Cwjc/10633/2011 Of Indian Oil Cororation v. Commissioner Of Income Tax (Tds), Patna

IN THE HIGH COURT OF JUDICATURE AT PATNACIVIL WRIT JURISDICTION CASE No.10633 of 2011 ====================================================== Indian Oil Corporation, a company incorporated under the Companies Act, having its office at Lok Nayak Jai Prakash Bhawan, P.O. GPO, P.S. Kotwali, Patna through its Chief Finance Manager Shri Bimalendu Biswas son of Late Kani Lal Biswas, resident of P.O. GPO P.S. Kotwali, Patna, District-Patna. .... .... Petitioner Versus 1.Commissioner of Income Tax (TDS), Patna having its office at 5[th]Floor, Central Revenue Building (Annexe), Beerchand Patel Marg, Patna. 2.Assistant Commissioner of Income Tax (TDS), Patna having its office at 6[th] Floor, Central Revenue Building (Annexee), Beerchand Patel Marg, Patna. .... .... Respondents ====================================================== Appearance :For the Petitioner : Mr. D.V.Pathy, Advocate with Mr. Abhi Sarkar, Advocate For the Respondents : Mr. Harshwardhan Prasad, Advocate ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE BIRENDRA PRASAD VERMA ORAL ORDER (Per: HONOURABLE THE CHIEF JUSTICE) 2 11-07-2011 With the consent of the learned advocates, the petition is decided today. This petition under Article 226 of the Constitution is filed by the Indian Oil Corporation for stay of the recovery proceedings pursuant to the impugned notice of demand, pending the appeals against the notice of demand. The dispute relates to the rate of tax deducted at source by the petitioner Indian Oil Corporation (hereinafter referred to as „the Corporation‟) from the contractual amount paid to the transporters. Learned advocate Mr. D.V. Pathy has appeared for the Corporation. He has submitted that the Corporation has entered into various agreements for transportation of its products such as L.P.G. and other petroleum products with various transporters. From the amount paid to the transporters the Corporation hasdeducted tax at source @ 2% as envisaged by Section 194C of the Income tax Act. The demand is that the transport contracts entered into by the Corporation with the transporters are the lease agreement. Under the said agreements the vehicles are leased to the Corporation and the amount paid by the Corporation is that of rent. The Corporation, therefore, is liable to deduct tax at source @ 10% of the amount paid as envisaged by Section 194I of the Income tax Act. The matter involves manifold questions of fact and law. Whether the agreements for transport entered into by the Corporation is a lease agreement; whether for the purpose of deduction of tax at source the transport vehicles can be termed as “Plant” within the meaning of Section 43(3) of the Act; whether in spite of payment of tax by the transporters, the Corporation can be compelled to make good the alleged short fall in the amount of tax deducted at source. In view of the aforesaid questions that arise in the appeals pending before the appellate authority and that the petitioner is a public sector undertaking of the Government of India, we consider it expedient that pending the appeals and subject to the decision in the appeals, no coercive recovery should be made from the petitioner Corporation For the aforesaid reasons, the petition is allowed. Pending the appeals before the appellate authority there shall be no coercive recovery pursuant to notices of demand dated 19[th] January 2011 for the financial years 2007-08, 2008-09 and 2009-10 (Annexure-3 series to the petition). The parties will bear their own cost. (R.M. Doshit, CJ) Pawan Kumar/- (Birendra Prasad Verma, J)