DCIT Vs District Mining Officer Dantewada Mining Office (Supreme Court of India)
The matter arose from a batch of tax appeals decided by the Chhattisgarh High Court under Section 260A of the Income Tax Act, 1961. The common substantial question of law was whether Section 206C(1C) of the Income Tax Act applies for collecting Tax Collected at Source (TCS) from offenders engaged in illegal mining or transportation/storage without lease or licence and from whom compounding fine is collected under Rule 71(5) of the Chhattisgarh Minor Mineral Rules, 2015.
Read HC Judgment in this case: Compounding Fee Not Royalty: HC Quashes TCS Demand on Illegal Mining Fines
Read SC Judgment dated 27.02.2026 in this case: SC Upholds HC Ruling That TCS Cannot Apply to Compounding Fees in Illegal Mining Cases
The controversy originated from a TDS survey conducted on 24.09.2018 under Section 133A(2A) in the office of the District Mining Officer, Bemetara. The Income Tax Department observed that TCS had not been collected on compounding fees/fine recovered from illegal miners and transporters. Consequently, an order dated 01.07.2019 under Sections 206C(1C), 206C(6), and 206C(7) treated the Mining Officer as an “assessee-in-default” and raised demand along with interest and penalty. The Commissioner (Appeals) and subsequently the ITAT upheld the demand relating to non-collection of TCS on compounding fees.
