JUDGMENT :

1. Shri V.K. Shukla, learned Dy. Advocate General for the petitioner/State.

2. Shri Rohit Arya, learned senior counsel with Shri S. Lal for the respondents.

3. Challenging the orders passed by the ITO and the action taken for recovery of tax, which was to be deducted at source by the State Government from persons who have been granted mining and quarry lease, this petition is filed by the State Government.

4. State Government had granted various quarry leases to private persons. The quarry leases have been granted in accordance to the Mines and Minerals (Development and Regulation) Act, 1957 and the M.P. Mining Mineral Rules, 1996, royalty as per statutory provision has been collected and in some cases the lease period has expired. Proceedings have been initiated by the IT Department on the ground that after introduction of Section 206, Sub-section (l)(c) [sic-s. 206C(1C)] in the IT Act, w.e.f. 1st Oct., 2004 by Finance Act, 2004 every person who grants lease or licence in respect of any mine or quarry to another person for the purpose of business is required to debit an amount equal to 2 per cent of the total amount payable by the licensee by way of tax an