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The Tax Publishers Liability to deduct TCS under Section 206C(1C) read with 206C(6) and 206C(7) for transfer of mining rights - arising out of collection of compounding fee and penalty from illegal mining rights *Facts:* This was a combined appeal of ITAT of 38 petitions in total for a number of district mining authorities for various assessment years. Assessee the district mining officer of Chattiggarh was slapped with TCS payable and interest and was held as an assessee in default for non-collection of Tax collection at source (TCS) from the collections of compounding fees and penalty from illegal mining operators. Plea of the assessee were - 1) There was no transfer of any right in written or in oral form for illegal mining granted so they were not obligated to collect TCs. 2) Taxing Section 206(1C) was only a vicarious liability and the responsibility to pay tax was on on the recipient of the income and at best only interest would be applicable for the delayed period of payout. 3) There were no instructions from higher authorities to effect TCS on the compounding fees/penalty collected for illegal mining. 4) The logic of illegal mining and impounding the vehicles and collecting the compounding fee/penalty could not have been envisaged by the assessee to trigger a TCs. 5) The payments were actually directly remitted to the National Mining Trust fund and hence they were not liable as the collector of the alleged revenue. Held against the assessee that - 1) Section 206C(1C) does not envisage any written contract but has used the word expansively "otherwise" so the assessee was obligated to do TCs. 2) Vicarious liability scenario cannot be envisaged for Section 206C(1C) as the Section is differently worded to Section 201 (TDS) and the vicarious liability concept where in if the actual recipient of income discharges the tax obligation then there will be no liability of TDS cannot be read into Section 206C. 3) Absence of instructions from higher authorities was no excuse. 4) The TCS Section envisages TCS to be done on all payments in whatsoever form/manner so illegal mining would also fall into its ambit. 5) For the limited purpose of checking as to whether the payments were actually made to the National Mining Trust thereby assessee was not the person as the actual collector under the law the cases were remanded for statistical verification. *Case:* District Mining Officer v. Dy. CIT 2023 TaxPub(DT) 4606 (Raipur-Trib)

The Tax Publishers

Liability to deduct TCS under Section 206C(1C) read with 206C(6) and 206C(7) for transfer of mining rights - arising out of collection of compounding fee and penalty from illegal mining rights

Facts:

This was a combined appeal of ITAT of 38 petitions in total for a number of district mining authorities for various assessment years.

Assessee the district mining officer of Chattiggarh was slapped with TCS payable and interest and was held as an assessee in default for non-collection of Tax collection at source (TCS) from the collections of compounding fees and penalty from illegal mining operators. Plea of the assessee were -

1) There was no transfer of any right in written or in oral form for illegal mining granted so they were not obligated to collect TCs.

2) Taxing Section 206(1C) was only a vicarious liability and the responsibility to pay tax was on on the recipient of the income and at best only interest would be applicable for the delayed period of payout.

3) There were no instructions from higher authorities to effect TCS on the compounding fees/penalty collected for illegal mining.

4) The logic of illegal mining and impounding the vehicles and collecting the compounding fee/penalty could not have been envisaged by the assessee to trigger a TCs.

5) The payments were actually directly remitted to the National Mining Trust fund and hence they were not liable as the collector of the alleged revenue.

Held against the assessee that -

1) Section 206C(1C) does not envisage any written contract but has used the word expansively "otherwise" so the assessee was obligated to do TCs.

2) Vicarious liability scenario cannot be envisaged for Section 206C(1C) as the Section is differently worded to Section 201 (TDS) and the vicarious liability concept where in if the actual recipient of income discharges the tax obligation then there will be no liability of TDS cannot be read into Section 206C.

3) Absence of instructions from higher authorities was no excuse.

4) The TCS Section envisages TCS to be done on all payments in whatsoever form/manner so illegal mining would also fall into its ambit.

5) For the limited purpose of checking as to whether the payments were actually made to the National Mining Trust thereby assessee was not the person as the actual collector under the law the cases were remanded for statistical verification.

Case: District Mining Officer v. Dy. CIT 2023 TaxPub(DT) 4606 (Raipur-Trib)