Calcutta High Court (Appellete Side)
Sb. Kaijar Ahmed vs The State Of West Bengal & Ors on 23 April, 2014
Author: Biswanath Somadder
Bench: Biswanath Somadder
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24 WP No. 7329 (W) of 2014
23.04.2014
sb. Kaijar Ahmed
Vs.
The State of West Bengal & Ors.
Mr. Shahan Shah
.... For the petitioner.
Mr. J. P. Khaitan, Sr. Adv.
.....Amicus Curiae
Mr. S. N. Bhattacharya
Mr. Somnath Banerjee
... For the State.
Mr. Amitava Chawdhury,
Ms. Annesha Kar Gupta
... For the Zilla Parishad.
The petitioner has approached this Court essentially
aggrieved by the contents of a notice dated 24th February,
2014, issued by the District Engineer, Nadia Zilla Parishad,
wherein it has been stated, inter alia, that if a person having
a PAN card is selected as the highest bidder in the auction
process, he shall pay @ 2 per cent on the bid amount as tax
in the name of FC & CAO, Nadia Zilla Parishad and on the
other hand, if a person without a PAN card is selected as the
highest bidder in the same auction process, he shall pay @
20 per cent on the bid amount as tax in the name of FC &
CAO, Nadia Zilla Parishad.
The auction process-in-question centers around lease of
a ferry ghat situated in the district of Nadia.
From the report filed earlier on behalf of the Additional
District Magistrate (ZP), Nadia, it appears that the auction
process, in terms of the notice dated 24th February, 2014,
has been directed to be kept in abeyance upto 31st May,
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2014.
It is, however, submitted by the learned advocate
appearing on behalf of the Nadia Zilla Parishad that
although the impugned notice has been kept in abeyance by
the Zilla Parishad authorities, the provisions of sub-section
(1C) of section 206C of the Income Tax Act and section
206AA of the Income Tax Act would be attracted in the facts
of the instant case. He also submits that the statutory
description of 'toll plaza' as provided under the Income Tax
Act, would also include a ferry ghat.
An interesting question, therefore, arises for
consideration as to whether the highest bidder in the
auction process for lease of a ferry ghat is required to pay
income tax, as stated above.
In such a backdrop, this Court had requested Mr. J. P.
Khaitan, Senior Advocate, to be the amicus in order to
render his assistance to this Court in respect of analyzing
the relevant provisions of the Income Tax Act for the purpose
of determining whether the Zilla Parishad could be at all
justified in imposing such tax upon the highest bidder in
respect of the auction process for lease of a ferry ghat.
Mr. Khaitan, learned Senior Advocate, has drawn this
Court's attention firstly to the provisions of sub-section (1C)
of section 206C of the Income Tax Act, which comes under
the heading 'Collection at source' under Chapter XVII BB.
The relevant provision is set out hereinbelow:-
"(1C) Every person, who grants a lease or a licence
or enters into a contract or otherwise transfers any
right or interest either in whole or in part in any
parking lot or toll plaza or mine or quarry, to another
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person, other than a public sector company (hereafter
in this section referred to as "licensee or lessee") for the
use of such parking lot or toll plaza or mine or quarry
for the purpose of business shall, at the time of
debiting of the amount payable by the licensee or
lessee to the account of the licensee or lessee or at the
time of receipt of such amount from the licensee or
lessee in cash or by the issue of a cheque or draft or by
any other mode, whichever is earlier, collect from the
licensee or lessee of any such licence, contract or lease
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
Sl.No. Nature of contract or percentage
licence or lease, etc.
------------------------------------------------------------------
(1) (2) (3) ----------------------------------------------------------------- i) Parking lot Two per cent ii) Toll Plaza Two per cent iii) Mining and quarrying Two per cent".
Mr. Khaitan submits that a bare reading of the aforesaid provision of law - which falls under the heading 'Collection at source' - clearly indicates that in respect of only three categories of contract or licence or lease can 2 per cent tax be levied to be collected at source. These three categories 4 have been specifically described in the statute as "Parking lot", "Toll plaza", and "Mining and quarrying". He submits that lease of a "ferry ghat" has been specifically excluded and also does not fall anywhere within the compass of any of these three natures of contract or licence or lease, as described statutorily. He also submits that there is no rational nexus between a "Toll Plaza" and a "ferry ghat"
Mr. Khaitan, thereafter, refers to the provisions of section 206AA of the Income Tax Act and submits that the said section also cannot apply in the facts of the instant case. He further submits that a plain reading of section 206AA of the Income Tax Act would clearly reveal that the requirement for furnishing of a Permanent Account Number (PAN) is only in a case where Income tax is deductible under Chapter XVII B of the Income Tax Act, which falls under the heading, 'Deduction at source' and comprises of sections 192 to 206B (omitted in the year 1996) of the Income Tax Act. He submits that the provisions of Chapter XVII B are clearly distinct from Chapter XVII BB and does not come into play when there is a requirement for 'Collection at source' as opposed to 'Deduction at source'. He further submits that in the facts of the instant case, since the lease of a ferry ghat does not fall within the three natures of contract or licence or lease as statutorily defined in the Table contained under sub-section (1C) of section 206C of the Income Tax Act, the question of imposition of section 206AA of the Income Tax Act cannot arise.
Having regard to the submission made by Mr. J. P. Khaitan, this Court is of the view that neither the provision of sub-section (1C) of section 206C nor section 206AA of the 5 Income Tax Act would be applicable for the purpose of imposition of income tax at the time of auction for lease of a ferry ghat by the Zilla Parishad authorities. This Court renders its deepest appreciation to Mr. J. P. Khaitan, learned Senior Advocate, for kindly agreeing to be the amicus and also for assisting this Court to interpret the applicability of the provisions of the Income Tax Act - as discussed above - in the given facts of the instant case. The writ petition stands disposed of accordingly. Urgent photostat certified copy of this order, if applied for, be given to the learned advocates for the parties.
(Biswanath Somadder, J.)