R LAXMICHAND AND COMPANY Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioners are carrying on their business in tendu leaves. The petitioners have challenged the vires of ss. 44AC and 206C of the IT Act, 1961 (for short 'the Act') as inserted by the Finance Act, 1988. An incidental prayer in the petition is to restrain respondent No. 7, Orissa Forest Corporation Ltd., from recovering the amount of income tax pursuant to the provisions contained in ss. 44AC and 206C of the Act.

(2.) THE petitioners purchased tendu leaves from respondent No. 7, Orissa Forest Corporation Ltd., principal office of which is situated at Bhuvaneshwar (Orissa) and which carries on its activity within the territory of State of Orissa or at any rate the action of respondent No. 7 deducting income tax at source as per the provisions contained in ss. 44AC and 206C of the Act does not take place within the territory of Gujarat. Respondents No. 1 to 6 are Union of India and other IT authorities. By order dt. 1st Dec., 1989, this Court (Coram: R.C. Mankad, Actg. C.J. & R.A. Mehta, J.) has issued rule and granted ad interim relief. Today, the matter has come up before us for hearing as to interim relief.

(3.) THE learned counsel for the petitioners has relied upon a decision of this High Court in the case of M.D. Juvekar vs. Modern Bakeries 1987 (2) GLR 1375 and another decision of this High Court in Modern Food Industries (India) Ltd. vs. M.D. Juvekar 1988 (1) GLR 481. The earlier decision was carried in LPA which is reported in subsequent decision. Hence both the decisions arise out of the same case. In that case, the petitioner was communicated with the impugned order within the territory of Gujarat and, therefore, the Court held that this Court had jurisdiction. In the instant case, the entire transaction of deducting the amount of tax at source has taken place outside the territory of Gujarat. On this point there is no dispute. It is not pointed out to us that any of the activity or action of respondent No. 7 has taken place within the territory of Gujarat. Therefore, the aforesaid decisions have no relevance and are of no help to the petitioners.