By K. B. Bhujle
Advocate
CIT(TDS) vs. Commissioner, Akola
Municipal Corporation; 397 ITR 226 (Bom):
The respondent assessee is the Municipal
Corporation for the town Akola. For the A. Ys. 2005-06 to 2007-08, the
assesssee had entered into a contract called agency agreement, by virtue of
which the assessee appointed an agent to provide services of collecting octroi
on its behalf. This octroi was collected at the rates fixed by the assessee,
for which the necessary receipts are also issued in the name of the assessee.
The entire amount collected by the agent is remitted to the assessee and the
agent is entitled to a commission depending upon the quantum of octroi
collected during the year. The ITO(TCS) was of the view that that the assessee
was obliged to collect tax at source u/s. 206C(1C) of the Income-tax Act, 1961
in respect of octroi collection received from the agent. Since the assessee had
not collected and deposited such tax, the ITO(TCS) passed order u/s. 206C and
raised a demand of Rs. 1.09 crore for failure to collect tax at source and
interest of Rs. 15.96 lakh on the same. The Tribunal cancelled the demand.
On appeal by the Revenue, the Bombay High
Court upheld the decision of the Tribunal and held as under:
“i) It
is a settled position of law that fiscal statutes are strictly construed.
Section 206C(1C) of the Income-tax Act, 1961, provides that a person who grants
an agency or licence, or in any other manner transfers his right in respect of
a parking lot, toll plaza or a mine and quarry to another person, while
receiving the amount so collected from the agent or licensee (the transferee of
its right), should also collect tax at source. The above obligation is only
restricted to parking lots, toll plazas or mine or quarry. This obligation does
not extend to octroi.
ii) The
Seventh Schedule to the Constitution of India empowers the state to levy octroi
as found in entry 52 of List II thereof, while entry 59 of List II of the
Seventh Schedule to the Constitution empowers the State to collect tolls. Thus,
there is a basic constitutional difference between the two levies. A “toll” is
normally collected on account of use of the roads by animals and humans. As
against which, “octroi” is normally collected on account of goods entering the
corporation limits (area) for use, consumption or sale.
iii) Section
206C(1C) cannot be extended to collection of octroi. The Legislature when it
brought in section 206C(1C) of the Act, has not authorised the collection of
tax at source in respect of octroi. It specifically restricted its obligation
to only three categories namely parking, toll plaza, mining and quarrying. No
fault can be found with the impugned order of the Tribunal.”
