THEE COMMISSIONER OF INCOME TAX [TDS] vs. THE AP BEVERAGES CORPORATION LIMITED

Since the issue involved in the instant batch ofzppeals is one and the same and the parlies also being the same, they ate I eard together and are decided by this Common Judgment

The instant appeals under Section 260,4. of the lncome Tax Act, 1961 (for short 'the Act of l96l') have been preferretl by the appellant challenging the common order passed by the lnconre Tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad (for short the 'ITAT'), in ITA.Nos. 1024 to 1029lHyd/2005, decided on 15.09.20C6

For convenience. the facts in Income Tax Tribu ral Appeal No.69 of 2008 are discussed hereunder

The facts ol the case in brief are that the respo rdent No.l / A.P. Beverages Corporation Limited (for short the 'APBC'1.') u'hich is a State Govemment undertaking had the erclusive privilege of w'holesale trade and distribution of Indian made Foreign Liquor (for short 'IMFL') as well as 'Beer' in the State and also recommenced wholesale operations from 08.05.19 97. The Assessing OfTicer upon inspection found that the APBCL ought to have collected Tax Coltected at Sowce (for short 'TCS') only from around September, 2003 onwards and accordingly' the Assessing Officer treated APBCL as an assessee in default under Section 206C(6) of the Act of 1961 and charged interest under Section 206C(7) of the Act of 1961 fbr multiple assessment years (1999-2000 to 2004- 2005) raising substantial demands'

In an appeal betbre the Commissioner of Income Tax' (Appeals)- Il, Hyderabad, by a common order dated 31 08'2005' the Commissioner of lncome Tax (Appeals) upheld the Department's stand after accepting their detailed case that APBCL was liable to collect TCS under Section 206CoftheActofig6Ion.Beer'salesmadetoretaillicenseesduring the relevant assessment years' The Department's reasoning was that APBCL was a..seller,, within the meaning of the provision and that once it sold 'Beer', which according to the Department was alcoholic liquor for human consumption and not covered by the IMFL exclusion' the statutory obligation to collect TCS arose automaticall)' and ',f ithout an)' discretion. Moreover, the Department also pointed ort that APBCL had adminedly collected TCS onty from around September, 2003 onu'ards u,hich meant that for the earlier years, particularly 1')99-2000 to 2004- 05, it had failed to comply with the requirement de spite carrying out large volume and regular sales to retail licensees.

Therefore, the Department claimed that APBCI- had rightly been treated as an assessee in default under Section 206C ,rf the Act of l96l and was liable to pay tax. Moreover, the Commissioner of Income Tax (Appeals) held that "Beer" is an alcoholic liquor for human consumption other that IMFL and therefore covererl by the Table to Section 206C( l). l'he Commissioner of Income Tax (Appeals) further rejected APBCL's contention that sales of APBCL cou d not be treated as mere second or subsequent sales exempt from TCS because the first transaction between breweries and APBCL did not operate in the ordinary way fbr the purpose of the Section. Since APRCL being a public sector cornpany was excluded from the statLtory definition of "buyer" and on that basis the onward sale by APB('L to retail dealer becomes the first taxable po int in the chain attracting Section 206C of the Act of 1961 and conltrmed the demand'

Aggrieved by this order, the APBCL further flled an appeal before the ITAL The ITAT held that 'Beer' should be treated as IMFL and therefore it would lall outside Section 206C's earlier entry covering "alcoholic liquor for human consumption other than IMFL"' It also relied on the legislative intent and a press note to read the provision as mainly aimed at country liquoq so it concluded that tax at source was not payable on the-.'Beer's sales in question' Thus' aggrieved by this order the Deparlment has filed an appeal before this Court under Section 260,{ of the Act of 1961 g, The primary contention of N'Venkatraman' learned Assistant Solicitor General appearing for Mr' Raja Shekar Rao Salvaji' lear-ned Senior Standing Counsel for lncome Tax Depafiment' was that APBCL was a "seller" within the meaning of the Explanation to Section 206C of the Act of 196i. That once it is found that the commodity sold is "alcohotic liquor for human consumption (other than IMFL)"'' the obligation to collect tax at source is mandatory and automatic' He further

Secondly, the leamed Additional Solicitor Genelal contended that the ITAT erred in law and on facts in holding that SerJion 206C of the Act of 1961 did not apply to 'Beer' on the reasoning that 'Beer'should be treated as IMFL and therefore falls outside the explession "alcoholic liquor for human consumption (other than IMFL)" in rhe Table and the findings of the ITAf are contrary to the commercial understanding excise/statutory classifications and the material on record

He also submitted that 'Beer' has consistently been treated as a distinct category from IMFL in excise administration and trade practice and the ITAI overlooked / ignored such relevant indicators. It was therefore submitted that the ITAT's conclusion that 'Beer' is definitely IMFL is not a permissible inference from the record and amounts to a perverse finding and the that differences in alcoholic content' the ITAI's reasoning proceeds on assumptions rather than legally sustainable classifi cation criteria.

Lastly, the learned Assistant Solicitor General contended that the ITAI has adopted an impermissible interpretative route by relying heavily on alleged legislative intent gathered from executive material such as a Govemment press note and by reading Section 206C of the Act of 1961 as if it were wholly dependent on or confined by the earlier scheme under Section 44AC of the Act of 1961' It was submitted that when Section 206c of the Act of 1961 by its own language specifies the Page l1of34 nature of goods and mandates collection at sources, tht: ITAI ought not to have diluted or restricted its operation by importirg external aids, particularl)' when the provision is clear and unambiguor-rs. That executive press notes cannot override the enacted text nor can tley be treated as binding instruments for narrowing the charging the sccpe of the statute' The ITAT's approach in rewriting the provisions by e1'fectively carving out 'Beer' from the specified goods despite the Deparlment's case as accepted by the Commissioner of Income Tax (Appeals) that 'Beer' falls within "alcoholic liquor other than IMFL" for the relevant period. Therefore, the leamed Assistant Solicitor General prays that this Court to set aside the ITAI's order and allow the instant batch of appeals.

The learned Assistant Solicitor General in support of his contentions, relied upon the following decisions: a) Excellent Timber Imports & Exports (P.) Ltd. vs. Income Tax officerr b) Commissioner of Central Excise, Bolpur vs. Ilatan Melting & Wire Industries2. Itzolzl ee taxmann com 531 (Kerala) '(2008) 13 S,rpreme Court Cases 1 14. Mr. A.V. Krishna Koundinya, leamed Senior Counsel appearing for Mr. A.VA. Siva Kartikeya, learned counsel for APBCL opposing the appeals contended that no liabiliry to coliect TCS under Section 206C of the Act of 1961 arises on the sale of 'Beer', because 'Beer'falls within the description of IMFL. It is submitted that the expression "IMFL" is not defined in the Income-tax Act, and therefore it must be understood in the sense in which persons conversant with the trade understand it. In the context of the statutory scheme 'Beer' is manufactured in India adopting brewing methods and standards historically introduced from abroad and hence answer's the description of "IMFL". Consequently, during the relevant period, Section 206C of the Act of 1961 applied only to "alcoholic liquor for human consumption other than IMFL" and therefore 'Beer' stood excluded. Therefore, the ITAT was correct in holding that TCS provisions were not attracted to 'Beer''

Leamed Senior Counsel appearing for APBCL submitted that Section 44AC inserted by the Finance Act, 1988 w.e.f. 01'04'1989 was not a general charging provision but a limited presumptive computation rule operating only within the four comers of its express conditions He ul also submitted that section 44AC( I ) begins with a notr-obstante clause "Notwithstanding anything to the contrary contained in Sections 28 to 43C" but this overriding effect is only for the specific ;lass of "buyers" contemplated by the Section. The provisions applies onll'where a buyer other than a public sector company obtains goods "in any sale by way of auction, tender or any other mode" conducted hy a qualifying "seller" as dehned in the Explanation. He further ccntended that the Parliament itself restricted the deeming fiction where the deemed profit percentage does not extend to buyer in the future sale of goods obtained pursuant to a sale under section 44AC(l ) except in the limited situation involving a public sector company. On this reading, the Department's attempt to treat the presumptive percentage as automaticaliy applicable to every stage of the liquor supply chain was said to tre contrary to the statutory text the defined expressions "buyer", "seller". "purchase price" and the bu ilt-in exclusions.

It was also submitted by the learned Senior Counsel appearing for APBCL that Section 206C is, in substance, a cc llection-at-source machinerl' provision and cannot be elevated into a self-contained rule for Page 14 of34 either chargeability or computation of business income. He also pointed out that Section 206C(1) requires collection "at the time of debiting or at the time of receipt whichever is earlier", which shows that it is triggered by a transactional event and is designed to ensure advance recovery of tax on income "comprised therein". However, Section 206C(4) of the Act of 1961 expressly treats the amount collected as payment of tax on behalf of the buyer and mandates that credit shall be given in the regular assessment "for the assessment year for which such income is assessable", thereby preserving the primacy of the normal assessment process

Leamed Senior Counsel further submitted that the legislative intent of section 44AC itself supports a strict and contextual reading where the Direct Tax Laws (Amendment) Act, 1989, inserted a specific proviso (in clause (a) relating to alcoholic liquor) providing that the presumptive deeming rule would not apply where the liquor is not obtained by auction and where the sale price of such goods is fixed by or under a State Act. This amendment is a direct acknowledgement by Parliarnent that applying a flat presumptive percentage to all liquor

Lastly, the leamed Senior Counsel contended that Section 44AC was omitted by the Finance Act, 1992 w.e.f. 01.04.1993 and this omission was stated due to controversy in ir terpretation and administrative difficulties and once the special presumptive computation provision was deleted. the Revenue could not continue to import the deleted deeming concept into later years by relying on the continued presence of section 206C. That after omission of Sect on 44AC, profits and gains from trading 1n liquor or other spec ilied goods must necessarily be computed under the normal provisiorrs of the Act i.e.

Leamed Senior Counsel, in support of his contentions' relied upon the following decisions: (a) Union of India and another vs. A. Sanyasi Rao and Othersr (b)UCO Bank vs. Commissioner of Income Taxr (c) Commissioner of Income-Tax vs' Trans Asian Shipping Services (P.) Ltd.5

Respondent No.2 was impleaded only after bifurcation as a necessary party, since the assessment years involved (1999-2000 to '1rooo1 zto trR 330 (sc) ' (rggo) z3z trR 889 (sc) ' [2016] 385 trR 637 (sc)

Mr. A.Sudarshan Reddy, learned Advocate (iener-rl for the State of Telangana appearing lor Mr. A.K. Kanishka Anand, learned Standing Counsel for T.G.B.C.L. contended thal I'.G.B.C.t.. is reforc this Court primarily to assist in defending the correctness of the common order passed by the I'IAT in ITA.Nos.1024 to l029l!lyd/2005, decided on 15.09.2006, wherebl the ITAT held that'Beer'fell rvithin the class of IMFL for putposes of the un-amended entry in St'ction 206C and consequently that TCS was not attracted on 'Beer' prirr to 01.06.2003 The leamed Advocate General further contended the srrbmissions of the leamed Senior Counsel for respondent No. I in relation to the contemporaneous Press Notes and CBDT explanatorv circulars, the object and scope of Sections 44AC and 206C anrl the alternative submissions founded on the Explanation to Section 206C regarding the position of the assessee in the chain of sale

The leamed Advocate General further contended that the controversy is narrow and tums on the language of the statutory entry prior to 01.06.2003 which expressly covered "alcoholic liquor for human consumption (other than IMFL)", and on the fact that with effect from 01.06.2003 Parliament deleted the parenthetical exclusion. He further submitted that the appellant's case is legally incomplete because it reads only the genus ("alcoholic liquor for human consumption") and ignores the express statutory exclusion of IMFL. Therefore, the real inquiry is whether 'Beer' falls within the excluded class of IMFL in the context of Section 206C of the Act of 1961 as it then stood. The ITAI addressed precisely this question, applied the settled principle that undefined commercial expressions are to be understood in their trade and contextual sense and arrived at a reasoned conclusion on the materials before it. Thus, no substantial question of law arises under Section 2604 of the Act of 1961 and the appellant is impermissibly inviting this court to re-appreciate the same materials without showing perversity, misdirection in law or exclusion of relevant material'

Furthermore, the learned Advocate General contended that the ITAI was entitled to rely on contemporaneous legislative and executive materials (including the Press Note dated 23'06' 1988 and the CBDT

According to the leamed Advocate General 'Bet:r' was treated as IMFL for fiscal classification, demonstrating that Cour.s have not found it difficult to treat 'Beer' as Indian-made foreign [iquo:' notwithstanding lower alcohol percentage or distinct regulatory handling. The strongest point against the appellant's contentions is that the statutory amendment effective from 01.06.2003 deleting the IMFL exclusion where if 'Beer' were always outside IMFL, the amendment would be largely redundant

In support of his arguments, the learned Advocate General relied on the following decisions: a) Arlem Breweries Ltd. vs. Assistant Commissioner of Sales Tax' PanajiT 1i973) 88 trR 92 (sc) '1983 scc onLine Bom 466 c) Commissioner of Income-Tax' Bombay City-Il' Bombay vs. T' Manektal Mfg. Co. Ltd.e

For alt the aforesaid reasons, the learned Advocate General submitted that the ITAT's view is at least a possible and reasoned view and warrants no interference under Section 2604. ofthe {ct of 1961

Having heard the contentions put forth on either side and on perusal of records, the questions which arise for consideration are:- a) Whether on the facts and in the statutory settinl; prevailing prior to 01.06.2003, 'Beer' sold by the APBCL falls within the expression "alcoholic liquor for human consumption (other than IMFL)" in the Table to Section 206C( 1) so as to attract the obligation to collect tax at source? b) If the answer to question No.l is in the affirmative, whether the ITAT's order hotding that 'Beer' is "IMFL" suffels from perversitv or any error of law giving rise to a substantial question of law under Section 260,4. of the Act of I 96 1? u 1tosz1 3 Supreme Court Cases 472 " 119zB1 rr5 rrR zz5, c) Whether the Revenue can, in the guise of Section 206C, resurrect a presumptive i deeming approach associated with the erstwhile Section 44AC after its omission and thereby fasten default and interest for the relevant Years? 2S.Itwouldbetriteatthisjuncturetorefertothedefinitionsof "liquor", "foreign liquor", and "Indian Made Foreign Liquor" as defined in the Andhra Pradesh / [Telangana] Excise Act, 1968 (for short the 'Act of 1968').

Section 2(21) of the Act of 1968 which defines /iqzor 1S reproduced hereunder: " (2 1 ) " liEtor " inc l udes, - (a) Spirits of wine' denaturecl spirits, methylated spirits' recrified spirils, v'ine, beer, toddy and every liquid consisling o/ or containing alcohol and (b) Any olher intoxicaling subslonce t'hich the Governmenl may by notiJication' declare to be liqt'or for the purposes ol this Act:

Section 2(15) of the Act of 1968 which definespreign liquor is reproduced hereunder:

Section 2(18) of the Act of 1968 which defines Indian Made foreign liquor is reproduced hereunder: '1/18) Indian iv[ade Foreign Licluor" means liqtu'r produced' manufoclured or compounded in lndia a./ier lhe manner o-f Gin, brundy, whisl<y or rltm imported .from Jbreign c(Ltntriet and includes Wne. Beer Milk Punch und other liquors cottsisling of or containing any ,\uch spirils, bul does not include Forci17n Liquor"l"

It would also be relevant at this juncture to refer to a few judgments on the subject matter. In the case of Arlenrr Breweries Ltd' (supra) in paragraph No.27, it has been held as under:

The last queslion v,as *helher "Beer" could b: classifed as "lndianmatle .fitreign liquor" liable for sales tax under iten, 22 of the First Schetltle to the Acl. viz., "foreign liEtor and lndian-made lbreign liquor". Although the Sales Tax Act does not define lhe said tern, the Goo. Daman and Diu Excise Dult'Act of 196t v'hich vas also u Jiscul statute dettling n'ith same subiect, defined in section 2(kk) o:[ the .raid Act the said expression os meoning "bran$,. t,hislq, gin, rtrm, milk tr'vngh. v'ines or ' Beer ' manufactured in India and such other liquor as mat he dec'lared by the Government as lndian-made .lbreign liquor. Apurt Jrom the saitl delinition, "Beer" *hich was a drink of foreign origin, md also v'os a liquor though of loter alcohol percentage cottld be without any difJiculty cla.ssified as lndian-mode foreign liquor under itent .2 of the First Sched e to lhe sctid Act. "

In the case of Vegetable Products Ltd. (supra) it was held as under:

There is no doubt lhat the acceplance of one or the other interpretation sought to be placed on Section 271(1)(a)(i) by rhe parties would lead to some inconvenient result, but the duty oJ.the court is to read the section, understand its language and give elfect to the same lf the language is plain, the.fact that the consequence oJ giving effect to it may lead to some absurd result is not a .factor to be laken into occount in interpreting d provision. It is.for the Legislctlure to slep in and remove the (lbsurdity On lhe other hand, if nto reasonable constructions oJ a tcLxing provision are possible thot construction which favours the assessee musl be adopted' This is a well accepled rule of construction recognised by this Court in several of irs decisions. Hence all that we have to see is, what is the lrue efJbcr o/'the languoge emplol'ed in Section 271(1)(a)(t) If we 'find that language lo be ambiguous or capable of more meanings than one' lhen v;e have to adopt that inlerpretation t'hich .favours the assessee more particularly so because the provision relates to imposition of penalty. "

In the case of Allied Motors (P) Ltd. (supra) it was held as under:

In the case of Goodyear Inclia Ltd v State of Haryana [(1990) 2 S('C 7t ; 1990 SCC (Tax) 223 ; (1991) 188 ITR 4021 this Court said that the rule of reasonable construction must be applied tvhile construing a statule' Literal conslrlrction should be avoided if it defeats the manifest objecl and purpose of the Act.

Therefore, in the well-kno'tttn vords oJ Judge Leanrcd Hand, one cannol make a fortress out of the dictionary: and should remember that statules have some purpose and obiect lo uccomplish vh":ie sympathelic antl imaginati,e cli.scotery is the suresl guide to their meoring. ln the case o/.R B Jodha Mal Kuthialav. CIT [(1971) 3 SCC 369. (197]) 82 ITR 5701 this Court said that one should apply the rule of reasonable inlerprett:tlion. A proviso u,hic'h i.s inserted to remtdv trnintended consequences and lo make the provision workable, o Pro|ii-o which supplies an obvious otnission in the seclion and is requirct.tlo be read into the seclion to give Ihe section a reu.vonable interpretatiok. requires tu be treated as retrospective in operation so that a reasonable interpretation can he given to the section as a v'hole." Lastly, in the case of A. Sanyasi Rao and Othr:rs (supra) it was held as under:

The ubove net provisions enuble the Revenue Io estimcte the profils on a ''presumptive basis". lt appears thal Governmenl t'ontel to gel over the problems in asse.tsing income and recovering tax in the :'ase o./ persons dealing in country liquor, timber, lbresl produce, elc. Exptrience revealed that a large number of persons dealing in the said comr,rcclities did not moinl(tit1 ary. book,s oJ account or the books of accounl matntoined by such persons are incomplele. The business of lhe above-nteriioned per.sons 35. existed only for a short period a yedr or ruo. After the period of contract or ogreement, it was impossible lo trace them in many cases. Alany of them v,ere found to be dealing in benami names. There was evasion on a large scale. Government found it dfficult to collect the tar due from such persons. Section |l-AC occurs in Chapler IV of the Act dealing with computation of total income. Section D deuls with computation of pro.fits and gains oJ'business or profession. Section 1l- AC(I) determines the profits and goins of the year.from the bttsinass oJ' trading in certain specified goods Like liquor (olher than Indian-made fbreign liqrutr, timber and ;forest producel at a particular percenloge specified therein. Section 14-AC(2) states that the above provisions shall not apply to second or sub.sequent sale of such goods. Section 41-AC(3) is onl-v a clarificutory provision. The explanation to the seclion specifies the seller us Central Government, Stale Government, Local Atnhori4', Corporalion, etc. Section 206-C deals with collection and recovery rtf tax- Section 206-()(l) obliges the seller o;f the specified goods to collect firtm the purchaser an amount equal to the percentage menlioned in the Table as income lox. The goods mentioned in the Table are the very same goods mentioned in Section {!-AC. Sub-sections (2) to (5) of Section 206-C o.f the Act are .further machinery provisions. In particular, sub-section (1) provides thot any amounl collected under the section shall be deemed to be payment of tax on hehalf of the purchaser and provide's ;t'or the issuance oJ

Under the Income Tax where the provisions deaiing with collection of TCS and prescribing the rates at which those were to be collected also specifically enumerated that the TCS on liquor was on "alcoholic liquor for human consumption other than the IMFL", which itself carves out a specific exclusion. This could be evident from the provisions of the Income Tax Act as it then stood undet the Finance Act, 1988, thereafter under the Finance Act, 1992 and also rrnder the Finance Act, 1996, which continued under the Finance Act, 1999, Finance Act, 2000, and it was only in the Finance Act, 2003 did the ,iovemment gave a wider and broader interpretation to liquor by removing the exclusion clause which r.,"as there till the previous Finance Ar:t and under the Finance Act, 2003. It was the common terminology o I alcoholic liquor for human consumption which u,as referred to and rvhich include all types of liquor for human consumption 37 . We are of the considered opinion that statutc,ry provisions of Section 206C of the Act of 1061 which itself fastens an obligation to collect tax at source only when the transaction involves goods that fall within the specific descriptions set out in the statutory Table' So, the main question is simply whether the goods sold fit that Table description' For the years in question, the relevant entry was framed as "alcoholic liquor for human consumption (other than IMFL)"' The words in parentheses are not decorative or incidental, but they are paft of the definitionofthetaxablecategoryandoperateasaninbuiltlimitation. The entry covers only that subset of alcoholic liquor which is not IMFL' To put in simple language, the Revenue is oniy partly right where TCS is mandatory only if the sale fatls within the table entry and the entry applies only when the goods match the description completely including thewordsinbracketsthatexcludeIMFL'Sounlessitisfirstshownthat 'Beer' is not IMFL for that period Revenue cannot say TCS was automatic just because 'Beer' is alcohotic liquor for human consumption'

Moreover, the term IMFL is not defined anywhere in the Income- tax Act when a tax law uses a common commercial term but does not define it, Courts generally do not invent a new meaning on their own' Instead, they try to understand the term in the way it is normally understood by people who deal with that product in leal life, such as traders, sellers and those in the liquor business. They a so read the term in the setting of the section where it appears, because the same word can sometimes carry a slightly different meaning dependin; on the purpose of that particular provision. However, the ITAI followed this normal and accepted method as it looked at the surrounding legal context and the materials available from the relevant time period. Basec on that, it asked a practical question for the limited purpose of the then existing entry in Section 206C, can 'Beer' reasonably be treated as irlling within the umbrella of IMFL. After considering the context, the IT{I answered that it could consider. Therefore the ITAf did not create a new exemption or add words to the statute; moreover, the statute itself already contained an exclusion for IMFL in the relevant entry. However, the ITAI's role was only to decide, as a matter of classification, whether 'lleer' falls within that excluded category. So, the ITAI's finding is simply a decision about how to classifi 'Beer' under the exclusion that Parlia-nent itself wrote into the law. Because this tums on how an undefined commercial term should be understood in context, the Revenue's preferertce for a different meaning does not by itself raise a "substantial quer;tion of law". A substantial question of law arises only if the ITAT applied the wrong legal test, ignored material evidence, relied on irrelevant considerations or reached a conclusion that no reasonable ITAI could reach on the same record. The existence of two possible views is not enough' Further, the Revenue relied heavily on how State excise departments and liquor regulator usually treat and describe 'Beer'.

According to Revenue, because of the Excise Law and licensing practice often placed 'Beer' in a category separate from IMFL, 'Beer' should not automatically be treated as "IMFL" for the purpose of Section 206C of the Act of I 961. However, that Act does not adopt State excise classifications as controlling definitions for Section 206c where Parliament has used an expression like IMFL without defining it, the meaning has to be worked out primarily from the Income-tax Act itself, including: o The exact words used in the Table entry .Thepresenceoftheparentheticalexclusion(asitstoodbefore 01.06.2003), and .

At most, State excise practice and regulator)' c ocuments can be treated as supporting or background material. They ma1. help the Court understand how the product is generally viewed in a,lministration and trade, but they cannot override the text of the Income-rax Act or nullify an exclusion that Parliament has expressly built into the statutory description of goods. The same principle applies to tre ITAT's use of contemporaneous explanatory material, such as Press Notes or CBDT explanatory notes. The ITAIdid not treat those materials as if they were "law" or as if they could change the statute. It referred to them only for a limited and legally permissible purpose, namel.,, to assist in understanding an undefined commercial expression liko "IMFL" and to appreciate the context in which the collection-at-soL rce scheme was introduced

Yet another aspect which was highlighted by the leamed counsel appearing for the respondents was that the demand and contention raised by the appellant / Revenue has not been applied or made applicable in Page 32 of34 any of the States or Union Territories within the country and has been experimented only in the State of Telangana, which fact was also is not disputed and forces this Bench to draw an adverse inference against the Revenue and in favour of the assessee.

A key factor supporting the ITAI's reasoning is the later amendment made by the Parliament w.e.f. 01 .06.2003. By that amendment, the Parliament deleted the words "other than IMFL" from the relevant entry in the Table to Section 206C. ln ordinary statutory interpretation, when Parliament removes specific words from a taxing entry Courts presume that the change was deliberate and intended to alter the scope of the provision. Courts generally avoid an interpretation that would make such an amendment pointless or without practical effect. On a plain and practical reading, the 2003 deletion indicates that before 01.06.2003 the entry applied only to alcoholic liquor for human consumption excluding IMFL because the exclusion was expressly written into the statutory description. After 01.06.2003 the exclusion was removed, which reasonably suggests that Parliament intended to broaden the coverage so that IMFL would also fatl within the net from that date onwards. This gives the amendment a clear function that it expands the class of goods on which TCS is to be collected

However, if the Revenue's interpretation is accepted, namely that 'Beer'was never within IMFL and was always covereci even before the amendment, then deleting the words "other than IMFL' would add little or nothing in relation to 'Beer'. Such a reading risks r.reating the 2003 change as redundant, which is not a preferred approach to interpretation. A more coherent construction is that, prior to 01.06-2(t03, the statutory language kept IMFL outside this particular TCS entrl' and Parliament chose to change that position prospectively by deleting the exclusion.

Once the ITAI's view is accepted as a reasonable view on classification for the pre-amendment period, the Revenue's further arguments become consequential and cannot indepenclently sustain the appeal. Issues about nhether the APBCL is a "seller", whether the APBCL should be treated as an assessee in default under Section 206C(6) ofthe Act of 1961, and whether interest under Section 206C(7) of the Act of 1961is payable, all arise only if the goods sold fall within the relevant Table entry in the hrst place. For the pre 01.06.2003 period,

Tire three questions of law framed in paragraph No'23 of this common judgment stands answered against the Revenue and in favour of the APBCL. Accordingly, the lead case viz., Income Tax Tribunal Appeal No.69 of 2008 stands dismissed' As a consequence of the lead case getting dismissed, the other appeals also stand dismissed'

As a sequel, miscellaneous petitions pending if any, shall stand closed. However, there shall be no order as to costs //II MOHD.ISMAIL DEPUW REGISTRAR SECTION OFFICER One Fair Copy to the Hon'ble SRI JUSTICE P'SAM KOSHY '(For His Lordship's kind Perusal) AND OneFairGopvtotheHon'b|eSRIJUSTICESUDDALACHALAPATHIRAO ' (For His Lordship's kind Perusal) 1 2 The lncome Tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad To, 11 LR Copies

The Under Secretary, Union of lndia, Ministry of Law' Just:ice and Company Affairs, New Delhi 4.TheSecretary,AdvocatesAssociationLibrary'HighCourlfortheStateof Telangana, High Court Buildings at Hyderabad

One CC to Sri iaja Snekar Rio Satvlli ( Senior Standingl Counsel for lncome Tax ) [OPUC]

One'Cb to Sri A V A Siva Kartikeya, Advocate IOPUC]

One cc to sii A K. Kanishka' Anand, standing counsel for T.G.B.c.L. 1 [oPUC] \ s itn"-Ct to Sri N. Venkatraman, Assistant Soticitor General [OPUC] t ;. i*" ccr1" tn" Advocate General, High court for the state of relangana at HYderabad (OUT) 10.Two CD CoPies M ADK/KA