Wrong Collection Of TCS On Purchase Of Coal For Generation Of Power: Jharkhand High Court Directs Refund

The Jharkhand High Court has directed the Tax Collected as Source (TCS) refund wrongfully collected despite verifying purchase of coal was used for generation of power.

The bench of Justice Rongon Mukhopadhyay and Justice Deepak Roshan has observed that the root cause lies in the illegality committed by the Revenue in compelling Central Coalfields Limited (CCL) in effecting TCS qua the transactions of purchase of coal which according to the petitioner was genuinely used in generation of power. Such TCS was affected by Respondent CCL even though appropriate Form 27C was issued by the Petitioner with a verification that the goods so purchased would be used for the purposes of generation of power.

The petitioner/assessee is a Company and submitted that the Respondents forcefully realised Rs. 7,86,33,649 from the Petitioner in the guise of Tax Collected as Source (TCS) for the period FY 2012-2013 to the First Quarter of FY 2017-2018.

The petitioner contended that the benefit of Section 206C(1A) of the Income Tax Act, 1961 ought to have been granted to the Petitioner once Form 27C has been submitted by the Petitioner and there exists no material to conclude that the declaration forming part of such Form is false. Once Form 27C has been submitted by the buyer, the concept of a ‘mini-trial’ does not exist at the time of availment of benefit under Section 206 C(1A) of the Income Tax Act, 1961.

The petitioner was made to wait for the issuance of TCS Certificate or subsequent adjustment of its future tax liabilities by the Income Tax Department until technical glitches are resolved which would legitimise the illegal collection of tax.

The assessee contended that Central Coalfields Limited cannot take the defence that it will not refund the money unless the Income Tax Department refunds the TCS. Interest has to necessarily follow the refund of TCS illegally collected from the Petitioner as a matter of course.

The petitioner apprehended that if TCS certificates come to be issued in favour of the Petitioner by CCL by following the procedure laid down by department then the benefit of credit of TCS would not actually insure to the petitioner.

The court held that Appeal under Section 260A is a statutory right and we cannot prevent anyone, either Assessee or Revenue from availing such right. The plea of Respondent CCL is misconceived and hence rejected.

The court granted the Assessee the liberty to move to a competent Civil Court with regards to its claim of interest under Section 244A.

Counsel For Petitioner: Sujit Ghosh

Counsel For Respondent: Biren Poddar

LL Citation: 2023 Livelaw (Jha) 59

Case Title: Adhunik Power & Natural Resources Ltd. Versus Central Coalfields Limited

Case No.: W.P. (T) No. 2023 of 2021

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