petition seeking exemption from tax collection at source under Section 206C(1A) of Income Tax Act, 1961.
Remedy Sought
The petitioner sought a direction to the respondents to consider their application for exemption from tax collection at source under Section 206C(1A) of the Income Tax Act, 1961.
Filing Reason
The petitioner's members, being contractors of Tendu leaves, were being subjected to tax collection at source by the Forest Department, which they contended was not applicable to them.
Issues
Whether the members of the petitioner-association, who are contractors of Tendu leaves (a forest produce), are entitled to claim exemption under sub-section (1A) of Section 206C of the Income Tax Act, 1961 from the collection of tax at source from them by the seller, namely, the Forest Department of the State of Maharashtra?
Submissions/Arguments
The petitioner argued that the contractors are not 'buyers' under Section 206C as they are engaged in trading of forest produce, and the Forest Department is not a 'seller' under the provision.
The respondents opposed the petition, contending that the contractors are liable to tax collection at source.
Ratio Decidendi
The contractors of Tendu leaves are not 'buyers' under Section 206C of the Income Tax Act, 1961 as they are engaged in trading of forest produce, and the Forest Department is not a 'seller' under the provision. Therefore, they are entitled to exemption from tax collection at source under Section 206C(1A).
Judgment Excerpts
The question involved in this petition is whether the members of the petitioner-association, who are the contractors of Tendu leaves (a forest produce), are entitled to claim exemption under sub-section (1A) of Section 206C of the Income Tax Act, 1961 from the collection of tax at source from them by the seller, namely, the Forest Department of the State of Maharashtra?
Procedural History
The petitioner filed a writ petition before the Bombay High Court at Nagpur on 19th September 2019, seeking exemption from tax collection at source under Section 206C(1A) of the Income Tax Act, 1961. The court reserved judgment on 4th September 2019 and pronounced it on 19th September 2019.
Acts & Sections
- Income Tax Act, 1961: 206C, 206C(1A)
