HARVANSH AND SONS Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner M/s Harvansh and Sons, is a partnership firm and had taken a contract for retail sale of country liquor for the entire Raisen district for the excise year 2001-02 for a sum of Rs. 13,30,00,000. For the purpose of sale of country liquor the petitioner has to transport his stock from the warehouses of Gairatganj and Abdullaganj. At the time of making payment towards licence fees, tax at source was deducted at the rate of 10 per cent on the issue price which is inclusive of cost of liquor plus excise duty on it. The said deduction was done as per Section 206c of the IT Act, 1961 (hereinafter referred to as 'the Act' ).

(2.) AS putforth in the writ petition many contractors submitted representations to the Central Government for a direction that the tax at source should be deducted only on the cost of liquor purchased by the State Government and exclusive of the excise duty as the same is the practice which is prevalent in other States. The Central Government accepted the demand and issued a direction that the tax at source should be deducted only on the cost of the liquor. Even after the issuance of the direction of the Central Government the respondents insisted on deduction of tax at the rate of 10 per cent on the issue price.

(3.) IT is urged in the writ petition that a writ petition was filed at Indore Bench forming the subject-matter in Ashok Kumar v. Union of India (1998) 98 Taxman 32 (MP), this Court directed that tax at source should be deducted only on the cost of liquor supplied by the Government of Madhya Pradesh. Similar view was also taken by the Gwalior Bench in Vinod Kumar Rathore v. Union of India (Writ Petn. No. 2325 of 1996 ). It is setforth in the petition that in compliance of the aforesaid orders the Excise CIT, Madhya Pradesh had issued a circular to all the Districts to follow the order and collect the tax at source only on the cost of liquor. Copy of the said circular has been brought on record as Annex. P-4.