Whether TDS u/s 194H shall be deducted by BSNL/MTNL on payment of commission paid to Subscribers Trunk Dialing (STD) / Public Call Office (PCO)?
It is well settled in law that a tax withholding liability is a vicarious liability, as a part of tax collection mechanism, in the sense that when there is no primary liability of the taxpayer, proxy liability of the tax deductor also does not survive. In a situation like the one, we are in seisin of, in which the CBDT itself accepts that there is hardly any primary tax liability of the recipients of income. It is highly contentious an issue whether or not vicarious tax withholding liability can be invoked. As a matter of fact, the Central Board of Taxes has taken a stand that the demands are not to be enforced on BSNL and MTNL offices except in the cases where taxes have been deducted at source but not paid over to the revenue.