Judgment 1. Heard Mr. D.V. Pathy, counsel for the petitioner, the Advocate General representing the State and Mr. L.N. Rastogi, counsel for the Income Tax Department. 2. The petitioner seeks a direction for refund of the amount of security deposits for settlement of retail vends of country liquor that is withheld by the Excise Department on account of the demand made against it by the Income Tax Department. The matter, thus, becomes a tripartite dispute. 3. The facts are brief and without any controversy. The petitioner took settlement of retail vends of country liquor at Danapur and Akluchak Tarachak for the year, 1997-98. He deposited Rs. 1 lac as security deposit for Danapur vends and another sum of Rs. 39,700.00 for Akluchak Tarachak vends. Similarly, for the year, 1999-2000 the petitioner took settlement of country liquor vends at Danapur and deposited Rs. 1,46,000.00 as security deposit. The total amount of security deposits for the two years in question, thus, comes to Rs. 2,85,700/-. After the expiry of the settlement period the petitioner asked for refund of the amount of security deposits for the two years. The Excise Department, however, refused to make the refund as in the meantime it was faced with demands by the Income Tax Department. 4. It may be recalled here that Sec.206C inserted in the Income Tax Act with effect from 1.6.1988 made it obligatory for any person being a seller to collect from the buyer of any goods, including alcoholic liquor for human consumption, the amount of tax at the rate indicated in the table given under the section. The Excise Department was thus required to collect from the petitioner (the settlee/the buyer) the amount of tax as per the table under Sec.206C at the time of realisation of price of the country liquor supplied by it to the settlee, the petitioner. The excise authorities, however, failed to do so. As a matter of fact it was not an isolated case and the authorities in the Excise Department, under the belief that the department was not covered by the expression "every person being a seller" had omitted to collecty the amounts of income tax from all the settlees all over the State. The excise authorities, however, failed to do so. As a matter of fact it was not an isolated case and the authorities in the Excise Department, under the belief that the department was not covered by the expression "every person being a seller" had omitted to collecty the amounts of income tax from all the settlees all over the State. The omission of its authorities landed the excise department in the position where under sub-section (1)C of Sec.206C of the Act it incurred the liability to pay the entire amount that was collectable from its settlees. The Income Tax Department, accordingly raised a demand against the Excise Department. Govt, of Bihar in terms of sub-section (1)C of Sec.206C of the Act. The demand of the Income Tax Department was to the tune of around Rs. 59 crores. 5. Faced with the huge demand by the Income Tax Department, the Excise Department, Govt, of Bihar resorted to withholding the security deposits of the settlees for adjustment against the amounts of income tax collectable from them along-with the price of the country liquor/India made foreign liquor supplied to them for sale during the respective periods of their settlement. It may be noted that on the petitioners application for refund it was stated that income tax collectable from the petitioner in terms of Sec.206C amounted to Rs. 4,91,509/- that was in excess of the amount of his security deposits and hence, the amount of security deposits would not be refunded to him. 6. In this connection some other relevant facts may also be noted. The admitted position is that the State of Bihar challenged the demand of around Rs. 59 crores raised by the Income Tax Department in terms of Sec.206C (1)C in CWJC No. 2101/2000. The writ petition was admitted for hearing and remains pending before the court. It is, however, an admitted position that in the absence of any stay granted by the court the Income Tax Department was able to realise from the State Govt, the entire amount of its demand of about Rs. 59 crores. This would, naturally, include the small sum of Rs. 4,91,509.30 paise collectable by the Excise Department from the petitioner under sec. 206C of the Act. 7. 59 crores. This would, naturally, include the small sum of Rs. 4,91,509.30 paise collectable by the Excise Department from the petitioner under sec. 206C of the Act. 7. The other relevant fact is that the petitioners assessments under the Income Tax Act for the assessment periods 1998-99 and 2000-01 (appertaining to settlement years 1997-98 and 1999-2000 respectively) have already been completed and finalised. In response to repeated questions by the court Mr. Rastogi admitted that the assessments for the two assessment years in question had not only been completed but had become final and they could no longer be re-opened. He further admitted that for the two assessment years in question the Income Tax Department had no demand against the petitioner. 8. It may be noted here that sub-section (4) of Sec.206C provides that any amount collected under that section and paid to the revenue under sub-section (3) would be deemed as payment of tax on behalf of the person from whom the amount has been collected and credit would be given to him for the amount so collected or\ the production of the certificate furnished under sub-section (5) in the assessment made under the Act for the assessment year for which such income was assessable. 9. It is seen above that the amount of Rs. 4,91,509.30 that was collectable by the Excise Department from the petitioner under sec. 206C of the Act for the two assessment years in question forms part of the much larger sum of about Rs. 59 crores, already recovered by the Revenue from the State Government. In terms of sub-section (4)C that amount must go to the credit of the petitioner towards his income tax liabilities for the assessment years in question. 10. In the aforesaid facts and circumstances we consider it proper that the petitioner should make an application before the Income Tax authorities for refund of Rs. 2,85,700.00 being the amount of security deposits passed on by the Excise Dept. to the Revenue. In case such an application is made before the Assistant Commissioner of Income Tax, Arrah within one month from today, he will consider the petitioners claim in accordance with law and in light of this order and take a decision on merits. 2,85,700.00 being the amount of security deposits passed on by the Excise Dept. to the Revenue. In case such an application is made before the Assistant Commissioner of Income Tax, Arrah within one month from today, he will consider the petitioners claim in accordance with law and in light of this order and take a decision on merits. In the special facts and circumstances of the case he shall not reject the petitioners claim of refund on the ground of non-production of the certificate under sub-section (5) of Sec.206C of the Act but shall consider the claim in light of this order. Before passing a final order he will allow the petitioner an opportunity of hearing and to produce any materials in support of his claim. If the claim is allowed, he will make the necessary refund within three months from the date of making the application. In case for any reason the claim is disallowed, he wili pass a speaking order assigning reasons for his decision. The petitioner will then be entitled to seek his remedies in accordance with law. 11. Mr. Pathy submitted that for the preceding years 1989-90 and 1990-91 the Assistant Commissioner Exicse had issued in his favour a certificate in Form 27D showing collection of Rs. 47,767/- as tax collected at source. It will be open to the petitioner to make an application for refund before the Assistant Commissioner, Income Tax, Arrah on the basis of this form with regard to assessment periods in question. 12. This writ petition stands disposed of with the aforesaid observations and directions.