Jharkhand High Court

Deputy Commissioner Of Income Tax vs M/S Central Coalfields Ltd on 12 February, 2025

Author: Deepak Roshan

Bench: Deepak Roshan

IN THE HIGH COURT OF JHARKHAND AT RANCHI
                     T.A. No. 13 of 2023
 Deputy Commissioner of Income Tax, TDS Circle, Ranchi
 having its office 3rd Floor, Central Revenue Building, 5A,
 Mahatma Gandhi Main Rd., Ranchi, P.O. G.P.O, P.S. Lower
 Bazar, District-Ranchi.                ..... Appellant
                                       Versus
 M/s Central Coalfields Ltd., having its office opposite
 Governor House, Darbhanga House, Kutchery Road,
 Ranchi, P.O. G.P.O, P.S. Kotwali, District-Ranchi.
                                           ..... Respondent
                           ---------
CORAM:             HON'BLE THE CHIEF JUSTICE
              HON'BLE MR. JUSTICE DEEPAK ROSHAN
                           ---------
   For the Appellant       : Mr. Kumar Vaibhav, Sr. SC
                             Mr. Anurag Vijay, AC to Sr. SC
   For the Respondent      : Mr. Biren Poddar, Sr. Adv.
                             Mr. Piyush Poddar, Adv
                             Mr. Mahendra Kr. Choudhary, Adv
                             Mr. Manav Poddar, Adv.
                                       ---------

Reserved on: 22.01.2025                Pronounced on: 12 /02/2025
Per: Deepak Roshan, J.

Heard learned counsel for the parties.

2. The instant appeal has been preferred by the Revenue under section 260-A of the Income-tax Act, 1961 (the "Act") challenging the Order dated 23.01.2023 passed by the learned Income Tax Appellate Tribunal, Ranchi Bench in I.T.A No.38/Ran/2021.

3. The Revenue has raised the following substantial question of law as stated in paragraph 2 of the memo of appeal:

a. Whether on the facts and in law, the learned Tribunal has erred in ignoring the fact that it is duty and the responsibility of the assessee company to collect TCS @ 1% under section 206C (1A) of the Act from all buyers on the sale of coal if it is not used for

self consumption or for the purpose for which it was intended to be used ?

b. Whether on the facts and in law, the learned Tribunal has erred in holding that the assessee company is not responsible for verification of Form 27C if it is duly filed in and signed by the declarant ignoring the fact that Form 27C is widely misused and coal are utilized for trading purpose?

c. Whether on the facts and in law, the learned Tribunal has erred in deleting the entire demand of 'TCS' by holding that the Revenue authorities have wrongly treated the company as "assessee in default"

under section 206C of the Act?

d. Whether on the facts and in law, the learned Tribunal has erred in ignoring the provisions that "if such buyer furnishes to the persons responsible for collecting tax, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner" mentioned in the sub-section 1A of the section 206C, meaning thereby that not only it should be furnished in prescribed form in duplicate, but also verified in prescribed manner. In such circumstances, whether, M/s Central Coalfields Limited was required to verify the genuineness of the buyers who submitted Form 27C for they being the end user of the coal for manufacturing, processing or producing articles or things or for the purpose of generation of power and not for trading purposes?

e. Whether on the facts and in law, in the light of the extant provisions prescribed under section 206C (1A) of the Income-tax Act, 1961 read with Rule 37C of the Income Tax Rule, 1962, the Ld. ITAT has erred in

shifting the entire onus to verify the genuineness of such buyers who submitted the Form 27C to the seller, M/s Central Coalfields Limited, on the Income Tax Department?

f. Whether on the facts and in law, the learned ITAT has erred in ignoring the outcome of enquires made in the case of M/s Gautam Coal Works Pvt. Ltd. establishing the fact that this buyer was not the end user of the coal purchased from M/s Central Coalfields Limited?

g. Whether on the facts and in law, the learned ITAT has erred in deleting the entire demand against the respondent assessee, M/s Central Coalfields Limited on the technical ground that the entire demand was created for a single Assessment Year 2018-19, whereas in the order u/s 206C dated 10.11.2017, the TCS demands as well as the interest thereof were calculated for each Assessment Year pertaining to A.Y. 2013-14 to A.Y. 2018-19 separately?

4. Though, the Revenue has proposed as many as nine

substantial question of law in the instant appeal, the

fulcrum of the Revenue's appeal is the interpretation of

section 206 C of the Act. As per the Revenue, under section

206 C (1A) of the Act, the verification of the declaration to

be furnished by the purchaser is to be done by the seller

(i.e. the assessee in the instant matter).

5. The relevant portion of the section 206 C of the Act

reads as under:

(1-A)"Notwithstanding anything contained in sub-section, no collection of tax shall be made in the case of a buyer, who is resident in India, if such buyer furnishes to the person responsible for collecting tax, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the goods referred to in column (2) of the aforesaid Table are to be utilized for the purposes of manufacturing, processing or producing articles or things [or for the purposes of generation of power] and not for trading purposes."

6. The relevant rule under the Income-tax Rules, 1962

(the "Rules") for the purposes of section 206C of Act is Rule

37-C, relevant part of which reads as:

(1)"A declaration under sub-section (1A) of section 206C to the effect that any of the goods referred to in the Table in sub-section (1) of that section are to be utilized for the purposes of manufacturing, processing or producing articles or things and not for trading purposes shall be in Form No. 27C and shall be verified in the manner indicated therein."

7. The 'declarant' in Form-27C is the 'purchaser' and

not the 'seller'. The verification/ declaration part of Form-

27C reads as under:

"I/We ........................................ do hereby declare that to the best of my/our knowledge and belief what is stated above is correct, complete and is truly stated. I/We declare that the goods referred to in Column No.21 shall not be used for trading purposes. I/We also, declare that I/We am/are resident in India within the meaning of section 6 of the Income-tax Act, 1961."

8. Quite clearly, the phrase 'verified in the prescribed

manner' in the scheme of the Act and the Rules, mean that

the verification/ declaration is to be made by the purchaser

who is providing the signed/ verified form to the seller, and

neither the Act, nor the Rules, in any manner lay down that

any verification whatsoever is to be done by the seller, as is

being sought to be contended by the Revenue.

9. Further, the learned tribunal has rightly considered

this entire issue and has also referred to the judgment of

this Hon'ble Court in the case of M/s Atibir Industries Co.

Ltd., Giridih vs. The Central Coalfields Limited & Ors. [WPC

No. 46/2018, order dt.03.12.2018] which is relevant for the

instant matter. The learned Tribunal has rightly held at

paragraph-18 of the impugned order:

"....We are, therefore, of the considered view that once Part I of Form 27C dully filled and signed by the declarant is received by the assessee and Part-II of Form 27C is dully filled and signed by the seller is forwarded to the respective revenue authorities, within the prescribed time limit, then nothing more is required to be done by the assessee and if any buyer is found to have given a false statement, then the assessee should not be held responsible for such act of the buyer..."

10. Hence, on an overall consideration of the aspects as

enunciated above, in our considered view, there is no

question of law, much less any substantial question of law

involved in the instant appeal, as, what is being contended

by the Revenue is clearly de hors what is laid down in

section 206C(1A) of the Act read with Rule 37C of the Rules

and Form 27C.

11. The Hon'ble Supreme Court in the case of CIT v. A.A.

Estate (P) Ltd.1 has held that if the High Court is of the

view that if an appeal does not involve any substantial

question of law so as to attract the rigor of section 260-A of

the Act for its admission, the appeal ought to be dismissed