NILA BAKERS & CONFECTIONERIES (I) PVT. LTD. vs. INCOME TAX OFFICER (TDS)

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WP(C)/29444/2021HC KeralaKLHC01073188202120 December 2021Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS7 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that the demand for late fees under Section 234E for the period from 2012-13 up to the first quarter of the assessment year 2015-16 (i.e., until June 1, 2015) was without legal authority. The Court reasoned that Section 234E was introduced by the Finance Act, 2012, and the relevant provisions in Section 200A(1) that enabled the computation of such fees were amended effectively from June 1, 2015. Citing the precedent in M/s. Sarala Memorial Hospital v. Union of India and Another, the Court found that the amendment was prospective. Consequently, the intimations demanding late fees for the period before June 1, 2015, were quashed. The ratio decidendi is that statutory provisions imposing financial liabilities, especially those introduced or amended by finance acts, are prospective unless expressly stated otherwise, and demands must align with the operative dates of such provisions. The operative direction was to quash the intimations to the extent they demanded late fee under Section 234E for the period from 2011-12 till June 1, 2015.

What were the facts?

The petitioner, Nila Bakers & Confectioneries (I) Pvt. Ltd., received intimations (Ext.P1 to Ext.P15) demanding late filing fees under Section 234E of the Income Tax Act, 1961. These demands pertained to the periods from 2012-13 to 2015-16. The petitioner contended that Section 234E, introduced by the Finance Act, 2012, and Section 200A(1) which includes provisions for computing such fees, were amended with effect from June 1, 2015. Therefore, the petitioner argued that no liability for late fees under Section 234E could arise before this date. 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 demand for late fee under Section 234E of the Income Tax Act, 1961, for periods prior to June 1, 2015, is legally sustainable, considering the prospective nature of the amendments to Section 200A(1) of the Act? (Question of law) Assessee's contentions: The petitioner argued that Section 234E was introduced by the Finance Act, 2012, and Section 200A(1) was amended with effect from June 1, 2015. Therefore, any demand for late fees under Section 234E prior to June 1, 2015, is without authority. 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 was prospective and binding on the authorities. Revenue's contentions: The judgment records that the Standing Counsel for respondents 1 to 3 and the Assistant Solicitor General for the fourth respondent were heard, but does not detail their specific arguments.

Which sections of the Income-tax Act were involved?

Section 234E,Section 200A(1),Section 200(3),Section 206C(3)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
W.P.(C) No.29444/21 -:1:- IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS MONDAY, THE 20TH DAY OF DECEMBER 2021 / 29TH AGRAHAYANA, 1943 WP(C) NO. 29444 OF 2021 PETITIONER: NILA BAKERS & CONFECTIONERIES (I) PVT. LTD. SIDCO INDUSTRIAL PARK, KALLIPADAM, SHORANUR, PALAKKAD-679 122. (REPRESENTED BY SRI. M.SATHYANARAYANAN, DIRECTOR). BY ADVS. K.N.SREEKUMARAN P.J.ANILKUMAR (A-1768) N.SANTHOSHKUMAR RESPONDENTS: 1 INCOME TAX OFFICER (TDS) AAYKAR BHAVAN, ENGLISH CHURCH ROAD, PALAKKAD-678 101. 2 DEPUTY COMMISSIONER OF INCOME TAX TDS CPC, AAYKAR BHAVAN, SECTOR-3, VAISHALI, GAZIABAD, UTTARPRADESH-201010. 3 CENTRAL BOARD OF DIRECT TAXES NORTH BLOCK NEW DELHI-110002, REPRESENTED BY ITS CHAIRMAN. 4 UNION OF INDIA MINISTRY OF FINANCE, DIRECT TAXES DEPARTMENT, NEW DELHI-110 001, REPRESENTED BY ITS SECRETARY. OTHER PRESENT: SRI CHRISTOPHER ABRAHAM -SC IT DEPT, SRI MANU S ASG W.P.(C) No.29444/21 -:2:- THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20.12.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.29444/21 -:3:- BECHU KURIAN THOMAS, J. ----------------------------------------- W.P.(C) No.29444 of 2021 ---------------------------------------- Dated this the 20th day of December, 2021

JUDGMENT By Ext.P1 to Ext.P15 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 2015-16 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 to Ext.P15, the 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) 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, learned counsel for the petitioner, Sri.Christopher Abraham, learned Standing Counsel for the respondents 1 to 3 as well as Sri.S.Manu, learned Assistant Solicitor General of India for the fourth 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 into the Act, it was held that the amendment would take effect only 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.

6.

In view of the above, the demand for late fees for the period till the first quarter of the assessment year 2015-16 is without authority. The demand in Ext.P1 to Ext.P15 intimations for the period from 2012-13 to the first quarter of assessment year 2015-16 is bereft of authority and cannot be legally sustainable.

7.

Accordingly, I quash Ext.P1 to Ext.P15 intimations to the extent it demands late fee under section 234E for the period from 2011-12 till 01.06.2015. The writ petition is therefore allowed as above. BECHU KURIAN THOMAS JUDGE AJM

Appendix — schedule of exhibits
APPENDIX OF WP(C) 29444/2021 PETITIONER’S EXHIBITS : Exhibit P1 TRUE COPY OF THE INTIMATION OF LEVY U/S 234E, AGAINST 26Q OF Q2 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 26Q OF Q3 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:2012-13 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P4 TRUE COPY OF THE INTIMATION OF LEVY U/S 234E, AGAINST 26Q OF Q3 FOR F.Y:2013-14 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P5 TRUE COPY OF THE INTIMATION OF U/S 234E, AGAINST 26Q OF Q4 FOR F.Y:2013-14 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P6 TRUE COPY OF THE INTIMATION OF U/S 234E, AGAINST 26Q OF Q1 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P7 TRUE COPY OF THE INTIMATION OF U/S 234E, AGAINST 24Q OF Q1 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P8 TRUE COPY OF THE INTIMATION OF U/S 234E, AGAINST 26Q OF Q2 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P9 TRUE COPY OF THE INTIMATION OF U/S 234E, AGAINST 24Q OF Q2 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P10 TRUE COPY OF THE INTIMATION OF U/S 234E, W.P.(C) No.29444/21 -:7:- AGAINST 26Q OF Q3 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P11 TRUE COPY OF THE INTIMATION OF U/S 234E, AGAINST 24Q OF Q3 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P12 TRUE COPY OF THE INTIMATION OF U/S 234E, AGAINST 24Q OF Q4 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P13 TRUE COPY OF THE INTIMATION OF U/S 234E, AGAINST 26Q OF Q4 FOR 2014-15 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P14 TRUE COPY OF THE INTIMATION OF U/S 234E, AGAINST 24Q OF Q1 FOR 2015-16 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P15 TRUE COPY OF THE INTIMATION OF U/S 234E, AGAINST 26Q OF Q1 FOR 2015-16 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P16 TRUE COPY OF THE NOTICE NO.ITBA/COM/F/17/2021-22/1037145198(1) DATED 23.11.2021 ISSUED BY THE IST RESPONDENT REGARDING TDS DUES INCLUDING LATE FEED UNDER 234E. RESPONDENT’S EXHIBITS : NIL AJM //TRUE COPY// PA TO JUDGE

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