EUROTECH MARITIME ACADEMY PRIVATE LIMITED vs. INCOME TAX OFFICER (TDS)

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WP(C)/29655/2021HC KeralaKLHC01073608202107 January 2022Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS5 pages
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What did the High Court hold?

The High Court held that the intimations demanding late fee under Section 234E for the periods from 2012-13 to 2014-15 were legally unsustainable. The Court reasoned that while Section 234E was introduced effective July 1, 2012, the mechanism for computing such fees, as provided in Section 200A(1) of the Act, was amended to include the relevant clauses (c) to (f) only 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 to Section 200A was prospective. Therefore, the petitioner could not be subjected to late fees under Section 234E for periods prior to June 1, 2015. The Court quashed the intimations (Ext.P1 to Ext.P3) to the extent they demanded late fee under Section 234E for assessment years 2012-13 till 2014-15. The ratio decidendi is that a fee provision can only be enforced if the mechanism for its computation is in place.

What were the facts?

The petitioner, Eurotech Maritime Academy (P) Ltd., received intimations (Ext.P1 to Ext.P3) demanding late filing fees under Section 234E of the Income Tax Act, 1961. These demands pertained to assessment years 2012-13 to 2014-15. The petitioner contended that Section 234E, while introduced in 2012, became enforceable for computing late fees only after the amendment to Section 200A of the Act, which incorporated clauses (c) to (f) with effect from June 1, 2015. Therefore, the petitioner argued that no liability for late fees under Section 234E could arise for periods prior to June 1, 2015. The respondents are the Income Tax Officer (TDS), Deputy Commissioner of Income Tax (TDS CPC), Central Board of Direct Taxes, and the Union of India.

What were the issues?

1. Whether the levy of late fee under Section 234E of the Income Tax Act, 1961, is applicable for the period prior to June 1, 2015, considering that Section 200A(1) was amended to include provisions for computing such fees only from that date. Assessee's Contention: The petitioner argued that Section 234E, though introduced by the Finance Act, 2012, could not be invoked to levy late fees for non-filing of Tax Deduction at Source (TDS) statements for periods before June 1, 2015. This is because Section 200A(1) of the Act, which deals with the computation of tax liability including fees, was amended to incorporate clauses (c) to (f) with effect from June 1, 2015. They 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 to Section 200A was prospective. Revenue's Contention: The judgment does not record any specific arguments made by the revenue on this issue.

Which sections of the Income-tax Act were involved?

Section 234E,Section 200A

AI-generated summary — verify with the full judgment below

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.29655 OF 2021 PETITIONER: EUROTECH MARITIME ACADEMY (P) LTD., OPP. TVS, KALOOR, KOCHI-682 017. (REPRESENTED BY SRI. BABU JOSEPH, EXECUTIVE DIRECTOR) 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, GAZHIABAD, UTTARPRADESH-201 010. 3 CENTRAL BOARD OF DIRECT TAXES, NORTH BLOCK NEW DELHI-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.29655 OF 2021 -2- BECHU KURIAN THOMAS, J. --------------------------------------------- W.P.(C) No.29655 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 2014-15 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.29655 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.29655 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 2014-15 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 2014-15. The writ petition is therefore allowed as above. BECHU KURIAN THOMAS JUDGE bpr

W.P.(C) NO.29655 OF 2021 -5-

Appendix — schedule of exhibits
APPENDIX PETITIONER'S EXHIBITS EXHIBIT P1 TRUE COPY OF THE INTIMATION OF LEVY U/S 234E, AGAINST 24A 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 24A OF Q4 FOR F.Y 2013-14 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER EXHIBIT P3 TRUE COPY OF THE INTIMATION OF LEVY U/S 234E, AGAINST 24A OF Q4 FOR F.Y 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER

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