Excise duty paid by the buyers into the Government treasury is not part of the amount payable by them to the sellers at the time of sale/purchase of liquor and, therefore, the sellers are not entitled to collect tax at source on such amount.

N.K.Sodhi, J.

1. The petitioners in this bunch of 43 petitions bearing Nos. 4778, 4718, 4759, 4760, 4761, 4812, 4831, 4839, 4840, 4848, 4849, 4872, 4878, 4879, 4880, 4888, 4901, 4933, 4955, 4956, 4966, 4971, 4972, 5114, 5331, 5414, 5415, 5417, 5691, 5721, 5834, 5862, 5919, 5939, 5940, 6078, 6191, 6192, 6401, 6422, 6566, 7449 and 7540 of 1992 filed under Article 226 of the Constitution hold L-14A licences for the financial year 1992-93 obtained by them in an auction held for the purpose in accordance With the provisions of the Punjab Excise Act, 1914, as applicable to the States of Punjab and Haryana. These licences are for retail vend of country spirit including rum and gin and, on the strength of such a licence, a licensee trades in the licensed premises in alcoholic liquor for human consumption (other than Indian-made foreign liquor). A licensee who is a successful bidder is required to pay the entire amount of licence fee in twelve monthly instalments. Every licensed premises popularly known as the vend has a fixed quota of country liquor/alcohol and the licensees keep lifting for sale from time to time the country liquor from the distilleries (manufacturers). Before the country liquor can be purchased from the distilleries, a permit is necessary to be obtained from the Excise and Taxation Department for a certain quantity after depositing the excise duty thereon in the Government treasury, Then, on the production of this permit, the distilleries would, after charging the price, sell and allow release of liquor to the licensee for further sale at the vend. Thus, the petitioners have not only to pay the licence fee in monthly instalments but also the excise duty before obtaining the permit which enables them to lift a given quantity of liquor from the sellers (manufacturers) and thereafter they have also to pay the price of liquor which they purchase from the manufacturers for onward retail sale.

2. According to Section 206C of the Income-tax Act, 1961 (hereinafter called "the Act"), as substituted by the Finance Act, 1992, with effect from April 1, 1992, every person who is a seller (like the distilleries) is required to collect tax at source at the rate of 15 per cent. on the amount payable by the buyer (like the petitioners) of goods of the nature of alcoholic liquor for human consumption other than Indian-made foreign liquor. Sub-section (1) of Section 206C of the Act, as it stands at present and the Explanation added with effect from April 1, 1992, after Sub-section (8) read as under :

"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 : Table S. No.Nature of goodsPercentage (1)(2)(3) (i)Alcoholic liquor for human consumption (other than Indian-made foreign liquor)Fifteen per cent. (ii)Timber obtained under a forest leaseFifteen per cent. (iii)Timber obtained by any mode other than under a forest leaseFive per cent. (iv)Any other forest produce not being timberFifteen 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 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. . . . 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 spe