G.C.Bharuka, J. - (1.) IN the present writ petitions one of the prayers is for quashing a part of the clarification given by the first respondent-Deputy Commissioner of INcome-tax, in his letter dated October 5, 1995, addressed to the President, Confederation of INdian INdustry, Southern Region, Bangalore (annexure "B"), where in paragraph 3(a) it has been opined that the payment to hotels towards banquet charges, which include catering for a certain number of people at a fixed rate per person exceeding the limit will attract the provisions of section 194C of the INcome-tax Act, 1961 (in short "the Act").
(2.) THE first petitioner is a public limited company owning and operating a chain of five star hotels. One of its hotels is situated at Bangalore. THE second petitioner is one of its shareholders. According to the petitioners in their hotels they offer a number of facilities and amenities to patrons such as a select restaurant, a restaurant with facility of orchestra and a banquet hall for special private gatherings and entertainments and other similar facilities. According to the petitioners, the petitioner company provides banquet facilities within its hotel premises to the patrons. At these banquets apart from serving food and beverages as per the requirements of its customers, various other facilities like those of providing furniture, air-conditioning, trained staff, communication are also provided, subject to payment of consolidated charges. According to the petitioners, the said services are provided in the normal course of their hotel business as required by the Department of Tourism under the guidelines (annexure "C") issued by them.
(3.) THE controversy raised herein has arisen because of certain answers given by the first respondent-Deputy Commissioner of Income-tax, in an interface held by corporate persons with the officers of the Income-tax Department on the provisions pertaining to deduction of tax at source which was held at Hotel Ashoka, Bangalore, on August 31, 1995. THEse answers were communicated to the people of industry as noticed above through a communication dated October 5, 1995 (annexure "B"), giving an impression that the interpretation so given of the statutory provisions contained under the Act, statutorily binds the persons who are to abide by those provisions. As a matter of fact, as averred in the writ petition pursuant to the said clarification at annexure "B", Tata Information Systems Limited being one of the companies which had availed of the banquet facilities provided by the first petitioner, has deducted tax at source under section 194C on the payments made by it. According to the first petitioner when objections were taken to such deduction at source, the same was refused to be acceded to by the customer, Tata Informations Systems Limited, resting its stand on the clarifications given by the first respondent - Deputy Commissioner of Income-tax, in its communication at annexure "B". Their reply dated February 29, 1996, has been placed at annexure "D".;