Deputy Director (Geology And Mining) Vs DCIT (Chhattisgarh High Court)
Chhattisgarh High Court held that TCS provisions covered under section 206C(1C) of the Income Tax Act doesn’t apply to amount of compounding fees/ fine that was recovered from illegal miners and transporters of minerals.
Facts- The present tax appeals have been preferred under Section 260A of the Income Tax Act, 1961 calling in question legality, validity and correctness of judgment & order dated 21-72023 passed by the Income Tax Appellate Tribunal (ITAT), Raipur Bench, Raipur. The substantial question of law involved herein is whether provisions of Section 206(IC) of the Income Tax Act, 1961 are applicable for collecting TCS from offenders who do illegal mining or transportation/storage having lease or license or have not entered into the contract for transfer of right in Mines or Quarry and from whom Compounding Fine is collected as per provisions under Rule 71(5) of the Chhattisgarh Minor Mineral Rules, 2015?
Conclusion- Held that Section 206C(1C) of the IT Act specifically obliges to collect tax by the assessee from the lease holder or license holder or with whom the assessee has entered into contract or otherwise transferred any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry. Similarly, there is no legislative mandate to collect tax at source from the person who is involved in illegal mining or illegal transportation of minerals and similarly, compounding fees/fine is collectable in terms of Section 23A of the MMDR Act read with Rule 71(5) of the Rules of 2015 and the effect of compounding would be that on being compounded under Section 23A(1), no proceeding or further proceeding shall be taken and the offender, if in custody, shall be released forthwith.
