What did the High Court hold?

The High Court held that KSRTC was justified in deducting income tax from the gratuity amount exceeding the prescribed ceiling limit. The employee retains the liberty to claim a refund if they are not liable for the tax.

The Karnataka State Road Transport Corporation (KSRTC) deducted income tax from an employee's gratuity payment, arguing it was justified as the gratuity exceeded the ceiling limit. The authorities had previously ruled against such deductions.

What were the issues?

Whether income tax can be deducted from gratuity payments when the amount exceeds the statutory ceiling limit.

Karnataka State Road vs The Deputy Labour Commissioner | Karnataka High Court 2020

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 9TH DAY OF SEPTEMBER, 2020

BEFORE

THE HON'BLE MR.JUSTICE N.S.SANJAY GOWDA

WRIT PETITION NO.50127 OF 2015 (L-KSRTC)

BETWEEN

KARNATAKA STATE ROAD TRANSPORT CORPORATION MYSORE URBAN DIVISION MYSORE BY ITS DIVISIONAL CONTROLLER REPRESENTED BY ITS CHIEF LAW OFFICER.

…PETITIONER

(BY SMT. H.R. RENUKA, ADVOCATE)

AND 1. THE DEPUTY LABOUR COMMISSIONER AND APPELLATE AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT REGION 2, KARMEEKA BHAVANA BANNERGHATTA ROAD BANGALORE-560029.

THE ASSISTANT LABOUR COMMISSIONER AND CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY ACT MYSORE DIVISION MYSORE-570 001.

2 3. Y.C. NARAYANA S/O Y.S. CHANDRASHEKARAIAH ADULT NO.210, M BLOCK 2ND STAGE, 2ND MAIN 9TH CROSS, KUVEMPUNAGAR MYSORE-570 023. …RESPONDENTS

(BY SRI P.B. ACHAPPA, AGA FOR R1 & R2, R3 IS SERVED & UNREPRESENTED)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDERS PASSED DTD. 02.11.2012 (ANNEX-A) PASSED BY THE R-2.

THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:

ORDER

KSRTC has filed this writ petition challenging Annexures- ‘A’ and ‘C’ by which the authorities have come to the conclusion that the deduction of income tax towards gratuity payable to the employee could not have been done by the KSRTC.

3 2. Notice of this petition was served on the respondent No.3. However despite notice being served, he has chosen to remain absent.

The learned counsel for the petitioner contends that issue raised in this writ petition is covered by the decision rendered in W.P.No.5759/2006 which has also been followed in W.P.No.18946/2010. She contends that as per the said decision, the KSRTC is entitled to deduct the income tax wherever the gratuity amount payable was more than the ceiling limit fixed.

In the instant case, it is not in dispute that the gratuity payable to the petitioner on the ceiling limit was Rs.3,50,000/- and the gratuity payable was Rs.3,61,457/- and in that view of the matter, the KSRTC was justified in deducting the sum of Rs.23,211/- towards income tax.

4 5. In view of the aforestated decisions rendered by this Court, the impugned orders cannot be sustained and the same were accordingly to be set aside.

It is hereby held that the deduction made by the KSRTC towards income tax over and above the prescribed ceiling limit is valid. The workmen would however, be at liberty to claim refund of the income tax deducted by the KSRTC, if he is not liable to pay the income tax an the said amount.

Accordingly, the writ petition is allowed.

Sd/- JUDGE

SSD

KARNATAKA STATE ROAD vs. THE DEPUTY LABOUR COMMISSIONER

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