Debangsu Basak, J. - (1.) Eight writ petitions have been taken up for final hearing analogously as they involve the same issues. The petitioners in W.P. No. 1806 of 2005 are aggrieved by notices issued under Section 206C of the Income Tax Act, 1961. The other writ petitioners have challenged the constitutional validity of the amendment brought about by Section 81 of the Finance Act, 2012 with effect from July 1, 2012 with regard to the definition of the term "buyer" as appearing in clause (aa) of the explanation to subsection (11) of Section 206C of the Act, of 1961.
(2.) Learned advocate appearing for the petitioners has submitted that, the petitioners purchase processed/sawn timber from the domestic and international markets. The petitioners are not forest contractor licensed/authorised by the operation of law to enter into forest and fell down trees. The vendors from whom the petitioners purchased the timber are also not forest contractors who are licensed/authorised to enter into the forest and fell down trees. According to him, the definition of "buyer" as obtaining in Section 206C of the Act, of 1961 is onerous for the petitioners. Section 206C was introduced to the Act, of 1961 with effect from June 1, 1988. It required every seller of timber obtained under a forest lease or by any other mode, to collect tax at source at the percentage specified in the table under sub-section (1) of Section 206C of the Act, of 1961 from the consideration received or receivable from the buyer of such timber. According to him, timber referred to in Section 206C of the Act, of 1961 should be confined to timber obtained in the Indian forest within the territorial jurisdiction of the country to which the Act, of 1961 applies. Thus tax collection at source will not apply to timber imported by the petitioner from outside India and sold thereafter as a seller of the same within the country. In support of such contentions, learned advocate appearing for the petitioners has referred to the budget speech of the Hon'ble Finance Minister of the Central Government made while presenting the union budget for the relevant year. He has referred to various passages of such budget speech. He has referred to the insertions made in Section 206C of the Act, of 1961 by Section 79 of the Finance Act, 1992. He has also referred to the amendments made to Section 206C of the Act of 1961 subsequent thereto. In particular, he has referred to amendments brought about in Section 206C of the Act of 1961 by Section 87 of the Finance Act, 2003 with effect from June 1, 2003 and by Section 81 of the Finance Act, 2012 with effect from July 1, 2012. According to the learned Advocate appearing for the petitioners, the legislative intent of the various provisions of section 260C of the Act of 1961 is to bring the forest contractors within the tax net. A buyer and seller of timber from the forest contractor are liable to pay tax. All other transactions are exempt from taxation. The petitioners are outside the purview of section 206C of the Act of 1961. Any other interpretation would mean that, the word "timber" appearing in the table appended to sub-section (1) of section 206C of the Act of 1961 has to be read down. In support of the contention that, budget speech of the Finance Minister can be read to gather the legislative intent of a particular statute, learned Advocate appearing for the petitioner has relied upon (K.P. Varghese v. Income Tax Officer, Ernakulam and Ors., 1981 AIR(SC) 1922).
(3.) Learned advocate appearing for the petitioner has referred to the Central Board of Direct Taxes circular number 525 dated November 28, 1988 and submitted that, the legislative intent was to bring the Forest contractors as sellers and buyers of forest produce within the tax net and not retail purchase and sale of processed/sawn timber in the open market. According to him, the petitioners are resellers of the goods. Resellers of timber have been kept outside the scope and ambit of tax collection at source between the period 1992 till 2012. He has traced the history of Section 206C of the Act of 1961 since it came into operation on June 1, 1988 till the last amendment thereof. According to him, the amendments brought about by section 81 of the Finance Act, 2012 are not backed by any authority. Such amendments are contrary to the legislative intent as originally propounded in 1988. It runs contrary to well founded and time-tested exemptions granted to resellers of timber. It creates unlawful and hostile discrimination. It leads to intra class discrimination without any intelligible differentia thereby violating Article 14 of the Constitution of India.;