Heard learned counsel for the petitioner. He submits that Section 190 of the Income Tax Act mandates deduction of tax at source and Section 194G of the said Act also provides for deduction of tax at source by the buyer having turnover of more than Rs.10 crores per annum. However, according to the learned counsel for the petitioner, countering the scheme of the Income Tax Act, the respondent-Oil Companies have issued impugned circulars directing the buyers to remit the entire sales consideration to them and in addition to that, to deposit 0.1% of the tax with the concerned department of the Central Government with an assurance that the same would be reimbursed to the buyers in due course by the Oil Companies. According to the learned counsel for the petitioner, the Income Tax Department has clarified the newly introduced provision of Section 194Q of the Act by their communication at Ext.P7 which unequivocally states that buyers are supposed to deduct tax at source within the sale consideration payable to the Oil Companies. Therefore, according to the learned counsel for the petitioner, the impugned circulars of the Oil Companies are in direct conflict with the statutory provisions of Income Tax Act. It is further argued that even if the buyer fails to remit the tax deducted at source to the Income Tax Department of the State, then the buyer can be prosecuted by the State resorting to the penal provisions of Section 276B of the Income Tax Act and therefore, the respondent-Oil Companies ought not to have harboured under apprehension that the buyers may not deposit the tax deducted at source with the Income Tax Department of the State.
2. Learned Standing Counsel who takes notice for respondents 3 to 9 makes a statement, on instructions, that impugned circulars are now no more applicable as those are modified by the Oil Companies. She submits that instruction to that effect has been received from the 3rd respondent-Hindustan Petroleum Corporation Limited but no such instructions have been received from other respondents.
In this view of the matter, issue notice before admission to other respondents returnable after six weeks. In the meanwhile, interim relief as claimed in the writ petition shall operate until further orders.