GONDIA BIDI LEAVES CONTRACTORS ASSOCIATION VS UNION OF INDIA AND OTHERS WRIT PETITION NO.2458 OF 1988, DECIDED ON 3RD OCTOBER, 1996.
1999 P T D 3121
[229 I T R 388]
[Bombay High Court (India)]
Before M. B. Shah, C. J. and S. B. Mhase, J
GONDIA BIDI LEAVES CONTRACTORS ASSOCIATION
versus
UNION OF INDIA and others Writ Petition No.2458 of 1988, decided on 03/10/1996.
(a) Income-tax---
----Collection of tax at source---Constitutional validity of provisions-- Sections 44-AC & 206-C do not violate Art. 14---Sections 44-AC .& 206-C are valid---Indian Income Tax Act, 1961, Ss.44-AC & 206-C---Constitution of India, Arts. 14 & 226.
(b) Income-tax---
----Collection of tax at source---Processing of tendu leaves whether amounts to "manufacture"---Matter remanded---Indian Income Tax Act, 1961, Ss.44-AC & 206-C.
Section 44-AC read with section 206-C of the Income Tax Act, 1961, is not hit by Article 14 of the Constitution and both sections are valid. What is brought to tax though levied with reference to the purchase price at an earlier point is nonetheless income liable to be taxed under the Income-tax Act. In the light of the practical difficulties envisaged by the Revenue to locate to the persons and to collect the tax due in certain trades, if the Legislature in its wisdom thought that it will facilitate the collection of the tax due from such specified traders on a "presumptive basis", there is nothing in the said legislative measure to offend Article 14.
Union of India v. A. Sanyasi Rao (1996) 219 ITR 330 (SC) fol.
Held, that the petitioners' representation that the processing of tendu leaves amounted to manufacturing activity should be decided by the Commissioner of Income-tax.
[The Court made it clear that if the petitioners' representation was rejected, it would not be open to them to file fresh petition for the same cause of action; that, however, it would be open to the members of the petitioner association to take other appropriate alternative remedy under the Act, if so advised.]
CST v. Bombay Mercantile Corporation (1975) 35 STC 505 (Bom); CST v. Jugal Kishore Badriprasad (1979) 43 STC 501 (MP) and Delhi Cold Storage Ltd. v. CIT (1991) 191 ITR 656 (SC) ref.
S.V. Manohar, V.R. Manohar and L.S. Dewani for Petitioner
P.N. Chandurkar, S.P. Chandurkar and Smt. S.S. Wandile for Respondents Nos. l to 3.
P.M. Gundawar for Respondent No.5.
S.B. Dewle for Respondents Nos.6 and 7
JUDGMENT
M. B. SHAH, C.J.---In this petition, the petitioners have prayed that the provisions of section 44-AC and section 206-C of the Income Tax Act, 1961, be struck down .as null and void. It has also been prayed that the respondents-authorities be directed to issue the certificates to the members of the petitioner association contemplated by the proviso to subsection (1) of section 206-C of the Income-tax Act certifying that the members of the petitioner association are processors of tendu leaves and, therefore, are not liable to pay the tax under section 44-AC and section 206-C of the Act. In the alternative, it is prayed that the respondents be directed to decide the representation submitted to them by the petitioners as Annexure "B" to the petition. Annexure-B is a representation by the Gondia Bidi Leaves Contractors Association, Gondia, wherein it is submitted that the members of the petitioner association are manufacturers and, therefore, the proviso to section 206-C would apply.
At the time of hearing of this matter, it is admitted that the question of validity of section 44-AC and 206-C of the Income-tax Act is upheld by the Supreme Court in the case of Union of India v. A. Sanyasi Rao (1996) 219 ITR 330. The Apex Court held that, what is brought to tax, though levied with reference to the purchase price at an earlier point is none the less income liable to be taxed under the Income-tax Act. The Court further held that in the light of the practical difficulties envisaged by the Revenue to locate the persons and to collect the tax due in certain trades, if the Legislature in its wisdom thought that it will facilitate the collection of the tax due from' such specified traders on a "presumptive basis", there is nothing in the said legislative measure to offend Article 14 of the Constitution. The Court, therefore, negatived the contention that section 44 AC read with section 206-C is hit by Article 14 of the Constitution and held that both the sections are valid.
In this view of the matter, the first prayer of the petitioners would not survive. With regard to the second prayer, learned counsel for the Revenue submitted that, as held by the Supreme Court in the case of Delhi Cold Storage (P.) Ltd. v. CIT (1991) 191 ITR 656, and the decision rendered by the Madhya Pradesh High Court n the case of CST v. Jugalkishore Badriprasad (1979) 43 STC 501 and the decision rendered by the Division Bench of this Court in the case of CST v. Bombay Mercantile Corporation (1975) 35 STC 505, the processing of tendu leaves does not amount to manufacturing activity.
As against this, learned counsel for the petitioners, submitted that, in any set of circumstances, the petitioners' representation to the aforesaid effect made at Annexure-B should be decided by the Commissioner of Income-tax.
Considering the aforesaid submission, it is ordered that the petitioners representation at Annexure "B" be decided by respondent No.3 preferably within a period of one month from today in accordance with law.
In the result, the petition is disposed of and the rule is made partly absolute, in the above terms. No order as to costs. Interim relief stands vacated.
It is made clear that the petitioners' representation, if rejected, it would not be open to them to file a fresh petition for the same cause of action. However, it would be open to the members of the petitioner association to take other appropriate alternative remedy under the Act, if so advised.
M.B.A./3092/FCOrder accordingly