Income-tax can be collected only on the cost price paid by the retail vendors to the wholesalers.

G.C.Bharuka, J.

1. The only question which survives for our consideration in this set of writ applications is, as to whether a sum equal to 15 per cent. of the excise duty payable by the petitioners on account of purchase of country spirit can be collected as income-tax under the provisions of Sec. 206C of the Income-tax Act, 1961 (hereinafter in short, " the Act " only).

2. The foundational facts as set out by the petitioners may briefly be stated as below. The petitioners are retail vendors in country spirit, which is an alcoholic liquor meant for human consumption. This privilege has been acquired by them by participating in auction-cum-tender system of settlement of shops envisaged under the provisions of the Bihar Excise Act, 1915 (hereinafter, in short, " the Excise Act " only), and the Rules framed thereunder. Consequent upon the settlements, they have been granted licences in Form No. 26 by the respective Collectors on different dates for the period ending March 31, 1995. Copies of some of such licences have been annexed by some of the petitioners to the respective writ applications. The State Government as a condition for grant of the said privilege has made it mandatory for the petitioners to lift a prescribed minimum quantity of liquor from the specified warehouses in every month. Sale of the country spirit is effected in sachets (polythene packs) by the wholesale licensee acquiring such privilege for the area concerned from the specified ware: houses, Messrs. S. K. G. Sugar Ltd., Patna, Messrs. Shri Shiv Shankar Chemical Industries (Bihar) Ltd., Bhagalpur, and Messrs. Kanpur Sugar Works Limited, Saran, and all these companies incorporated under the Companies Act, 1956, have acquired the privilege of supply in wholesale of country spirit from the respective warehouses to the petitioners. According to the statutory rules and directions, before taking the supply of the country spirit, the petitioners have to pay the cost price (i.e., purchase price), thereof by way of bank draft drawn in favour of the wholesaler and they have also to deposit the excise duty payable thereon in the Government treasury.

3. In the above factual background, it has been submitted by learned counsel for the petitioners that in view of the newly inserted provisions contained in Sec. 206C of the Act, any amount as income-tax can be collected only in respect of the cost price paid by them to the respective wholesalers and not in respect of the excise duty paid by them to the Government. In support of their submissions, apart from relying on the plain language of the said Section, our attention has been invited to the various provisions of the Excise Act, the rules, sale notification, terms and conditions of the licence relating to the retailers and wholesalers and the directions issued by the statutory authorities.

4. Sec. 206C of the Act as substituted by the Finance Act, 1992, with effect from April 1, 1992, reads as below :

" Sec. 206C.(1) Every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table below, a sum equal to the percentage specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax.

Sl. No. Nature of goods

Percentage

(1) (2)

(3)

(i) Alcoholic liquor for human consumption (other than Indian-made foreign liquor) Fifteen per cent.

(ii) Timber obtained under a forest lease Fifteen per cent.

(iii) Timber obtained by any mode other than under a forest lease Five percent.

(iv) Any other forest produce not being timber Fifteen per cent.

Provided that where the Assessing Officer, on an application made by the buyer, gives a certificate in the prescribed form that to the best of hi