LAWS(SC)-2024-7-23

EXCISE COMMISSIONER KARNATAKA Vs. MYSORE SALES INTERNATIONAL LTD

Decided On July 08, 2024
Excise Commissioner Karnataka Appellant
V/S
Mysore Sales International Ltd Respondents

JUDGEMENT

(1.) Heard learned counsel for the parties.

(2.) This appeal has been preferred against the judgment and order dtd. 13/3/2006 passed by the Division Bench of the High Court of Karnataka at Bengaluru (briefly "the High Court" hereinafter) in Writ Appeal No. 7926/2003. By the aforesaid judgment and order, the Division Bench had dismissed the writ appeal filed by the appellant as well as other writ appeals filed by Mysore Sales International, State of Karnataka and Mysore Sugar Company Limited assailing the common judgment and order dtd. 27/10/2003 passed by the learned Single Judge of the High Court, dismissing Writ Petition Nos. 6869-6874 of 2001 filed by the appellant and other writ petitions filed by the above parties against the orders dtd. 17/1/2001 passed by the Deputy Commissioner of Income Tax (TDS)-1, Bengaluru (referred to hereinafter as "the assessing officer" or "the revenue") under Sec. 206C(6) of the Income tax Act, 1961 (referred to hereinafter as "the Income Tax Act") for the assessment years 2000-2001, 1999-2000, 1998-1999, 1997-1998, 1996-1997 and 1995-1996 as well as the consequential demand notices of even date issued under Sec. 156 of the Income Tax Act. By the orders dtd. 17/1/2001, the assessing officer held that the appellant is a "seller" and the liquor vendors are "buyers" in terms of Sec. 206C of the Income Tax Act and hence the appellant was under a legal obligation to collect income tax at source from the liquor vendors (contractors) for the financial years relevant to the aforesaid assessment years. Accordingly, the assessing officer declared certain sums as income tax collectible at source by the appellant which it failed to do. Therefore, the appellant was directed to deposit the amounts so quantified as income tax deductible at source. Further, interest was also levied on the aforesaid amounts. This was followed by the demand notices. As noticed above, the challenge to the said orders dtd. 17/1/2001 by the appellant was negatived first by the learned Single Judge and then by the Division Bench of the High Court.

(3.) The short point for consideration in this appeal is whether provisions of Sec. 206C of the Income Tax Act is applicable in respect of the appellant and whether the liquor vendors (contractors) who bought the vending rights from the appellant on auction, can be termed as "buyer" within the meaning of Explanation(a) to Sec. 206C of the Income Tax Act or excluded from the said definition of "buyer" as per clause (iii) of Explanation (a) to Sec. 206C of the said Act. Relatable to the above core issue is the question as to, whether, the High Court was justified in rejecting the challenge to the said orders made by the appellant.