The word 'any work' in Section 194c of the Income-tax Act, 1961, should be interpreted in the limited sense of 'product or result', and that the mere transportation of goods by a common carrier does not affect or result in the goods carried and, as such, cannot be brought within the scope of Section 194c.

( 1 ) THE issue involved in this writ petition is whether common carriers of goods by road are liable to deduction of tax at source under Section 194c of the Income-tax Act, 1961 (hereinafter referred to as "the Act" ).

( 2 ) PETITIONER No. 1 is a registered society representing goods carriers and transporters in the State of West Bengal. According to the petitioners, the members of petitioner No. 1 are common carriers of goods. Except for transporting goods, such members do not carry out any other work in connection with the goods transported such as loading and unloading of the goods,

( 3 ) SECTION 194c of the Act was introduced in 1972. Briefly stated, Section 194c provides for the deduction of two per cent. on account of income-tax on the income comprised in payments made to contractors and subcontractors "for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor" and specified concerns or authorities.

( 4 ) ON May 29, 1972, a circular was issued by the Government of India explaining the scope and ambit of, inter alia, Section 194c. In so far as it is material the circular (Circular No. 86 (see [1972] 84 ITR (St.) 99, dated May 29, 1972) provided :" (ii) The deduction of income-tax will be made from sums paid for carrying out any work or for supplying labour for carrying out any work. In other words, the new provision will apply only in relation to 'works contracts' and 'labour contracts' and will not cover contracts for sale of goods. . . . The test is whether or not the work and labour bestowed end in anything that can properly become the subject of sale. . . . (iii) Contracts for rendering professional services by lawyers, physicians, surgeons, engineers, accountants, architects, consultants, etc. , can also not be regarded as contracts 'for carrying out any work' and, accordingly, no deduction of income-tax will be made from payments relating to such contracts. "

( 5 ) ON September 26, 1972, a second circular was issued by the Ministry (Circular No. 93 (see [1972] 86 ITR (St.) 30), dated September 26, 1972) in response to several inquiries received from various trade associations. One of the enquiries was whether the requirement of deduction of income-tax at source applied to transport contracts. The answer was as follows ;"a transport contract cannot ordinarily be regarded as 'contract for carrying out any work' and, as such, no deduction in respect of income-tax is required to be made from payments made under such a contract. In the case of a composite contract involving transport as well as loading and unloading, the entire contract will be regarded as 'works contract' and income-tax will have to be deducted from payments made thereunder. Where, however, the element of labour provided for loading and unloading is negligible, no income-tax will be deductible. "

( 6 ) THE scope and effect of Section 194c were also explained by the Board by its Circular No. 108 dated March 28, 1973, in a language which was materially identical with Circular No. 93 of 1972 (see [1972] 86 ITR (St.) 30 ).

( 7 ) THE Finance Bill of 1987 proposed to insert Section 194e by subjecting fees for professional services, royalty, fees for technical services, rent, commission or brokerage and payment for goods supplied to the Government or local authorities or public undertakings above specified limits subject to deduction at source. Section 194e, however, was not ultimately enacted.

( 8 ) IN 1991, Sections 194g and 194h were introduced in the Act by which payment of commission on sale of lottery tickets and payment of commission, brokerage, etc. , were made subject to deduction of income-tax at source. Subsequently, the provisions ceased to have effect in respect of such payments made on and after July 1, 1992, as far as such contracts are concerned. It is undisputed, that from the time of introduction of Section 194c till 1993 neither the Government nor the