Whether TDS U/s 194Q applicable on Coal, Electricity, Motor Vehicle, Jewellery, immoveable property etc?

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Whether TDS U/s 194Q applicable on Coal, Electricity, Motor Vehicle, Jewellery, immoveable property etc?

The provision which requires TDS to be done on purchases is applicable on purchase of goods. It may be noted that term ‘goods’ is not defined in the Income-tax Act. The term ‘good’ is of wide import. Normally anything which comes to the market for sale or purchase, can be treated as “Goods”.

As it is not defined in the Income Tax Act, one needS to import its meaning from other relevant Act & judicial pronouncements.

 ‘Goods’ is defined under

  1. Sale of Goods Act, 1930
  2. Central Goods and Services Tax Act, 2017.
  3. Constitution of India

Let us see the meaning under above Acts.

 

Sale of Goods Act, 1930

‘Goods’ means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale”

Central Goods and Services Tax Act, 2017

‘Goods’ means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply”

The Sale of Goods Act, 1930 is a specific statute which deals with the ‘sale of goods’ whereas the CGST Act, 2017 deals with tax on ‘supply of goods’. Thus, the definition of term ‘goods’ can be referred to from the Sale of Goods Act, 1930 for the purpose of section 194-O.

Constitution of India

Article 366(12) of the Constitution defines “Goods” to include all materials, commodities and articles.

Further, Article 366(26A) defines the term “services” to mean anything other than Goods.

Judicial Pronouncements:

The following pronouncements of the Supreme Court are relevant in interpreting the term “goods”:

In UOI v. Delhi Cloth & General Mills AIR 1963 SC 791/1963 SCR Suppl. (1) 586, it has been held as under:

“To become “goods”, an article must be something that can ordinarily come to the market to be bought and sold.“.

In Tata Consultancy Services State of A.P [2004] 141 Taxman 132  (SC) & BSNL v. UOI [2006] 3 STT 245/152 Taxman 135 (SC)], following observation may be noted:

A “goods” may be a tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of being transmitted, transferred, delivered, stored and possessed.

Going through above analysis, one can reasonably draw the conclusion that the definition of “goods” is wide enough to include every kind of moveable property, tangible or intangible, visible or invisible.

Let us see few items to see whether it can be considered as “goods” or not.

  1. Coal:
    Yes, it is goods. However, it may be liable for TCS. If made liable for TCS then TDS U/s 194Q will not be applicable.
  2. Shares or Securities:
    Yes, it is a goods. However, transactions in “shares and securities” through recognised stock exchanges exempted from section 194-O/section 206C(1H) by Guidelines issued by CBDT u/s 194-O(4). Let us hope that similar exclusion will be provided by guidelines issued under section 194Q).
  3. Electricity:
    Electricity is also “goods” as held in various judicial pronouncements. However, transactions in electricity, renewable energy certificates and energy saving certificates exempted from section 194-O in view of Guidelines issued by CBDT u/s 194-O(4). (Perhaps, similar exemption will be provided by guidelines issued under section 194Q. Let us hope that similar exclusion will be provided by guidelines issued under section 194Q).
  4. Fuel, Petrol  etc:
    It is undeniably goods.
  5. Motor vehicle:
    Yes, it is a goods, However, if the value of motor vehicle exceeds Rs. 10 Lakh then it may be liable for TCS. If made Liable for TCS then TDS U/s 194Q will not be applicable.
  6. Liquor:

Yes, it is goods. However, it may be liable for TCS. If made liable for TCS then TDS U/s 194Q will not be applicable.

  1. Jewellery or bullion:
    It is undeniably goods.
  2. Scraps:
    Yes, it is goods. However, it may be liable for TCS. If made liable for TCS then TDS U/s 194Q will not be applicable.
  3. Canned software (off the shelf computer software):
    Canned software (off the shelf computer software) are ‘goods’ as has been held by Supreme Court in its landmark decision of Tata Consultancy Services State of A.P [2004] 141 Taxman 132 (SC). Hence, it will be liable for GST
  4. Immoveable Property:
    It is not a ”goods” and hence not liable for TDS U/s 194Q. However, if the value exceeds Rs. 50 Lakh, it may be liable for TDS U/s 194IA

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