application of TDS u/s 194c on purchase of corrugated boxes

This query is : Resolved

ANKIT GOR (Querist)
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19 July 2011 Dear, sirs,
please read carefully my problem,
the company ltd. have business of manufacture of pre- laminated sheet and they buy corrugated box from other supplier and also give specification of company logo on boxes.
in bill there is no specification of material amount and job work amount.

so, what is the company responsibility towards TDS?

srinivasan

srinivasan (Expert)
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19 July 2011 The facts of the case is very important. The issue to be addressed is "when is the title of goods get transfered?"

If the order is only for manufacturing and selling the corugated boxes where the supplier of the boxes purchases the material, prints, manufactures and then sells. It is a sale transaction and there is no works contract involved in it to invoke sec.194C. There are lot of high court decision which supports this point.

The recent SC judgement in the case of silver oak laboratories Pvt. Ltd v. CIT,XVII Delhi had held that when there is excise duty paid on manufacture and the goods are sold it cannot attact 194C.

The other citations (mostly relates to packing material) are also given below for reference and can be relied upon.
Ø CIT V Glenmark Pharmaceuticals Ltd. 2010-TIOL-HC-Mum-IT =
Ø CIT V Girnar Food and Beverage P. Ltd. [306 ITR 23]
Ø Venbro Polymers V ITO, TDS Range-II, Erode - Mds HC (unreported) – WP 39037 of 2005
Ø BDA Limited V. ITO (TDS) Mum HC (2006)281 ITR 99
Ø CIT V. Dabur India Ltd. - Del HC (2005) 198 CTR 375 = 283 ITR 197
Ø CIT v. seagram manufacturing (p) Ltd. HC Del - [221 CTR 509]
Ø CIT V. Reebok India Co. HC Del – [306 ITR 124

ANKIT GOR

ANKIT GOR (Querist)
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19 July 2011 ya i can understand but actually we have not a business of manufacture of box. we use the box as a packing material so, it is packing materia; purchase for us. but we give opposit party specification for our co. logo print on box.

then TDS applicable? in the bill of purchase of boxes there is no specification of material and job work amount?

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srinivasan

srinivasan (Expert)
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19 July 2011 What need to be checked is the nature of transaction between you and the packing material vendor. If the contract for procurement of packing material is in the nature of pure sale / purcahase then 194C can not apply. Even if the boxes are for your own consumption i.e packing of your finished products.

I recommend you to go through couple of citations stated earlier by me to get more clarity.

K.Srini
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