M/s Bolkunda Packwai & (S) C.S. Shop, Burdwan v. ITO, WD-1(1), ASANSOL, Asansol

ITA 462/KOL/2016 | 2011-2012
Pronouncement Date: 29-11-2017 | Result: Allowed

Appeal Details

RSA Number 46223514 RSA 2016
Assessee PAN AAAAB2700K
Bench Kolkata
Appeal Number ITA 462/KOL/2016
Duration Of Justice 1 year(s) 8 month(s) 12 day(s)
Appellant M/s Bolkunda Packwai & (S) C.S. Shop, Burdwan
Respondent ITO, WD-1(1), ASANSOL, Asansol
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted C
Tribunal Order Date 29-11-2017
Assessment Year 2011-2012
Appeal Filed On 17-03-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN JM & DR.ARJUN LAL SAINI AM] I.T.A NOS. 462&463/KO L/2016 ASSESSMENT YEARS : 2011-12 & 2012-13 M/S. BOLKUNDA PACHWAI & C.S.SHOP -VS.- I.T. O. WARD-1(1) BURDWAN ASANSOL. [PAN : AAAAB 2700 K] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : NONE FOR THE RESPONDENT : SHRI ARINDAM BHATTACHAR JEE ADDL.CIT DATE OF HEARING : 23.11.2017. DATE OF PRONOUNCEMENT : 29.11.2017. ORDER PER N.V.VASUDEVAN JM THESE ARE APPEALS BY THE ASSESSEE AGAINST TWO ORDE RS OF CIT-(A)-ASANSOL BOTH DATED 28.01.2016 RELATING TO A.Y.2011-12 AND 2012-1 3. 2. WHEN THE APPEAL WAS CALLED FOR HEARING NONE APPE ARED ON BEHALF OF THE ASSESSEE. WE HOWEVER FIND THAT THE ISSUE RAISED BY THE ASSESSEE IN THESE APPEALS WHICH RELATED TO ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE B Y INVOKING THE PROVISION OF SECTION 40A(3) OF THE INCOME TAX ACT 961 (ACT.) OF RS.85 1 9 389/- IN A.Y.2011-12 AND RS.73 22 442/- IN A.Y.2012-13 HAS ALREADY BEEN DECI DED BY THIS TRIBUNAL IN THE CASE OF SEVERAL ASSESEES WHO ARE IN THE BUSINESS OF RETAIL ER OF COUNTRY LIQUOR SUCH AS THE ASSESSEE. 3. THE ASSESSEE IS A FIRM. IT CARRIES ON THE BUS INESS OF SELLING COUNTRY LIQUOR BEER RUM AND WHISKEY. IN THE BUSINESS OF SELLING COUNTRY LIQ UOR THE ASSESSEE HAS TO PURCHASE COUNTRY LIQUOR FROM ASANSOL BOTTLING AND PACKAGING PVT. LTD WHO ARE THE AUTHORISED BOTTLER PERMITTED TO DO THE WORK OF BOTTLING OF CO UNTRY LIQUOR BY THE EXCISE DEPARTMENT 2 ITA NOS.462&463/KOL/2016 M/S. BOLKUNDA PACHWAI & (S) CS SHOP A.Y.2011-12&2012-13 2 IN ASANSOL. THE BOTTLING PLANTS WILL SUPPLY COUNTR Y LIQUOR ONLY AFTER PAYMENT OF THE TOTAL PRICE OF THE REQUIRED BOTTLES OF COUNTRY LIQU OR INCLUDING (TAX COLLECTION AT SOURCE (TCS) IN THEIR BANK ACCOUNT. THE ASSESSEE HAS TO FU RNISH THE DEPOSIT SLIP TO THE BOTTLERS AND ONLY THEN THEY WILL BE PERMITTED TO LIFT THE CO UNTRY LIQUOR FROM THE BOTTLING PLANT. THE ASSESSEE DEPOSITED THE AMOUNT FOR LIFTING BOTTL ES OF COUNTRY LIQUOR FROM THE AUTHORIZED BOTTLER M/S.ASANSOL BOTTLING AND PACKING PVT.LTD. ASANSOL BY DEPOSITING CASH IN THE STATE BANK OF INDIA ASANSOL IN THE ACC OUNT OF ASANSOL BOTTLING AND PACKING CO.PVT. LTD. THE AO WAS OF THE VIEW THAT AS REQUIRE D BY THE PROVISION OF SECTION 40A(3) OF THE ACT ANY PAYMENT OVER AND ABOVE A SUM OF RS. 20 000/- HAS TO BE MADE ONLY BY WAY OF ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DRAFT. ANY PAYMENTS MADE IN VIOLATION OF THE AFORESAID PROVISION AND WHICH ARE CLAIMED AS EXPENSES DEDUCTIBLE WHILE COMPUTING INCOME FROM BUSINESS ARE LIABLE TO BE DIS ALLOWED AS EXPENSES WHILE COMPUTING INCOME FROM BUSINESS OF AN ASSESSEE. TH E PURCHASE PRICE OF COUNTRY LIQUOR WAS CLAIMED AS AN EXPENSE BY THE ASSESSEE IN ARRIVI NG ITS INCOME FROM BUSINESS. THE AO WAS OF THE VIEW THAT THE EXPENDITURE CANNOT BE A LLOWED AS THERE WAS A VIOLATION OF THE PROVISIONS OF SEC.40A(3) OF THE ACT. THERE ARE EXCEPTIONS IN THE PROVISION OF SECTION 40A(3) OF THE ACT WHICH ARE LAID DOWN IN RU LE 6DD OF IT RULES 1962 (RULES). THE AO HELD THAT NONE OF THE EXCEPTIONS AS MENTIONE D IN RULE 6DD EXISTED IN THE CASE OF THE ASSESSEE WHICH WOULD JUSTIFY PAYMENT OF PURC HASE PRICE OF BOTTLERS OF LIQUOR IN CASH AND ACCORDINGLY THE AO DISALLOWED A SUM OF RS. 2 48 09 463/- WHICH WAS THE PAYMENTS MADE IN CASH IN VIOLATION OF THE PROVISION OF SECTION 40A(3) OF THE ACT. ON APPEAL BY THE ASSESSEE CIT(A) CONFIRMED THE ORDER O F THE AO. HENCE THIS APPEAL BY THE ASSESSEE BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING OF THIS APPEAL IT WAS BROUGHT TO OUR NOTICE BY THE LD. COUNSEL FOR THE ASSESSEE THAT AN IDENTICAL ISSUE WAS CONSID ERED AND DECIDED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2008-09 IN ITA NO.1603/ KOL/2011 BY ITS ORDER DATED 01.06.2016. IN THE AFORESAID ORDER THIS TRIBUNAL ON IDENTICAL FACTS HELD THAT THE 3 ITA NOS.462&463/KOL/2016 M/S. BOLKUNDA PACHWAI & (S) CS SHOP A.Y.2011-12&2012-13 3 DISALLOWANCE U/S 40A(3) OF THE ACT CANNOT BE SUSTAI NED. THE LD. DR HOWEVER SUBMITTED THAT THE ITAT KOLKATA BENCH IN THE CASE OF MOHAN LA L CHOWDHURY IN ITA NO.1964/KOL/2009 ORDER DATED 30.04.2010 HAS TAKEN A VIEW THAT ONCE THE PROVISION OF SECTION 40A(3) OF THE ACT ARE ATTRACTED THE ASSESSE E CAN ESCAPE DISALLOWANCE ONLY IF HIS CASE FALLS WITHIN THE AMBIT OF RULE 6DD. IT WAS POI NTED OUT THAT IN THE DECISION RENDERED IN ASSESSEES OWN CASE NO SUCH APPLICABILITY OF EXC EPTIONS PRESCRIBED UNDER RULE 6DD HAS BEEN SPELT OUT. THE LD. DR ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS PANDURAN GA ENTERPRISES IN ITA NO .752 OF 2007 DATED 22.09.2014 WHEREIN THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF AN ARRACK CONTRACTOR WHO MADE PURCHASE FROM THE GOVT. OF KARNATAKA CAME TO THE CONCLUSION THAT IN THE CASE OF PURCHASE OF COUNTRY LIQUOR FROM THE STATE THERE WAS NO REQUIREMENT TO PAY ANY SUCH PURCHASE ONLY IN CASH A S PER KARNATAKA EXCISE LICENCES (GENERAL CONDITIONS) RULES 1967 AND THEREFORE THE T RIBUNAL WAS IN ERROR IN DELETING THE ADDITION MADE U/S 40A(3) OF THE ACT. THE LD. DR ALS O SUBMITTED THAT THE EXCEPTIONS SPECIFIED UNDER RULE 6DD(B) OF THE RULES ALSO DID N OT APPLY BECAUSE THE BOTTLER DOES OR DID NOT INSIST ON PAYMENT IN CASH ALONE. HE ALSO SU BMITTED THAT RULE 6DD (K) IS ALSO NOT APPLICABLE BECAUSE THE BOTTLER OF THE GOVERNMENT CA NNOT BE CONSIDERED AS PRINCIPAL OF THE STATE. 5. THE LD . COUNSEL FOR THE ASSESSEE ON THE OTHE R HAND HOWEVER PLACED RELIANCE ON THE DECISION OF ITAT KOLKATA IN THE CASE OF RAMNAGAR PACHWAI & C.S.(S)SHOP VS ITO IN ITA NO.148/KOL/2015 ORDER DATED 05.08.2016 WHEREIN THE ENTIRE ISSUE WITH REGARD TO THE APPLICABILITY TO RULE 6DD(B) AND RULE 6DD(K) IN THE CASE OF PURCHASE OF COUNTRY LIQUOR FROM THE STATE WAS DISCUSSED AND THIS TRIBU NAL ULTIMATELY CAME TO THE CONCLUSION THAT EXCEPTIONS SPECIFIED IN RULE 6DD(V) AND RULE 6 DD(K) WERE APPLICABLE IN THE CASE OF PURCHASE OF COUNTRY LIQUOR AND NO DISALLOWANCE C AN BE MADE U/S 40A(3) OF THE ACT. 4 ITA NOS.462&463/KOL/2016 M/S. BOLKUNDA PACHWAI & (S) CS SHOP A.Y.2011-12&2012-13 4 6. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. IN THE CASE OF THIS TRIBUNAL RAMNAGAR PACHWAI & C.S.(S)SHOP VS ITO (SUPRA) AFTER ANALYSING THE VARIOUS NOTIFICATIONS ISSUED BY THE EXCISE DEPARTME NT GOVERNMENT OF WEST BENGAL IN CONNECTION WITH THE COUNTRY LIQUOR CAME TO THE FOLL OWING CONCLUSION : 15. WE FIND THAT THE FOLLOWING FACTS ARE UNDISPU TED AND INDISPUTABLE:- (A) THE TRANSACTIONS MADE BY THE ASSESSEE IS GENUIN E. (B) THE IDENTITY OF THE RECEIVER (WHOLESALE LICENSE E) IS ESTABLISHED BEYOND DOUBT. ( C) THE PAYMENT IS MADE IN THE BANK ACCOUNT OF THE SELLER (WHOLESALE LICENSEE). WE HOLD THAT SINCE THE GENUINITY OF THE PAYMENTS MA DE TO THE M/S ASANSOL BOTTLING & PACKAGING CO. PVT. LTD (WHOLESALE LICENSEE) IS N OT DOUBTED BY THE REVENUE THE PROVISIONS OF SECTION 40A(3) COULD NOT BE MADE APP LICABLE TO THE FACTS OF THE INSTANT CASE. IT IS OBSERVED THAT THE ASSESSEE HAD TAKEN ENOUGH PRECAUTIONS FROM ITS SIDE TO ENSURE THAT THE PAYEE ALSO DONT ESCAPE FRO M THE AMBIT OF TAXATION ON THESE RECEIPTS BY DIRECTLY DEPOSITING THE CASH IN THE BAN K ACCOUNT OF THE PAYEE. MOREOVER THE REGULATIONS OF THE WEST BENGAL GOVERN MENT PURSUANT TO NOTIFICATION FROM ITS EXCISE DEPARTMENT DATED 29.8.2005 ALSO MAN DATES THE PAYMENT TO BE MADE BY WAY OF DIRECT DEPOSIT INTO THE BANK ACCOUNT OF T HE WHOLESALE LICENSEE. THIS FACT IS ALSO NOT DISPUTED BY THE REVENUE. 16. IT WILL BE PERTINENT TO GO INTO THE INTENTION BEHIND INTRODUCTION OF PROVISIONS OF SECTION 40A(3) OF THE ACT AT THIS JUN CTURE. WE FIND THAT THE SAID PROVISION WAS INSERTED BY FINANCE ACT 1968 WITH THE OBJECT OF CURBING EXPENDITURE IN CASH AND TO COUNTER TAX EVASION. THE CBDT CIRCU LAR NO. 6P DATED 6.7.1968 REITERATES THIS VIEW THAT THIS PROVISION IS DESIGN ED TO COUNTER EVASION OF A TAX THROUGH CLAIMS FOR EXPENDITURE SHOWN TO HAVE BEEN I NCURRED IN CASH WITH A VIEW TO FRUSTRATING PROPER INVESTIGATION BY THE DEPARTMENT AS TO THE IDENTITY OF THE PAYEE AND REASONABLENESS OF THE PAYMENT. ............. 20. WE ALSO FIND THAT THE IMPUGNED ISSUE IS ALSO COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF A SHOK MONDAL VS ITO IN ITA NO. 873/KOL/2012 FOR ASST YEAR 2009-10 DATED 6.2.20 14 WHEREIN IT WAS HELD THAT :- 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT TH E OUTSET A PERUSAL OF THE DECISION IN THE CASE OF SMT.PUSHPALATA MONDAL SHOWS THAT THE TRIBUNAL HAD DECIDED THE CASE BY FOLLOWING THE DECISION OF HON'BLE KERALA HI GH COURT IN THE CASE OF K.ABDU & CO. REFERRED TO SUPRA WHEREIN THE ISSUE WAS IN RELATION TO RULE 6DD(A) OF IT RULES. THE ISSUE 5 ITA NOS.462&463/KOL/2016 M/S. BOLKUNDA PACHWAI & (S) CS SHOP A.Y.2011-12&2012-13 5 IN THE ASESSEC'S CASE IS IN RESPECT OF THE PAYMENTS MADE UNDER THE RULES FRAMED BY THE GOVERNMENT AND SUCH PAYMENT WAS REQUIRED TO BE MADE IN LEGAL TENDER. A PERUSAL OF THE GOVERNMENT NOTIFICATION ISSUED BY THE GOVT. OF WEST BENGAL CLEARLY SHOWS THAT THE DEALERS ARE AGENTS OF THE GOVERNMENT AND THE PAYMEN TS MADE ARE TO THE GOVERNMENT. IT ALSO MAKES IT CATEGORICALLY REQUIRED THAT THE PAYME NT IS TO BE MADE BEFORE LIFTING OF THE COUNTRY SPIRIT. CONSEQUENTLY WE ARE OF THE VIEW THA T THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL I N THE CASE OF M/S.AMRAI PACHWAI & C.S.SHOP REFERRED TO SUPRA WHEREIN IT HAS BEEN HELD AS FOLLOWS :- '6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT TH E OUTSET A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE AO HAS RECO GNIZED THE ASSESSEE'S BUSINESS IN TRADING OF COUNTRY SPIRIT AND COUNTRY L IQUOR. COPY OF FORM OF LICENCE ISSUED BY DURGAPUR MUNICIPAL CORPORATION AND COPY O F FORM III ISSUED BY DEPARTMENT OF EXCISE GOVT. OF W.B. WERE ALSO FOUND AT PAGES 177 AND 179 OF THE ASSESSEE'S PAPER BOOK. IN ANY CASE THE VALIDITY OF LICENCE OF THE ASSESSEE TO TRADE IN COUNTRY SPIRIT AND COUNTRY LIQUOR IS NOT THE ISS UE BEFORE US. THE ISSUE IS WHETHER THE PAYMENTS MADE BY THE ASSESSEE FOR THE PURCHASE OF COUNTRY SPIRIT FROM THE TERRITORIAL LICENSEE BOTTLING PLANT IFB AGRO INDUS TRIES LTD. CITY CENTRE DURGAPUR FALLS WITHIN THE EXEMPTION PROVIDED UNDER RULE 6DD(B) OF THE I.T.RULES 1962. ADMITTEDLY THE AO HAS RECOGNIZED THAT THE PR OVISION OF RULE 6DD(B) OF THE I.T RULES 1962 IS APPLICABLE IN CASE OF PAYMENTS M ADE TO GOVERNMENT DIRECTLY. THIS IS FOUND IN PAGE 2 OF THE ASSESSMENT ORDER. A PERUSAL OF THE KOLKATA GAZETTE TUESDAY 20 TH SEPT 2005 SHOWS THAT THE GOVERNMENT OF WEST BENGA L DEPARTMENT OF EXCISE HAS ISSUED A NOTIFICATION WHEREIN THE WA REHOUSE HAS BEEN IDENTIFIED TO MEAN THE WAREHOUSE FOR SUPPLY OF COUNTRY SPIRIT TO THE RETAIL VENDORS ESTABLISHED AT CONVENIENT PLACES BY THE COMMISSIONER AT THE EXP ENSE OF THE STATE GOVERNMENT OR AT THE EXPENSE OF A PERSON TO WHOM THE EXCLUSIVE PRIVILEGE OF SUPPLYING OR SELLING COUNTRY SPIRIT BY WHOLESALE HAS BEEN GRANTE D U/S 22 OF THE ACT OF A LICENSED WHOLESALE VENDOR OF COUNTRY SPIRIT. FURTHER IT HAS BEEN SPECIFICALLY IDENTIFIED THAT THE AUTHORISED REPRESENTATIVE OF THE WHOLESALE LICE NSEE SHALL REALIZE THE NECESSARY AMOUNT OF DUTY COST PRICE AND BOTTLING CHARGE IF THERE BE ANY AT THE PRESCRIBED RATE AND SUCH OTHER IMPOSITION AS MAY BE PRESCRIBE D BY LAW FROM THE RETAIL VENDOR TO WHOM THE COUNTRY SPIRIT IS TO BE ISSUED F ROM THE CONCERNED WAREHOUSE. IT IS ALSO SPECIFICALLY MENTIONED IN SECTION (2) OF THE SAID NOTIFICATION THAT NO RETAIL VENDOR OF COUNTRY SPIRIT SHALL DEPOSIT DUTY DIRECT INTO THE LOCAL TREASURY FOR ISSUE OF COUNTRY SPIRIT TO BE TAKEN BY HIM FROM THE WAREH OUSE CONCERNED WHICH CLEARLY SHOWS THAT THE WAREHOUSE IS FOR THE SUPPLY OF THE C OUNTRY LIQUOR SPECIFICALLY THE WAREHOUSE IS UNDER THE DIRECT CONTROL AND CUSTODY O F THE STATE GOVT. THE STATE GOVERNMENT HAS CLOSED ITS DOORS IN SO FAR AS THE LO CAL TREASURY IS CONCERNED AND THE PAYMENT FOR THE PURCHASE OF COUNTRY SPIRIT OR C OUNTRY LIQUOR HAS TO BE MADE TO THE WAREHOUSE RUN BY THE GOVERNMENT. THIS SHOWS TH AT ANY PAYMENT MADE TO THE WAREHOUSE WHICH IS UNDER THE DIRECT CONTROL OF THE STATE GOVERNMENT IS A PAYMENT MADE DIRECTLY TO THE GOVERNMENT. ONCE THIS IS ACCEPTED THEN THE PROVISIONS OF RULE 6DD(B) OF THE I.T RULES 1962 WH ICH CLEARLY SPELLS OUT THAT THE PAYMENT MADE TO THE GOVERNMENT IN LEGAL TENDER UNDE R THE RULES FRAMED BY THE GOVERNMENT IS EXEMPTED FROM THE RIGOURS OF SECTION 40A(3) OF THE ACT. HERE IT IS 6 ITA NOS.462&463/KOL/2016 M/S. BOLKUNDA PACHWAI & (S) CS SHOP A.Y.2011-12&2012-13 6 NOTICED THAT THE PAYMENTS MADE BY THE ASSESSEE FOR PURCHASE OF COUNTRY SPIRIT AND COUNTRY LIQUOR IS TO THE GOVERNMENT AS PER THE NOTI FICATION ISSUED BY THE GOVERNMENT AND IS IN LEGAL TENDER SPECIFIED BY THE NOTIFICATION. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE PAYMENT MADE BY THE ASSESSEE FOR THE PURCHASE OF COUNTRY LIQUOR AND COUNTRY SPIRIT FROM THE TERRITORIAL LICENSEE BOTTLING PLANT IFB AGRO INDUSTRIES LTD. CITY CENTRE DURGA PUR IS PROTECTED BY THE EXEMPTION IN TERMS OF RULE 6DD(B) OF THE 1.T.RULES 1962. IN THE CIRCUMSTANCES THE ADDITION AS MADE BY THE AO AND AS CONFIRMED BY THE ID. CIT(A) BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE I. T.ACT 19 61 STANDS DELETED. 8. IN THE RESULT THE ADDITION AS CONFIRMED BY THE I D. CIT(A) STANDS DELETED. WE FIND THAT THIS DECISION WAS RENDERED BY PLACING RELIANCE ON ITS EARLIER DECISION IN THE CASE OF M/S AMRAI PACHWAI & C.S.SHOP IN ITA NO. 1251/KOL/2011 DATED 15.1.2014 AND AFTER CONSIDERING THE CONTRARY DECISI ONS RENDERED IN THE CASE OF PUSHPALATA MONDAL IN ITA NO. 965/KOL/2010 DATED 28. 7.2011 AND HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS K ABDU & CO (170 T AXMAN 297). WE FIND THAT THE CO-ORDINATE BENCH DECISION IN THE CASE OF M/S A MRAI PACHWAI & C.S.SHOP IN ITA NO. 1251/KOL/2011 DATED 15.1.2014 AND THE HELD PORTION IS REPRODUCED HEREINABOVE. 21. WE FIND THAT M/S ASANSOL BOTTLING & PACKAGING CO. PVT LTD IS A BOTTLING PLANT CUM WAREHOUSE UNDER RULE 2(VII) OF THE WEST B ENGAL EXCISE RULES 2005 WITH PRIVILEGE GRANTED U/S 22 OF THE BENGAL EXCISE ACT 1909. AT THIS JUNCTURE IT WOULD BE RELEVANT TO GO INTO THE DEFINITION OF WAREHOUSE AS PROVIDED UNDER THE STATE EXCISE RULES 2005 AS BELOW:- WAREHOUSE UNDER RULE 2(VII) OF THE W.B.EXCISE R ULES 2005 MEANS THE WAREHOUSE FOR SUPPLY OF COUNTRY SPIRIT TO RETAIL VE NDORS ESTABLISHED AT CONVENIENT PLACES BY THE COMMISSIONER AT THE EXPENS E OF THE STATE GOVERNMENT OR AT THE EXPENSE OF A PERSON TO WHOM THE EXCLUSIVE PRIVILEGE OF SUPPLYING OR SELLING COUNTRY SPIRIT BY WHOLESALE HAS BEEN GRANTE D UNDER SECTION 22 OF THE ACT OR OF A LICENSED WHOLESALE VENDOR OF COUNTRY SPIRIT . THE ABOVE DEFINITION MAKES IT CLEAR THAT THE WAREH OUSE REFERRED TO UNDER THE STATE EXCISE RULES IS UNDER THE DIRECT CONTROL AND AUTHOR ITY OF THE COMMISSIONER OF STATE EXCISE BECAUSE IT IS ESTABLISHED BY THE COMMISSIONE R OF STATE EXCISE AND AS SUCH IS A STATE GOVERNMENT ESTABLISHMENT. IT IS ALSO PERTI NENT TO NOTE THAT THE EXPENDITURE IN RELATION TO SUCH WAREHOUSE IS BORNE BY THE STATE GOVERNMENT OR BY THE LICENSEE TO WHOM THE EXCLUSIVE PRIVILEGE IS GRANTED U/S 22 O F THE BENGAL EXCISE ACT 1909. HENCE THERE COULD BE NO DOUBT THAT THE WAREHOUSE IS ESTABLISHED BY THE STATE EXCISE COMMISSIONER. HENCE IT COULD BE SAFELY CONC LUDED THAT THE WAREHOUSE SO ESTABLISHED BY THE STATE EXCISE COMMISSIONER IS A STATE GOVERNMENT ESTABLISHMENT. IT WOULD ALSO BE PERTINENT TO NOTE THAT THE SAID WAREHOUSE HAS BEEN SPECIFICALLY ESTABLISHED FOR SUPPLY OF COUNTRY SPIR IT TO RETAIL VENDORS (ASSESSEE HEREIN) ONLY AND NOT TO ANYBODY ELSE. 7 ITA NOS.462&463/KOL/2016 M/S. BOLKUNDA PACHWAI & (S) CS SHOP A.Y.2011-12&2012-13 7 IT WOULD BE PERTINENT TO LOOK INTO THE DEFINITION O F WHOLESALE LICENSEE AS PER RULE 2(VIII) OF THE EXCISE RULES 2005 AS BELOW:- RULE 2(VIII) WHOLESALE LICENSEE MEANS THE WHOL ESALE VENDOR OF COUNTRY SPIRIT TO WHOM LICENCE HAS BEEN GRANTED IN WEST BENGAL EXC ISE FORM NO. 26. IT WOULD BE PERTINENT TO LOOK INTO SECTION 22 OF TH E BENGAL EXCISE ACT 1909 AT THIS JUNCTURE AS BELOW:- SECTION 22 GRANT OF EXCLUSIVE PRIVILEGE OF MANUFA CTURE AND SALE OF COUNTRY LIQUOR OR INTOXICATING DRUGS (1) THE STATE GOVERNMENT MAY GRANT TO ANY PERSON ON SU CH CONDITIONS AND FOR SUCH PERIOD AS IT MAY THINK FIT THE EXCLUSIVE PRIV ILEGE (A) OF MANUFACTURING OR SUPPLYING BY WHOLESALE OR (B) OF MANUFACTURING AND SUPPLYING BY WHOLESALE OR (C) OF SELLING BY WHOLESALE OR RETAIL OR (D) OF MANUFACTURING OR SUPPLYING BY WHOLESALE AND SELL ING RETAIL OR (E) OF MANUFACTURING AND SUPPLYING BY WHOLESALE AND SEL LING RETAIL ANY COUNTRY LIQUOR OR INTOXICATING DRUG WITHIN ANY SPECIFIED LOCAL AREA: PROVIDED THAT PUBLIC NOTICE SHALL BE GIVEN TO THE I NTENTION TO GRANT ANY SUCH EXCLUSIVE PRIVILEGE AND THAT ANY OBJECTIONS MADE B Y ANY PERSON RESIDING WITHIN THE AREA AFFECTED SHALL BE CONSIDERED BEFORE AN EXCLUSI VE PRIVILEGE IS GRANTED. (2) NO GRANTEE OF ANY PRIVILEGE UNDER SUB-SECTION ( 1) SHALL EXERCISE THE SAME UNLESS OR UNTIL HE HAS RECEIVED A LICENSE IN THAT BEHALF F ROM THE COLLECTOR OR THE EXCISE COMMISSIONER. HENCE IT COULD BE SAFELY CONCLUDED THAT M/S ASANSOL BOTTLING & PACKAGING CO. PVT LTD (BOTTLING PLANT) IS A WAREHOUSE WITHIN THE MEAN ING OF RULE 2(VII) OF THE EXCISE RULES 2005 AND SAID WAREHOUSE IS A STATE GOVERNMENT ESTABLISHMENT ESTABLISHED AND CONTROLLED BY THE EXCISE COMMISSIONER . IT WOUL D BE RELEVANT TO REPRODUCE RULE 6DD(B) OF THE IT RULES AT THIS JUNCTURE :- (B) WHERE THE PAYMENT IS MADE TO THE GOVERNMENT AND UNDER THE RULES FRAMED BY IT SUCH PAYMENT IS REQUIRED TO BE MADE IN LEGAL TE NDER. IN THE INSTANT CASE THE ASSESSEE (RETAIL VENDOR) HAD MADE CASH PAYMENTS FOR PURCHASE OF COUNTRY SPIRIT BY DEPOSITING CASH DIREC TLY INTO THE BANK ACCOUNT OF M/S 8 ITA NOS.462&463/KOL/2016 M/S. BOLKUNDA PACHWAI & (S) CS SHOP A.Y.2011-12&2012-13 8 ABPL AS PER RULE 6(2) OF THE EXCISE RULES 2005 IT HAS TO BE CONSTRUED AS PAYMENT MADE TO THE STATE GOVERNMENT AUTHORITY AND ACCORDIN GLY FALLS UNDER THE EXCEPTION PROVIDED IN RULE 6DD(B) OF THE IT RULES. 22. IT IS NOT IN DISPUTE THAT M/S ASANSOL BOTTLIN G & PACKAGING CO. PVT LTD HAVE BEEN GRANTED LICENCE TO ACT AS A WHOLESALER FOR SUP PLY OF COUNTRY LIQUOR TO THE RETAIL VENDOR AS PER THE REGULATIONS OF THE EXCISE DEPARTMENT GOVERNMENT OF WEST BENGAL. AT THE COST OF REPETITION WE WOULD L IKE TO STATE THAT THE SAID REGULATION MANDATED THE PAYMENTS TO BE MADE DIRECTL Y INTO THE BANK ACCOUNT OF THE SAID WHOLESALE LICENSEE BY THE RETAIL VENDOR (I.E A SSESSEE HEREIN) FOR STRICT AND EFFECTIVE REGULATION OF THE COUNTRY LIQUOR AND FOR PREVENTION OF SPURIOUS STOCKS AND BLACK MARKETING TRANSACTIONS FROM THE SAME. HENCE IT COULD BE SAFELY CONCLUDED THAT THE SAID WHOLESALE LICENSEE HAD ACTED AT THE I NSTANCE OF THE STATE GOVERNMENT. ONCE THIS IS SO THEN THE SAID WHOLESALE LICENSEE COULD BE CONSTRUED AS AN AGENT OF THE STATE GOVERNMENT. FOR THE SAKE OF CONVENIENCE THE RELEVANT RULE IS REPRODUCED HEREUNDER:- RULE 6DD(K) WHERE THE PAYMENT IS MADE BY ANY PERS ON TO HIS AGENT WHO IS REQUIRED TO MAKE PAYMENT IN CASH FOR GOODS OR SE RVICES ON BEHALF OF SUCH PERSON. THE PAYMENT MADE BY THE ASSESSEE RETAIL VENDOR TO T HE PRINCIPAL GOVERNMENT OF WEST BENGAL THROUGH ITS WHOLESALE AGENT. THE RELAT IONSHIP BETWEEN THE ASSESSEE (AUTHORIZED RETAILER) AND GOVERNMENT OF WEST BENGAL (THE SUPPLIER) ACTING UNDER WEST BENGAL EXCISE RULES THROUGH ITS AUTHORISED WHO LESALER LICENSEE (AGENT) BOTH DE FACTO AND DEJURE IS ONE OF PRINCIPAL AN D AGENT. WE HOLD THAT THE ASSESSEE RETAIL VENDOR HAD MADE PAYMENT TO THE SAID AGENT (WHOLESALE LICENSEE) WOULD FALL UNDER THE EXCEPTION PROVIDED IN RULE 6DD (K) OF THE RULES. ............ 24. WE HOLD FROM THE AFORESAID FINDINGS THAT THE ASSESSEES CASE FALLS UNDER THE EXCEPTIONS PROVIDED IN RULE 6DD(B) AND RULE 6DD (K) OF THE RULES. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES AND RESPECTFU LLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE WE HAVE NO HESI TATION IN DELETING THE DISALLOWANCE MADE U/S 40A(3) OF THE ACT IN ALL THE YEARS UNDER APPEAL. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE FOR ALL THE YEARS UNDER APPEAL ARE ALLOWED. 7. IT IS NO DOUBT TRUE THAT TO AVOID DISALLOWAN CE U/S 40A(3) OF THE ACT THE ASSESSEE HAS TO MAKE OUT A CASE OF EXCEPTION WITHIN THE PARAMETE RS OF RULE 6DD. IT IS CLEAR FROM THE 9 ITA NOS.462&463/KOL/2016 M/S. BOLKUNDA PACHWAI & (S) CS SHOP A.Y.2011-12&2012-13 9 DECISION OF THE TRIBUNAL RENDERED IN THE CASE OF R AMNAGAR PACHWAI & C.S.(S)SHOP VS ITO (SUPRA) THAT IN THE BUSINESS OF COUNTRY LIQUOR EVEN WHEN PURCHASES ARE MADE FROM THE STATE PAYMENT IN CASH FOR SUCH PURCHASES WOULD BE COVERED WITHIN THE EXCEPTIONS UNDER RULE 6DD(B) AND RULE 6DD(K). AS FAR AS THE D ECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF PANDURANGA ENTERPRISES ( SUPRA) RELIED UPON BY THE LD. DR IS CONCERNED THAT WAS A CASE WHICH DEALT WITH THE PRO VISION OF RULE 14 OF KARNATAKA EXCISE LICENCE RULES. THE DECISION RENDERED BY THE TRIBUNAL IN THE CASE OF RAMNAGAR PACHWAI & C.S.(S)SHOP VS ITO (SUPRA) DEALT WITH SPE CIFIC EXCISE RULES APPLICABLE TO THE STATE OF WEST BENGAL. WE ARE THEREFORE OF THE VIEW THAT THE DISALLOWANCE U/S 40A(3) OF THE ACT HAS TO BE DELETED AS THE FACTS OF THE ASSES SEES CASE ARE IDENTICAL TO THE FACTS OF THE CASE DECIDED BY THE TRIBUNAL IN THE CASE OF RAM NAGAR PACHWAI & C.S.(S)SHOP VS ITO (SUPRA). WE ACCORDINGLY DIRECT THAT THE ADDITIO N MADE U/S 40A(3) OF THE ACT BE DELETED. THE APPEAL OF THE ASSESSEE IS ACCORDINGLY ALLOWED. 8. IN THE RESULT THE APPEALS BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 29.11.2017. SD/- SD/- [DR.A.L.SAINI] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29.11.2017. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. BOLKUNDA PACHWAI & (S) CS SHOP P.O.SAMADI BURDWAN-713359. 2. I.T.O. WARD-1(1) ASANSOL. 3. C.I.T. (A)- ASANSOL. 4. C.I.T- ASANSOL. 5. CIT(DR) KOLKATA BENCHES KOLKATA. TRUE COPY BY ORDER SR. PRIVA TE SECRETARY HEAD OF OFFICE/DDO ITAT KOLKATA BENCHES 10 ITA NOS.462&463/KOL/2016 M/S. BOLKUNDA PACHWAI & (S) CS SHOP A.Y.2011-12&2012-13 10