By TIOL News Service

ALLAHABAD, AUG 21, 2018: THE ISSUE BEFORE THE BENCH IS - Whether collection of Tahbazari by a licencee or leasee cannot be construed as collection of toll so as to attract provisions of TCS u/s 206C(1C), since Tahbazari is not provided under such section. And the verdict is YES.

Facts of the case

The assessee is a Zila Panchayat constituted under the Uttar Pradesh Kshettra Panchayats and Zila Panchayats Adhiniyam, 1961 and formulated a policy regulate its functions, where Tahbazari, Tahbazari-Vahan Stand and Balu-Morang, Gitti Bolder-Vahan Shulk was auctioned and authority letter was issued to the highest bidder. However, the AO conducted a survey and noticed that there were three kinds of auctions: (i) Tahbazari (ii) Tahbazari-Vahan Stand (iii) Balu-Morang and Gitti Bolder-Vahan Shulk and the Zila Panchayat had issued licences to different persons (through tender and auction) for collection of Tahbazari. The AO was of the view that the amount collected by the Zila Panchayat fell under the scope of Tax collected at source. Accordingly, he worked out the amount of short collection and amount of interest u/s 206 (7). On assessee's appeal, both the lower authorities held in favour of the Revenue.

The High Court held that,

++ the Tahbazari is not an item which is provided under this Section for collecting TCS. If a licence or lease is issued in favour of any other person for collecting the Tahbazari, it cannot be said that lessee is collecting toll on such licence or lease, as the case may be. We are required to construe the taxing provisions strictly and cannot give liberal interpretation to a taxing provision. The toll plaza does not include Tahbazari inasmuch as there is no toll set up for collecting the Tahbazari when licence for collecting the Tahbazari is issued. The Tahbazari has different connotation and it is not a toll as held by the Tribunal. We do not agree with the view taken by the Tribunal that Tahbazari is nothing but a toll or it is not different from Toll Plaza.

(See 2018-TIOL-1666-HC-ALL-IT)