S.K.G. Sugar Ltd. and Shiv Shankar Chemical Industries Ltd. Vs. Commissioner of Income-tax and anr. - Court Judgment

Excerpt:
- - union of india [1994] 2 pljr 64, where it was said that 'purchase price' in the case of retailers of country liquor under the bihar excise act will also include excise duty as well as cost price of country spirit. 7. it would be relevant to note that the period of sale as disclosed in the impugned letters is prior to march 31, 1991. the explanation inserted by the finance act, 1990, to section 44ac of the act has been made effective from april 1, 1991. therefore, for the purposes of transactions which had taken place prior to that day, the purchase price in such cases will include the excise duty as well. 1. although both the writ petitions have been filed by different petitioners, the facts and points in these cases are common, therefore, for the sake of convenience, they are being disposed of by this order. 2. the petitioners have challenged the validity of the order of the deputy commissioner of income-tax, range ii, patna, dated june 13, 1991, whereby they were asked to furnish information regarding sales made to various retailers from april 1, 1990, to september 30, 1990, and october 1, 1990 to march 31, 1991, together with the details of tax collected from them and dates of deposit in the government's account. 3. by the aforementioned letters the petitioners were informed that wholesalers in liquor, in terms of the provisions of section 44ac of the income-tax act, 1961, are required to collect tax at the rate of 15 per cent. of the total purchase price, including excise duty, cost of labelling, bottling, etc., plus surcharge at the rate of 12 per cent. on tax so collected from the retail dealers on sales made by them. 4. mr. rastogi, appearing for the respondents, contended that the question involved in these cases has already been examined and answered by this court in the case of md. parwez ahmed v. union of india [1994] 2 pljr 64, where it was said that 'purchase price' in the case of retailers of country liquor under the bihar excise act will also include excise duty as well as cost price of country spirit. the computation of profits and gains have to be made on the basis of the price the buyer has to pay as the purchase price of the country spirit and not what will be the cost price of the goods. he contended that an identical view was also taken by this court in another case, namely, state of bihar v. cit : [1993]202itr535(patna) . 5. mr. pawan kumar, senior advocate, contended that the case of md. parwez ahmed v. union of india [1994] 2 pljr 64, was with respect to 'retail dealers', therefore, the ratio laid down in those cases may not be applicable to the case of the petitioners, who are admittedly wholesale dealers. 6. mr. rastogi submitted that 'a seller' as envisaged under sections 44ac and 206c of the act, includes 'wholesale dealer' and 'retail dealer'. undisputedly, a wholesale dealer is also a 'seller' as required under sections 44ac and 206c of the act, therefore, in terms of the ratio laid down in the above mentioned cases, the petitioners are certainly liable to furnish information, as required by the deputy commissioner with respect to the various sales, which had taken place at the relevant time and details of tax collected by them and dates of deposit in the government's account. 7. it would be relevant to note that the period of sale as disclosed in the impugned letters is prior to march 31, 1991. the explanation inserted by the finance act, 1990, to section 44ac of the act has been made effectivefrom april 1, 1991. therefore, for the purposes of transactions which had taken place prior to that day, the purchase price in such cases will include the excise duty as well. therefore, the petitioners are certainly required as per the provisions of section 44ac of the act to collect tax at the rate of 15 per cent. of the total purchase price, including the excise duty, cost of labelling, bottling, etc., plus surcharge at the rate of 12 per cent. on the tax so collected. 8. thus, having regard to the bench decisions, which we have just noticed, there appears no merit in these cases. the authorities are quite justified in holding that whole-salers in liquor are required to collect tax at the rate of 15 per cent. of the total purchase price, including excise duty, etc., plus surcharge of 12 per cent. on the tax so collected with respect to the sales in question. 9. in the result both the writ applications are dismissed, as devoid of anymerit.

Judgment:

1. Although both the writ petitions have been filed by different petitioners, the facts and points in these cases are common, therefore, for the sake of convenience, they are being disposed of by this order.

2. The petitioners have challenged the validity of the order of the Deputy Commissioner of Income-tax, Range II, Patna, dated June 13, 1991, whereby they were asked to furnish information regarding sales made to various retailers from April 1, 1990, to September 30, 1990, and October 1, 1990 to March 31, 1991, together with the details of tax collected from them and dates of deposit in the Government's account.

3. By the aforementioned letters the petitioners were informed that wholesalers in liquor, in terms of the provisions of section 44AC of the Income-tax Act, 1961, are required to collect tax at the rate of 15 per cent. of the total purchase price, including excise duty, cost of labelling, bottling, etc., plus surcharge at the rate of 12 per cent. on tax so collected from the retail dealers on sales made by them.

4. Mr. Rastogi, appearing for the respondents, contended that the question involved in these cases has already been examined and answered by this court in the case of Md. Parwez Ahmed v. Union of India [1994] 2 PLJR 64, where it was said that 'purchase price' in the case of retailers of country liquor under the Bihar Excise Act will also include excise duty as well as cost price of country spirit. The computation of profits and gains have to be made on the basis of the price the buyer has to pay as the purchase price of the country spirit and not what will be the cost price of the goods. He contended that an identical view was also taken by this court in another case, namely, State of Bihar v. CIT : [1993]202ITR535(Patna) .

5. Mr. Pawan Kumar, senior advocate, contended that the case of Md. Parwez Ahmed v. Union of India [1994] 2 PLJR 64, was with respect to 'retail dealers', therefore, the ratio laid down in those cases may not be applicable to the case of the petitioners, who are admittedly wholesale dealers.

6. Mr. Rastogi submitted that 'a seller' as envisaged under Sections 44AC and 206C of the Act, includes 'wholesale dealer' and 'retail dealer'. Undisputedly, a wholesale dealer is also a 'seller' as required under Sections 44AC and 206C of the Act, therefore, in terms of the ratio laid down in the above mentioned cases, the petitioners are certainly liable to furnish information, as required by the Deputy Commissioner with respect to the various sales, which had taken place at the relevant time and details of tax collected by them and dates of deposit in the Government's account.

7. It would be relevant to note that the period of sale as disclosed in the impugned letters is prior to March 31, 1991. The Explanation inserted by the Finance Act, 1990, to Section 44AC of the Act has been made effective

from April 1, 1991. Therefore, for the purposes of transactions which had taken place prior to that day, the purchase price in such cases will include the excise duty as well. Therefore, the petitioners are certainly required as per the provisions of Section 44AC of the Act to collect tax at the rate of 15 per cent. of the total purchase price, including the excise duty, cost of labelling, bottling, etc., plus surcharge at the rate of 12 per cent. on the tax so collected.

8. Thus, having regard to the Bench decisions, which we have just noticed, there appears no merit in these cases. The authorities are quite justified in holding that whole-salers in liquor are required to collect tax at the rate of 15 per cent. of the total purchase price, including excise duty, etc., plus surcharge of 12 per cent. on the tax so collected with respect to the sales in question.

9. In the result both the writ applications are dismissed, as devoid of any

merit.