A division bench of the Allahabad High Court in Apar Mukhya Adhikari v. ITO, has held that the toll plaza does not include Tahbazari for the purpose of collecting Tax at Source ( TCS ).
Tahbazari, is Import fee for permission to do certain acts such as sale of goods or services. Tahbazari is charge for a privilege to sell goods and services within certain limits of a local body for such imposition; there are no contracts, no agreements and no rents. Local body has authority to refuse to grant permission to carry on such business and if it does grant permission to carry on such business, a charge is to be paid as consideration for privilege of conducting such business.
The appellant is Apar Mukhya Adhikari, Zila Panchayat constituted under the Uttar Pradesh Kshettra Panchayats and Zila Panchayats Adhiniyam, 1961. In order to regulate its functions, a policy was formulated whereby Tahbazari, Tahbazari-Vahan Stand and BaluMorang, Gitti Bolder-Vahan Shulk is auctioned and authority letter is issued to the highest bidder. The Assessing Officer conducted a survey and noticed that there were three kinds of auctions: (i) Tahbazari (ii) TahbazariVahan Stand (iii) Balu-Morang and Gitti Bolder-Vahan Shulk. The Zila Panchayat had issued licences to different persons through tender and auction for collection of Tahbazari etc. According to the Assessing Officer, the amount so collected by the Zila Panchayat fell under/within the scope of Tax collected at source.
On second appeal, the Tribunal refused to grant relief to the assessee.
The bench comprising Justices Bharati Sapru and Dinesh Kumar Singh has held that “the Tahbazari is not an item which is provided under this Section for collecting TCS. If a licence or lease is issued in favour of any other person for collecting the Tahbazari, it cannot be said that lessee is collecting toll on such licence or lease, as the case may be. We are required to construe the taxing provisions strictly and cannot give liberal interpretation to a taxing provision,” the bench said.
It was, therefore, held that the toll plaza does not include Tahbazari inasmuch as there is no toll set up for collecting the Tahbazari when licence for collecting the Tahbazari is issued.
“The Tahbazari has different connotation and it is not a toll as held by the Tribunal. We do not agree with the view taken by the Tribunal that Tahbazari is nothing but a toll or it is not different from Toll Plaza. We, therefore, set-aside the impugned order and allow the appeal,” the bench said.
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