Judgment Sudhanshu Dhulia, J. 1. The petitioner before this Court is a registered society of Stamp Vendor Association of Roorkee, District Haridwar. They are aggrieved by the action of the Treasury Department, who are deducting Tax at Source (in short ‘TDS’) for the stamp papers being sold to the members of the petitioner/association vide an amendment made in the Income Tax Act, 1961 (hereinafter referred to as ‘Act’) under Section 194H of the Act, which reads as under:- “Section 194H. Commission or brockerage- Any person, not being in individual or an Hindu Undivided Family, who is responsible for paying, on or after the 1st day of June, 2001, to a resident, any income by way of commission (not being insurance commission referred to in Section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent. Provided that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee, does not exceed [five thousand rupees] : [Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such commission or brokerage is credited or paid, shall be liable to deduct income-tax under this section:] [Provided also that no deduction shall be made under this section on any commission or brokerage payable by Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited to their public call office franchisees. Explanation.—For the purposes of this section,— (i) “commission or brokerage” includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities; (ii) the expression “professional services” means services rendered by a person in the course of carrying on a legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or such other profession as is notified by the Board for the purposes of section 44AA; (iii) the expression “securities” shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); (iv) where any income is credited to any account, whether called “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]” 2. The challenge in the present writ petition by the members of the petitioner/association is the communication dated 17.02.2011 of Treasury Department, Haridwar, Uttarakhand by which they have been directed by the Treasury Department to deduct TDS while issuing the stamp papers to the stamp vendors, who are agents of the Treasury Department and what they get from the Treasury Department is a Commission. Hence, they are liable to give income tax on it, which is liable to be deducted at source. 3. Whether the amount received by the stamp vendors from the Treasury Department in lieu of their subsequent sale of the stamp papers to the individuals is by way of an agent of the Treasury Department or it falls any other category as the issue before this Court. In case, stamp vendor is working like an agent, and what he is actually getting is a commission from the Treasury Department then TDS is liable to be deducted on the commission earned. 4. In case, stamp vendor is working like an agent, and what he is actually getting is a commission from the Treasury Department then TDS is liable to be deducted on the commission earned. 4. Learned counsel for the petitioner has relied upon a decision of Division Bench of Gujarat High Court in Ahmedabad Stamp Vdndors Vs Union of India (2002, 257 ITR 202 Guj) decided on 28.06.2002 wherein after considering the submission of a similar stamp vendor association of Gujarat as well as the Treasury Department, the Division Bench of Gujarat High Court come to the conclusion that what the stamp vendors actually received from the Treasury Department is not a commission, but it is in the nature of a discount which varies from one per cent or two per cent, depending upon the value of the stamp papers. Hence they cannot be treated as “agents” of the Treasury Department and hence TDS is not liable to be deducted. 5. The Division Bench of the Gujarat High Court (supra) has examined this matter at great length. The question which the Gujarat High Court had placed before itself, in order to determine the controversy was whether the stamp vendors are agent of the State Government, who are paid “Commission” or “Brokerage” or whether the stamp vendors purchased stamp papers from the Government and the transaction between the two involves “contract of sale”. If they are agents then tax has to be deducted as per the provision of law. However, in case what transpires between the Government and the stamp vendors is a contract for sale then the tax is not liable to be deducted under the above provision. The Division Bench of the Gujarat High Court has relied upon the decision of the Hon’ble Apex Court in Bhopal Sugar Industries Ltd. Vs Sales Tax Officer reported in (1977) 3 SCC 147 wherein such a determination had earlier been done by the Hon’ble Apex Court which reads as under:- "As a matter of law there is a distinction between a contract of sale and a contract of agency by which the agent is authorised to sell or buy on behalf of the principal and make over either the sale proceeds or the goods to the principal. The essence of a contract of sale is the transfer of title to the goods for a price paid or promised to be paid. The essence of a contract of sale is the transfer of title to the goods for a price paid or promised to be paid. The transferee in such a case is liable to the transferor as a debtor for the price to be paid and not as agent for the proceeds of the sale. The essence of agency to sell is the delivery of the "goods to a person who is to sell them, not as his own property but as the property of the principal who continues to be the owner of the goods and will therefore be liable to account for the sale proceeds." 6. It further elaborates on those principles, which reads as under:- "The essence of the matter is that in a contract of sale, title to the property passes on to the buyer on delivery of the goods for a price paid or promised. Once this happens the buyer becomes the owner of the property and the seller has no vestige of title left in the property. The concept of a sale has, however, undergone a revolutionary change, having regard to the complexities of the modern times and the expanding needs of the society, which has made a departure from the doctrine of laissez faire by including a transaction within the fold of a sale even though the seller may by virtue of an agreement impose a number of restrictions on the buyer, e.g., fixation of price, submission of accounts, selling in a particular area or territory and so on. These restrictions per se would not convert a contract of sale into one of agency, because in spite of these restrictions the transaction would still be a sale and subject to all the incidents of a sale. A contract of agency, however, differs essentially from a contract of sale inasmuch as an agent after taking delivery of the property does not sell it as his own property but sells the same as the property of the principal and under his instructions and directions. Furthermore, since the agent is not the owner of the goods, if any loss is suffered by the agent he is to be indemnified by the principal. This is yet another dominant factor which distinguishes an agent from a buyer--pure and simple. In Halsbury's Laws of England, volume 1, fourth edition, in para. Furthermore, since the agent is not the owner of the goods, if any loss is suffered by the agent he is to be indemnified by the principal. This is yet another dominant factor which distinguishes an agent from a buyer--pure and simple. In Halsbury's Laws of England, volume 1, fourth edition, in para. 807 at page 485, the following observations are made: 'The relation of principal and agent raises by implication a contract on the part of the principal to reimburse the agent in respect of all expenses, and to indemnify him against all liabilities, incurred in the reasonable performance of the agency, provided that such implication is not excluded by the express terms of the contract between them, and provided that such expenses and liabilities are in fact occasioned by his employment'." 7. The Gujarat High Court further made a distinction between the “Commission” and the “Discount” and came to the conclusion that what the Government gives to the stamp vendors is a “Discount” and not a “Commission”. It is further being noted here that the Stamp Act and the Gujarat Stamp Supply & Sales Rules, which are being applicable in the State of Uttarakhand are not pari materia. 8. Gujarat High Court made the following determination, which reads as under:- “A perusal of the aforesaid rules would certainly indicate that there are several restrictions imposed upon the licensed vendors but as laid down by the apex court in Bhopal Sugar Industries Ltd. v. STO [1977] 40 STC 42, 47, "the concept of a sale has, however, undergone a revolutionary change, having regard to the complexities of the modern times and the expanding needs of the society, which has made a departure from the doctrine of laissez faire by including a transaction within the fold of a sale even though the seller may by virtue of an agreement impose a number of restrictions on the buyer, e.g., fixation of price, submission of accounts, selling in a particular area or territory and so on. These restrictions per se would not convert a contract of sale into one of agency, because in spite of these restrictions the transaction would still be a sale and subject to all the incidents of a sale." Hence without being swayed by the aforesaid restrictions imposed by the rules regarding the manner in which the licensed stamp vendors are to carry on their business, we have to examine whether the licensed stamp vendor is an agent of the State Government.” 9. Finally the Gujarat High Court has held, which reads as under:- “The crucial question is whether ownership in the stamp papers passes to the stamp vendor when the treasury officer delivers stamp papers on payment of price less discount. The rules themselves contemplate that what the licensed vendor does, while taking delivery of the stamp papers from the Government offices, is purchasing the stamp papers. Clause (b) of Sub-rule (2) of Rule 24 indicates that the discount which the licensed vendor had obtained from the Government was on purchase of the stamp papers. The stringency of the restrictions contained in the rules is not on account of the fact that the ownership over the stamp papers is not transferred to the licensed vendors when they deliver the stamp papers on payment of price less discount, but the stringency of the conditions is on account of the nature of the stamp papers as such stamp papers are used in transactions relating to valuable properties for the purpose of creating, transferring and extinguishing the interest in valuable properties. Judicial notice can be taken of the fact about the important, if not paramount, role being played by stamp papers in our legal system.” 10. The above determination of Gujarat High Court has been followed by the Kerala High Court in Kerala State Stamp Vendors Vs Office of Accountant General [(2006) 200CTR (Ker)658] decided on 20.06.2005. 11. This Court is clearly of the view that in the present case, the determination of the Division Bench of the Gujarat High Court gives the correct position of law on the subject and, therefore, it is to be followed by this Court as well. 12. Consequently writ petition succeeds. The communication dated 17.02.2011 is hereby quashed. 11. This Court is clearly of the view that in the present case, the determination of the Division Bench of the Gujarat High Court gives the correct position of law on the subject and, therefore, it is to be followed by this Court as well. 12. Consequently writ petition succeeds. The communication dated 17.02.2011 is hereby quashed. As far as the refund of the TDS amount is concerned, since the deduction of TDS is wrong, the respective stamp vendors are at liberty to approach Income Tax Department for refund of the said amount as per the procedure established under the Income Tax Act.