The deduction under Section 206C of the Income-tax Act, 1961, can be made only with reference to the cost price of the country spirit and not with respect to the excise duty paid thereon.

G.C. Bharuka, J.

In this set of writ applications, the petitioners are licensed retail vendors dealing in country spirit having their spirit shops situated in the district of Buxar and Bhojpur. M/s Sheo Narayan Jaiswal (Pvt.) Ltd., who has been impleaded as a respondent, is the wholesale supplier.

2. The present writ applications have been filed with a prayer that the Respondents be restrained from collecting any amount as income-tax in respect of the purchases of Country spirit made by them pursuant to the provisions contained in Section 206C of the Income-tax Act, 1961, as substituted with effect from 14.1992 by the Finance Act, 1992. The grounds set out for claiming the said relief are as below:

(i) The respondent whole-seller is an individual and, therefore, he does not fall in the category of' seller' as defined under clause (b) of the Explanation to the impugned provision.

(ii) Since the respondent whole-seller sells and supplies the country spirit to the petitioners after purchasing the same from manufacturer, therefore, the petitioners being the second buyers are not covered by the expression 'buyer' as defined under clause (a) of the Explanation to the impugned provision.

(iii) Excise duty paid by the petitioners can not be deemed to be the amount payable by the buyer to the seller as a consideration for sale of country spirit.

3. Before considering the imports of the submissions made at the Bar on behalf of the petitioners, it is better to quote the relevant provisions, which are set out as under :-

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.

S. No. Nature of goods Percentage

(1) (2) (3)

(i) Alcoholic liquor for human consumption other Fifteen

than (Indian-made Foreign liquor) percent

(ii) Timber obtained under a forest lease Fifteen

percent

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

(iv) Any other forest produce not being timber Fifteen percent

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 his belief any of the goods referred to in the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things and not for trading purposes, the provisions of this sub-section shall not apply, so long as the certificate is in force."

(b) after sub-section (8), the following Explanation shall be inserted, namely :-

'Explanation.-For the purposes of this Section:

(a) "buyer" means a person who obtains in any sale, by way of auction, tender or any other mode, goods of the nature specified in the Table in subsection (1) or the right to receive any such goods but does not include,-

(i) a public sector company,

(ii) a buyer in the further sale of such goods obtained in pursuance of such sale, or

(iii) a buyer where the goods are not obtained by him by way of auction and where the sale price of such goods to be sold by the buyer is fixed by or under any State Act.

(b) "seller" means the Central Government, a State Government or any local authority or Corporation or authority established by or under a Central, State or Provincial Act, or any company or firm or co-operative society.'

4. So far as the first ground is concerned, the very description of the name of the whole-seller shows that it is a private limited company incorporated under the provisions of the Companies Act, 1956 and it has been wrongly stated in some of the writ applications that it is an individual. Company, as it