The assessee, an association of stamp vendors, bought stamps from the State Govt. at a discount. The department claimed that the stamp vendors were “agents” of the State Govt. and that the said discount was “commission or brokerage” and the State Govt. ought to deduct TDS u/s 194H. The assessee filed a Writ Petition to challenge the department’s action. The Gujarat High Court upheld the assessee’s plea that (a) title in the stamps passed to the vendors and that they were not “agents” of the State Govt. but were transacting on a “principal to principal” basis and (b) the discount available to the stamp vendors was not “commission or brokerage” so as to fall within s. 194H. On appeal by the department to the Supreme Court, HELD dismissing the appeal:
SUPREME COURT OF INDIA
Commissioner of Income-tax
v.
Ahmedabad Stamp Vendors Association
S.H. KAPADIA, CJI.
AND MADAN B. LOKUR, J.
CIVIL APPEAL NO. 10270 OF 2003
SEPTEMBER 6, 2012
ORDER
Heard learned counsel on both sides.
The respondent in this civil appeal is Ahmedabad Stamp Vendors Association and the Members of the said Association are licensed Stamp Vendors.
We are satisfied that 0.50% to 4% discount given to the Stamp Vendors is for purchasing the stamps in bulk quantity and the said discount is in the nature of cash discount.
In the circumstances, we concur with the impugned judgement that the impugned transaction is a sale.
Consequently, section 194H of the Income-tax Act, 1961, has no application.
The civil appeal filed by the Department is dismissed with no order as to costs.
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