EUROTECH MARITIME ACADEMY vs. INCOME TAX OFFICER (TDS)

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WP(C)/29652/2021HC KeralaKLHC01073636202107 January 2022Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS5 pages
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What did the High Court hold?

The High Court of Kerala held that the intimations demanding late fee under Section 234E for the periods 2012-13 and 2013-14 were bereft of authority and legally unsustainable. The Court reasoned that while Section 234E was introduced in 2012, the mechanism for computing the fee, as referred to in Section 200A(1)(e), was incorporated with effect from June 1, 2015. Following the precedent set in M/s. Sarala Memorial Hospital v. Union of India and Another, the Court found that the amendment was prospective. Consequently, the demand for late fees prior to June 1, 2015, was quashed. The operative direction was to quash Ext.P1 to Ext.P3 intimations to the extent they demanded late fee under Section 234E for the assessment years 2012-13 till 2013-14. No issue was expressly left undecided.

What were the facts?

The petitioner, Eurotech Maritime Academy, received intimations (Ext.P1 to Ext.P3) demanding late filing fees under Section 234E of the Income Tax Act, 1961. These demands pertained to the periods 2012-13 and 2013-14. The petitioner argued that Section 234E, while introduced by the Finance Act, 2012, and amended to include fee computation under Section 200A(1)(e) effective from June 1, 2015, should not apply retrospectively. The petitioner contended that no liability for late fees for non-filing of Tax Deduction at Source (TDS) statements could be imposed prior to June 1, 2015. The respondents are the Income Tax Officer (TDS), Deputy Commissioner of Income Tax (TDS CPC), the Central Board of Direct Taxes (CBDT), and the Union of India.

What were the issues?

1. Whether the late fee demanded under Section 234E of the Income Tax Act, 1961, for the periods 2012-13 and 2013-14 is legally sustainable, considering the effective date of the relevant amendments to Section 200A. Assessee's contentions: The petitioner argued that Section 234E, specifically the aspect of computing late fees under Section 200A(1)(e), became effective only from June 1, 2015. Therefore, any demand for late fees prior to this date, for non-filing of TDS statements, is invalid. The petitioner relied on the decision in M/s. Sarala Memorial Hospital v. Union of India and Another (W.P.(C) No.37775 of 2018), which held that the amendment was prospective and binding on the authorities. Revenue's contentions: The judgment records no specific arguments from the revenue.

Which sections of the Income-tax Act were involved?

Section 234E,Section 200A

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Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 7TH DAY OF JANUARY 2022 / 17TH POUSHA, 1943 W.P.(C) NO.29652 OF 2021 P ETITIONER: ( EUROTECH MARITIME ACADEMY, OPP.TVS, KALOOR, KOCHI-682 017 (REPRESENTED BY SRI.BABU JOSEPH, MANAGING TRUSTEE) BY ADVS. K.N.SREEKUMARAN P.J.ANILKUMAR (A-1768) N.SANTHOSHKUMAR RESPONDENTS: 1 INCOME TAX OFFICER (TDS), AAYKAR BHAVAN, I S PRESS ROAD, ERNAKULAM-682 018. 2 DEPUTY COMMISSIONER OF INCOME TAX, TDS CPC, AAYKAR BHAVAN, SECTOR-3, VAISHALI, GAZIABAD, UTTARPRADESH-201 010. 3 THE CENTRAL BOARD OF DIRECT TAXES, NORTH BLOCK NEW DELI-110 002 REPRESENTED BY ITS CHAIRMAN. 4 UNION OF INDIA, MINISTRY OF FINANCE, DIRECT TAXES DEPARTMENT, NEW DELHI-110 001. REPRESENTED BY ITS SECRETARY. R1-R3 ADV.CHRISTOPHER ABRAHAM, STANDING COUNSEL R4 ADV.S.MANU, ASSISTANT SOLICITOR GENERAL THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.01.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) NO.29652 OF 2021 -2- BECHU KURIAN THOMAS, J. --------------------------------------------- W.P.(C) No.29652 of 2021 --------------------------------------------- Dated this the 7th day of January, 2022

JUDGMENT By Ext.P1 to Ext.P3 intimations, petitioner has been called upon to pay the late filing fee under section 234E of the Income Tax Act, 1961 (for short,'the Act').

2.

As per the aforesaid intimations, amounts have been demanded as late fee for the periods from 2012-13 to 2013-14 on the basis of the provisions in section 234E of the Act, which is as follows: “234E-Fee for default in furnishing statements:- (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of Section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.”

3.

Though section 234E of the Act was introduced by the Finance Act, 2012 with effect from 1st July, 2012, since petitioner is being demanded by Ext.P1 late fee for not filing the statement of tax deduction at source, it is necessary to refer to section 200A of the Act. Section 200A(1) incorporated clause (c) to clause (f)

W.P.(C) NO.29652 OF 2021 -3- with effect from 01.06.2015. Sub-clause to section 200A (1) refers to the fee if any to be computed in accordance with the provisions of section 200A(1)(e). It is the claim of the petitioner that till 01.06.2015 petitioner cannot be mulcted with any liability to pay late fee for non filing of any statement of tax deduction at source.

4.

I have heard Sri.K.N.Sreekumaran, the learned counsel for the petitioner, Sri.Christopher Abraham, the learned Standing Counsel for respondents 1 to 3 as well as Sri.S.Manu, the learned Assistant Solicitor General of India for the 4th respondent.

5.

Learned counsel for the petitioner brought to my attention the decision in M/s.Sarala Memorial Hospital v. Union of India and Another (W.P.(C) No.37775 of 2018) wherein an identical question arose for consideration. After considering the statutory provisions and the implications of the amendment brought in to the Act, it was held that the amendment would take effect only with effect from 1st June, 2015 and is thus prospective in nature. It is submitted that the aforesaid judgment has become final and is binding upon the authorities.

W.P.(C) NO.29652 OF 2021 -4-

6.

In view of the above, the demand in Ext.P1 to Ext.P3 intimations for the period from 2012-13 to 2013-14 is bereft of authority and cannot be legally sustainable.

7.

Accordingly, I quash Ext.P1 to Ext.P3 intimations to the extent it demands late fee under section 234E for the assessment years from 2012-13 till 2013-14. The writ petition is therefore allowed as above. BECHU KURIAN THOMAS JUDGE bpr

W.P.(C) NO.29652 OF 2021 -5-

Appendix — schedule of exhibits
APPENDIX PETITIONER'S EXHIBITS EXHIBIT P1 TRUE COPY OF THE INTIMATION OF LEVY U/S 234E-AGAINST 26Q OF Q4 FOR F.Y 2012-13 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P2 TRUE COPY OF THE INTIMATION OF LEVY U/S 234E-AGAINST 24Q OF Q4 FOR F.Y 2012-13 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P3 TRUE COPY OF THE INTIMATION OF LEVY U/S 234E-AGAINST 26Q OF Q4 FOR F.Y 2013-14 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.

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