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1. The common question of law is involved in all the five cases and as such they have been heard together and are being disposed of by this common judgment.

2. The petitioners, assessees under the Income-tax Act and traders in kendu leaves, have filed the present writ applications for a declaration that the main provision of Sub-section (1) of Section 206C of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), is not applicable and their case is covered by the proviso to the said sub-section and, accordingly, a direction may be issued to respondents Nos. 2 and 3 (CIT, Ranchi and Income-tax Officer, Daltonganj Ward) to give exemption certificate in terms of the proviso to the aforesaid section read with rule 37C of the Income-tax Rules, 1962 (hereinafter referred to as "the Rules"), in the prescribed Form No. 27C and for quashing the decision taken by the Government of India, Ministry of Finance, Department of Revenue (respondent No. 1) on January 10, 1996, holding that the provision of Section 206C(1) shall be applicable in the case of kendu leaves traders as the exception carved out in the proviso to Sub-section (1) of Section 206C is not applicable in their case.

6. Accordingly, the petitioners used to apply for grant of certificate of exemption under the provisions of rule 37C of the Rules and the authorities used to issue necessary exemption certificate in Form No. 27C. They applied for the exemption certificate for the year 1966-67 (sic), but no exemption certificate was granted and thereafter they approached the higher authority but no relief was granted on the ground that the Central Board of Direct Taxes issued another letter dated January 10, 1996, withdrawing the clarification dated January 23, 1989, and has opined that the operations carried out by the kendu leaves traders like drying, sprinkling of water, bundling of kendu leaves, etc., do not change the nature and character of the leaves and these are performed only to maintain .the leaves in saleable and marketable condition. Thus, the operations do not result in any change of the products and as such the provision of Section 206C is applicable in their cases and not the exception as carved out in the proviso to Sub-section (1) of Section 206C. A copy of the said letter has been annexed as annexure-2 to the writ application.

7. Thus, the petitioners have claimed for quashing of annexure-2 as well as for a declaration that their case is covered by the proviso to Sub-section (1) of Section 206C as the activities after the purchase of kendu leaves prior to sale to the bidi merchants constitute processing and as such the tax in case of purchase by them cannot be deducted at source and they are entitled to certificates in terms of the proviso to Section 206C read with rule 37C of the Rules.

8. The stand of the Revenue Department is that the Corporation invites tenders for the kendu leaves every year and the entire works like drying, sprinkling of water, bundling of kendu leaves are done by the Corporation at its own cost. Alternatively, their stand is that mere drying, sprinkling of water, bundling of the kendu leaves, etc., cannot be equated with processing as the said activities do not change the nature and character of the kendu leaves and the processes are performed only to maintain the leaves in saleable and marketable condition.

Various judicial pronouncements, available abuses subsequent to be issue of the aforesaid clarification, dated January 23, 1989, through our F. No. 150/165 of 1988-TPL support the above position, making it incumbent to withdraw the view expressed earlier and to clarify that the provisions of Section 206C, shall be applicable to the case of tendu leaf-traders as the exception carved out in the proviso to Sub-section (1) of Section 206C is not applicable in such cases. A copy of the letter withdrawing the clarification issued earlier, vide letter dated 23rd January, 1989, is enclosed."