Wherein It Was Held That The Discount Paid To Stamp Vendors Is Not Intended To Be Covered By Section 194H Of The Income Tax Act, 1961 v. Ahmedabad Stamp Vendors Association

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN THURSDAY, THE 17TH DAY OF AUGUST 2017/26TH SRAVANA, 1939 WP(C).No. 6662 of 2010 (G) --------------------------- PETITIONER(S):------------- THE KERALA STATE STAMP VENDORS ASSOCIATION, THRISSUR DISTRICT COMMITTEE, REP. BY ITS GENERAL SECRETARY C.P.JOY, AGED 42, S/O. CHERUVATHUR PORINCHU, CHAVAKKAD, THRISSUR DISTRICT. BY ADVS.SRI.G.SREEKUMAR (CHELUR) SMT.PREETHY KARUNAKARAN SRI.K.RAVI (PARIYARATH) RESPONDENT(S):-------------- 1. THE STATE OF KERALA, SECRETARY TO THE GOVT., TAXES DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM. GOVT. SECRETARIAT, THIRUVANANTHAPURAM. 2. THE ACCOUNTANT GENERAL, THIRUVANANTHAPURAM. 3. THE DIRECTOR OF TREASURIES, THIRUVANANTHAPURAM. THIRUVANANTHAPURAM. 4. THE DISTRICT TREASURY OFFICER, IRINJALAKUDA. IRINJALAKUDA. 5. THE DISTRICT TREASURY OFFICER, THRISSUR. 6. THE COMMISSIONER OF INCOME TAX, ERNAKULAM. R1-5 BY ADV. SRI.M.R.DHANIL, GOVERNMENT PLEADER R6 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON17-08-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC6662/2010 APPENDIX PETITIONER'S EXHIBITS P1 :COPY OF COMMUNICATION BY THE DISTRICT TREASURY OFFICER,THRISSUR DATED 27.5.2003. P2 :COPY OF JUDGMENT RENDERED BY THIS COURT IN IA NO.3337/2005 INWP(C) NO.31207/2005 AND CONNECTED CASES DATED 20.6.2005. P3 :COPY OF INTERIM ORDER PASSED IN WA NO.2202/2005 DATED23.11.2005 OF THIS HONOURABLE COURT. P4 :COPY OF NOTICE ISSUED TO A MEMBER DATED 22.8.09. P5 :COPY OF DEMAND MADE ON ONE MEMBER DATED 29.1.2010. //TRUE COPY// jg-22/9 PA TO JUDGE. ANIL K.NARENDRAN, J -------------------------------------------------- WP(C) No.6662 of 2010 -------------------------------------------------- Dated, this the 17[th] day of August, 2017 JUDGMENT The petitioner is a registered association of stamp vendors in Thrissur District. The petitioner has filed this writpetition seeking a writ of mandamus commanding therespondents not to collect any past amounts, or any amountsalleging as arrears, including any penal charges as demandedin Exts.P4 and P5, stating it to be tax under Section 194H ofthe Income Tax Act, 1961, and not to take any coercive action,including actions for non-supply of stamp papers. 2.On 2.3.2010, this Court while admitting the writpetition on file, granted an interim order as prayed for and thesaid interim order was extended until further orders, on02.06.2010. 3.The challenge made in this writ petition is againstthe demand made to recover income tax from the discountallowed to the stamp vendors on the sale of stamp papers. ByExt.P1 judgment dated 20.6.2005, a learned Judge of thisCourt allowed O.P.Nos.20115 of 2003 and connected cases, WPC6662/10 wherein it was held that the discount paid to stamp vendors isnot intended to be covered by Section 194H of the Income TaxAct, 1961. 4.Today, when this writ petition was taken up for finalhearing, it is submitted by the learned Standing Counsel forthe Income Tax Department that, the issue raised in this writpetition is answered against the Revenue by virtue of thedecision of the Apex Court in Commissioner of Income-Taxand othersv.Ahmedabad Stamp Vendors Association [2012] 348 ITR 378 (SC), wherein it is held that, purchaseof stamp papers at discount is a sale transaction andconsequently, the discount given to the stamp vendors forpurchasing stamps in bulk quantity, will not attract Section194H of the Income Tax Act, 1961. The learned StandingCounsel would also submit that, the writ appeals filed by theRevenue against Ext.P1 judgment ended in dismissal by thejudgment of a Division Bench of this Court dated 15.11.2012 inW.A.Nos.2202 of 2005 and connected cases. In view of the law laid down by the Apex Court in thedecision referred to supra, this writ petition is allowed by WPC6662/10 -3- [2012] 348 ITR 378 (SC), wherein it is held that, purchaseof stamp papers at discount is a sale transaction andconsequently, the discount given to the stamp vendors forpurchasing stamps in bulk quantity, will not attract Section194H of the Income Tax Act, 1961. The learned StandingCounsel would also submit that, the writ appeals filed by theRevenue against Ext.P1 judgment ended in dismissal by thejudgment of a Division Bench of this Court dated 15.11.2012 inW.A.Nos.2202 of 2005 and connected cases. In view of the law laid down by the Apex Court in thedecision referred to supra, this writ petition is allowed by WPC6662/10 -3- setting aside the demand made in Exts.P4 and P5. No order as to costs. ANIL K.NARENDRAN JUDGE jg