Cwp/17623/2016 Of Amarjeet Beeton And Anr v. Commissioner Of Income Tax Aaykar Bhawan Chd And Ors

I N THE HI GH COURT OF PUNJAB AND HARYANA ATCHANDI GARH --CWP 17623 2016-Dat e of deci si on: 07. 12. 2016 Amar j eet Beet on and anot her Ver sus . . . Pet i t i oner s Commi ssi oner of I ncome Tax ( TDS) , Chandi gar h andot her s.. . . Respondent s CORAM: HON’ BLE MR. JUSTI CE S. J. VAZI FDAR, CHI EF JUSTI CEHON’ BLE MR. JUSTI CE DEEPAK SI BAL Pr esent : -Mr . Deepak Aggar wal , Advocat e,f or t he pet i t i oner s. Mr . Denesh Goyal , Advocat e,f or r espondent s No. 1 and 2. None f or r espondent s No. 3 and 4. Ms. Radhi ka Sur i , Seni or Advocat e,wi t h Ms. Ri nku Dahi ya, Advocat e,f or r espondent s No. 5 and 6.* * * * S. J. VAZI FDAR, C. J. ( ORAL) The pet i t i oner s seek a wr i t of cer t i or ar i t o quash acl ar i f i cat i on dat ed 16. 08. 2016 i ssued by r espondent No. 2 –Deput y Commi ssi oner of I ncome Tax ( TDS) , Ludhi ana st at i ng t hatcot t on wast e i s scr ap wi t hi n t he meani ng of t he t er m underSect i on 206C of t he I ncome Tax Act , 1961 ( i n shor t t he Act ) andt hat accor di ngl y TCS ( Tax Col l ect i on at Sour ce)woul d cont i nuet o appl y. Respondent No. 1 i s t he Commi ssi oner of I ncome Tax( TDS) , Chandi gar h. The pet i t i oner s al so seek an or der r est r ai ni ngr espondent s No. 3 t o 6,who ar e pr i vat e r espondent s and f r om whom t he pet i t i oner s pur chase t he goods, t o st op col l ect i ng TCSon pur chase of cot t on wast e. Last l y, t he pet i t i oner sseek an or der di r ect i ngr espondent s No. 1 and 2 t o i ssue di r ect i ons t o al l t he mi l lowner s such as r espondent s No. 3 t o 6 not t o col l ect t ax atsour ce on t he payment made by t he pet i t i oner s t o t he mi l lowner s. 2.We see no r eason t o ent er t ai n t hi s wr i t pet i t i onunder t he Act . Ther e i s uncer t ai nt y r egar di ng t he appl i cabi l i t yof Sect i on 206C of t he Actt o cot t on wast e. Sect i on 206C( 1) i nso f ar as i t i s r el evant r eads as under : - “ 206C. Pr of i t s and gai ns f r om t hebusi ness of t r adi ng i n al cohol i cl i quor , f or est pr oduce, scr ap et c. – ( 1) Ever y per son, bei ng a sel l ershal l , at t he t i me of debi t i ng of t heamount payabl e by t he buyer t o t heaccount of t he buyer or at t he t i me ofr ecei pt of such amount f r om t he sai dbuyer i n cash or by t he i ssue of acheque or dr af t or by any ot her mode,whi chever i s ear l i er , col l ect f r om t hebuyer of any goods of t he nat ur especi f i ed i n col umn ( 2) of t he Tabl ebel ow, a sum equal t o t he per cent age,speci f i ed i n t he cor r espondi ng ent r yi n col umn ( 3) of t he sai d Tabl e, ofsuch amount as i ncome- t ax: Expl anat i on ( b) t o Sect i on 206C def i nes scr ap as f ol l ows: - “ ( b) “ scr ap" means wast e and scr apf r om t he manuf act ur e or mechani calwor ki ng ofmat er i al s whi ch i sdef i ni t el y not usabl e as such becauseof br eakage, cut t i ng up, wear andot her r easons. ” 3.The pet i t i oner s cont end t hat t he Madr as Hi gh Cour tand t he Guj ar at Hi gh Cour t have deci ded t he i ssue i n t hei rf avour , al t hough i n r espect of ot her par t i es. Respondent No. 3sought a cl ar i f i cat i on i n t hi s r egar d f r om t he depar t ment .I ni t i al l y, a cl ar i f i cat i on was i ssued on 24. 05. 2016 st at i ngt hat cot t on wast e i s not cover ed under t he def i ni t i on of scr apcont ai ned i n Sect i on 206C( 1) r ead wi t h expl anat i on ( b) . By af ur t her communi cat i on dat ed 29. 06. 2016, t he depar t ment st at edas under : - 3.The pet i t i oner s cont end t hat t he Madr as Hi gh Cour tand t he Guj ar at Hi gh Cour t have deci ded t he i ssue i n t hei rf avour , al t hough i n r espect of ot her par t i es. Respondent No. 3sought a cl ar i f i cat i on i n t hi s r egar d f r om t he depar t ment .I ni t i al l y, a cl ar i f i cat i on was i ssued on 24. 05. 2016 st at i ngt hat cot t on wast e i s not cover ed under t he def i ni t i on of scr apcont ai ned i n Sect i on 206C( 1) r ead wi t h expl anat i on ( b) . By af ur t her communi cat i on dat ed 29. 06. 2016, t he depar t ment st at edas under : - “ Keepi ng i n vi ew t he j udgement s andf i ndi ngs of t he aut hor i t i es ( supr a) ,i t i s made cl ear t hat no TCSappl i cabi l i t y ar i ses on t he sal eofcot t on wast e whi ch i s r eused as r awmat er i al f or manuf act ur e of l owercount of cot t on yar n as i t i s notcover ed under t he def i ni t i on of t hescr ap u/ s206C( 1) r ead wi t hexpl anat i on ( b) of t he I ncome Tax Act ,1961. Fur t her , i n t he case of scr apwhi ch cannot be used as such as r awmat er i al t he l i abi l i t y under sect i on206C( 1) ar i ses. I n ot her wor ds, i fscr ap i s bei ng pur chased by t r adert hen t he TCS shoul d al ways becol l ect ed under t he pr ovi si ons of206C. ” Thi s cl ar i f i cat i on i s not absol ut e i n t er ms. I tcont empl at es t he possi bi l i t y ofscr ap whi ch cannot be usedbei ng cover ed under Sect i on 206C. The i mpugned communi cat i ondat ed 16. 08. 2016, however , st at es t hat cot t on wast e i s scr apunder Sect i on 206C and t he pr ovi si ons t her eof woul d appl y. Thecommuni cat i on st at es t hat t he j udgement of t he Madr as Hi ghCour t i n t he case ofThe Commi ssi oner of I ncome Tax War d- 1( 3) ,Coi mbat or e Vs M/ s Adi sankar a Spi nni ng Mi l l s ( P) Lt d. ( Madr as)has not been accept ed by t he depar t ment . The st at ement t hat t hemat t er i s pendi ng bef or e t he Supr eme Cour t i s, however , admi t t edl y i ncor r ect . The mat t er r ef er r ed t o does not concer nt hi s i ssue.Be t hat as i t may, as of now, t he depar t ment hasnot accept ed t he cont ent i on. 4.The i ssue woul d r equi r e consi der at i on by t heaut hor i t i es concer ned. I t woul d not be a pur e quest i on of l aw.I t woul d be a mi xed quest i on of l aw and f act .Ther e i s nowar r ant f or ent er t ai ni ng a wr i t pet i t i on when t he pet i t i oner scan avai l t he r emedy under t he Act i t sel f . 5.Mr . Goyal , l ear ned counsel appear i ng on behal f ofr espondent s No. 1 and 2 conf i r ms t hat i t i s al ways open t o t hepet i t i oner s t o seek a r ef und by f i l i ng appr opr i at e r et ur nsunder t he pr ovi si ons of t he Act i t sel f . The l ear ned counsel f or t he pet i t i oner s al so r el i edupon a j udgement of t he Guj ar at Hi ghCour ti n t he case ofThe Commi ssi oner of I ncome Tax ( TDS) Vs M/ s Pr i ya Bl ue.I ndust r i es Pvt . Lt d. , ( 2016) 381 I TR 2106.Thi s was al so an appeal under Sect i on 260A of t heAct .The i ssue has notat t ai ned f i nal i t y. We see no r eason i nt hat case t o ent er t ai n t hi s wr i t pet i t i on. The pet i t i oner oughtt o be r el egat ed t o t he r emedy under t he Act . 7.The wr i t pet i t i on i s, t her ef or e, di smi ssed wi t hl i ber t y t o adopt appr opr i at e pr oceedi ngs. ( S. J. VAZI FDAR)CHI EF JUSTI CE ( DEEPAK SI BAL)JUDGE