The Cuttack Bench of the Income Tax Appellate Tribunal (ITAT), cancelled TCS liability as there was sale of usable products and not scrap.
The assessee, Shree Balaji Build Tech is a firm dealing in trading of Iron and Steel goods. The assessee is mainly purchasing the scrap sold by RSP Rourkela. The RSP Rourkela is a steel manufacturing plant.
The Counsel for the assessee, submitted that if what has been sold by RSP is actually plain and simple scrap then what stopped RSP from recycling the said scrap in its manufacturing process. Thus, the claim of the Counsel for the assessee is that what has been sold by RSP under the terms scrap is the second quality products which did not meet quality control requirement of RSP also is found to be on a sound footing.
The Counsel appearing for the Revenue submitted that once what is sold as scrap and what is purchased is scrap cannot take a different character would not hold water insofar as what is scrap for one person could be a useful product for another.
A Division Bench consisting of George Mathan, Judicial Member and Arun Khodpia, Accountant Member observed that “In case of the assessee itself if we take the presumption that what the assessee has purchased from RSP is only scrap then he would be selling the same to some other steel manufacturing plant. However, the sales are retail sales. This itself shows that what has been sold by the assessee is not scrap but usable products.”
“This being so, we are of the view that what has been sold by the assessee is not scrap and consequently, the provisions of Section 206(C) of the act would not apply to the facts of the assessee’s case. Accordingly, the TCS liability determined by the AO and as confirmed by the CIT(A) in both the appeals of the assessee for both the years under consideration stands cancelled” the Tribunal ruled.
P.K.Mishra, appeared for the assessee and S.C.Mohanty, appeared for the Revenue.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanPremium. Follow us on Telegram for quick updates.
