VINOD RATHORE Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS reference is made by the single Bench to decide the following question of law : Whether collection of tax at source under Section 206c of the IT Act on the price of liquor shall include excise duty paid for purchase of liquor ?

(2.) COUNSEL for the petitioner in support of his contention has relied upon the judgment in the case of Vinod Kumar Rathore v. Union of India (Writ Petn. No. 2325 of 1996 decided on 30th Nov. , 1999 ). This judgment was delivered relying upon the judgment in the case of Ashok Kumar and Ors. v. Union of India (Writ Petn. No. 1042 of 1995 decided on 12th Sept. , 1996 ). Counsel for the petitioner submitted that these two judgments have been followed in another judgment of this Court in the case of Harvansh and Sons v. Union of India 2002 (4) MPLJ 495. Counsel for the petitioner submitted that the costs of liquor will not include excise duty but will include the cost price of liquor. He submitted that under Section 206c of the IT Act (hereinafter, referred to as the "act"), tax at source can be deducted only on the cost price and not on the price including the excise duty.

(3.) COUNSEL for the respondent--Department submitted that the aforesaid judgments have not laid down the correct law and Section 206c of the Act has not been interpreted properly. He submitted that this question has been determined by the apex Court in the case of Mcdowell and Co. Ltd. v. CTO AIR 1986 SC 649 whereby earlier judgment in the case of Mcdowell and Co. Ltd. v. CTO AIR 1977 SC 1459 has been overruled. He invited attention of this Court to the judgment in the case of Hindustan Sugar Mills v. State of Rajasthan AIR 1978 SC 1496 and submitted that the question of sale price has been considered in this case. In this case question of sale price chargeable by the purchaser under the scheme of cement control order and the sales-tax levied upon the said product was considered. In para 17 of the judgment, it has been held that the amount of freight formed part of the "sale price" within the meaning of the first part of the definition of that term and was includible in the turnover of the assessee. Counsel for the respondents, therefore, submitted that for collection of tax at source under Section 206c of the Act, price of liquor shall include the excise duty paid for purchase of liquor. He submitted that whatever amount is spent by the purchaser for buying the liquor is subject to deduction of tax at source which shall be finally determined after the assessee has submitted return and assessment orders are passed by the IT Department.