Ashok Kumar vs Union of India

A.R. Tiwari, J.—The petitioners have filed this petition under articles 226 and 227 of the Constitution for the under-noted reliefs :

"(i) That this Hon''ble Court be pleased to issue a writ in the nature of mandamus directing the respondents to collect the tax at source u/s 206C of the income tax Act, 1961, only on the price of the liquor (purchased by the State Government and the same is supplied to the petitioner) exclusive of the excise duty payable on it, at the rate of 15 per cent.

(ii) That this Hon''ble Court be further pleased to direct the respondents to consider the excise duty payable as the price for exclusive privilege granted to the petitioners for dealing in intoxicants.

(iii) Any other relief deemed fit be also granted together with costs of the petition."

Briefly stated, the facts of the case are that the petitioners are liquor traders and have obtained the permission for retail sale of country liquor in various districts of Madhya Pradesh. The petitioners are aggrieved by the attempt of the respondents to collect income tax at source at the rate of 15 per cent on the issue price of liquor which included excise duty payable on country liquor. The petitioners contended that the deduction should be only on the basis of price of liquor and not on excise duty also.

The respondents have not filed reply against admission.

I have heard Shri A.K. Sethi, the learned counsel for the petitioners, Shri B.G. Neema, the learned counsel for respondent No. 1, Shri A.M. Mathur, the learned senior counsel with Shri Nayar for respondent No. 2 and Shri Vinay Zelawat, the learned Government Advocate for respondent Nos. 3 to 6 for final disposal of this petition.

Right at the beginning, the counsel for the respondents submitted that validity of section 206C of the income tax Act, 1961 (''the Act'') has been up- held by the decision in Union of India v. A. Sanyasi Rao JT 1996 (2) SC 425/ 85 Taxman 321, but the question as projected in this petition is not decided so far.

Reliance is placed on a letter written by the Finance Minister of respondent No. 1 to the Member of the Parliament. By this letter dated 1-8-1994, it was communicated as under :

"I am glad to inform you that the request for collection of tax at source only in respect of cost of liquor supplied by the Madhya Pradesh Government has been found acceptable and necessary instructions in this regard have been issued to the concerned authorities."

In view of the aforesaid letter, the counsels for the parties agree that this petition be disposed of in conformity with this letter, but with liberty to the authorities to make appropriate adjustments, if found necessary, at the time of the assessment of tax.

Consequently, I do not go into the merits of the matter but dispose of this petition with directions as under :

(a) The authorities shall make collection of tax at source only in respect of cost of liquor supplied by the Government of Madhya Pradesh in conformity with the letter dated 1-8-1994 and instructions issued in this regard so far as these petitioners are concerned, hereafter.

(b) However, if the Act permits levy of income tax also on excise duty, the authority shall be free to make appropriate adjustments at the stage of assessment of tax.

With the aforesaid directions, this petition stands disposed of with no order as to costs.