M/S TEE ENN ENTERPRISES vs. UNION OF INDIA

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 12TH DAY OF JUNE, 2015

BEFORE

THE HON’BLE MR.JUSTICE ARAVIND KUMAR

WRIT PETITION NO. 26589/2014 C/W W.P.NOS.3476-3479/2014 & 5661-5665/2014, 3725/2014 & 9922-9923/2014, 6918-6938/2014, 11889-11890/2014, 12097-12121/2014, 13065-13074/2014, 14294- 14295/2014 & 30565-30567/2014, 14296-14297/2014 & 29363-29365/2014, 14669/2014 & 15513-15514/2014, 16939-16950/2014, 18788-18791/2014 & 18792/2014, 19398-19399/2014, 19407-19421/2014, 19762- 19775/2014, 23541-23549/2014, 25841-25848/2014, 26586-26587/2014, 26588/2014, 10243/2014 & 11891- 11894/2014, 15476/2014 & 16111-16113/2014, 24023/2014, 46360/2014, 41614-41617/2014, 41618/2014, 38130-38134/2014, 53286-53289/2014 & 53290-53291/2014, 38127-38129/2014 AND 37689/2014 & 5641-5658/2015 (T-IT)

W.P.NO.26589/2014:

BETWEEN:

M/S. LAKSHMINIRMAN BANGALORE PVT.LTD 15, SRIKANTAN LAYOUT, HIGH GROUNDS, R

2 BENGALURU- 560001 REPRESENTED BY ITS MANAGING DIRECTOR SRI G R SURESH AGED ABOUT 58 YEARS SON OF SRI RANGARAJAN

... PETITIONER

(BY SRI. S PARTHASARATHI, SRI. P. DINESH & SRI. JINITA CHATTERJEE ADVOCATES)

AND:

(BY SRI. K V ARAVIND, ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLE 226 & 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH AND TO HOLD THE PROVISIONS OF SECTION 234E OF THE ACT AS ULTRA VIRES OF THE CONSTITUTION OF INDIA.

W.P.NOs.3476-3479/2014 & 5661-5665/2014:

BETWEEN:

3 AGED ABOUT 54 YEARS, 229-234, SRIPADA UNIVERSITY POST ULLAL UPANAGAR BANGALORE -560 056.

... PETITIONERS

(BY SRI. RAMA MURTHY R, ADVOCATE)

AND:

4 MINISTRY OF FINANCE SOUTH BLOCK NEW DELHI- 110001.

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE & STRIKE DOWN PROVISIONS OF SEC.234E OF THE INCOME TAX ACT, 1961 AS UNCONSTITUTIONAL AND VIOLATIVE OF ARTICLE 14 OF THE CONSTITUTION OF INDIA.

W.P.NOs.3725/2014 & 9922-9923/2014:

BETWEEN:

M/S. K K BROTHERS NO.25/1, CHANDRA SOLITAIR, PAPANNA LANE, J.M.ROAD CROSS, BENGALURU-560002 (REPRESENTED BY TIS PRORIETOR SRI.GOUTHAMCHAND K MEHTA

5 AGED ABOUT 42 YEARS, S/O SRI.KANTILAL H MEHTA). ... PETITIONER (BY SRI CHYTHANYA K K, ADVOCATE)

AND:

(BY SRI.K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF CONSTITUTION OF INDIA PRAYING TO DECLARE THE NEWLY INSERTED SEC.234E OF THE IT ACT, BY THE FINANCE ACT, 2012 AS UNCONSTITUTIONALBEING ARBITRARY, DISCRIMINATORY & UNREASONABLE. THE RELEVANT EXTRACT OF SECTION 234E IS ENCLOSED AS ANNEXURE-A.

6 W.P.NOs.6918-6938/2014:

BETWEEN:

7 SRI T. VENKATARAMANA S/O SRI T.K. VISWESWARA RAO, AGED: 45 YEARS.

8 BANGALORE -560058 BY ITS PROPRIETOR SRI SHIVA KUMAR K.V. S/O SRI VEERANNA K.R. AGED: 40 YEARS.

9 SRI G.S. GIRISH S/O LATE G.N. SIDDANATH, AGED: 46 YEARS.

10 SRI P. GAJENDRA S/O P. MUNISWAMY NAIDU, AGED: 40 YEARS.

11 21. C.R. SHREEKUMAR S/O M.K. RAGHAVAN NAIR AGED: 52 YEARS 28/2, KEMPAIAH ESTATE, NEAR BMTC DEPOT 4TH PHASE PIA, PEENYA INDUSTRIAL AREA BANGALORE.

... PETITIONERS

(BY SRI.S R SHIVA PRAKASH, ADVOCATE)

AND:

12 THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE FINANCE ACT NO.2 OF 2012 BY WAY OF INSERTION OF SECTION 234E TO INCOME TAX ACT 1961 IS UNREASONABLE AND UNCONSTITUTIONAL BEING OPPOSED TO ARTICLE 265 AND 277 OF THE CONSTITUTION OF INDIA, AND HOLD THE SAID IMPUGNED PROVISION OF SECTION 234E OF THE INCOME-TAX ACT, 1961 AS VIOLATIVE OF THE CONSTITUTION OF INDIA FOR THE REASONS SET OUT IN THIS PETITION AND FOR WHICH THE PETITIONER SHALL EVER BE GRATEFUL.

W.P.NOs.11889-11890/2014:

BETWEEN:

... PETITIONERS

(BY SMT CHYTHANYA K K, ADVOCATE)

AND:

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE NEWLY INSERTED SEC.234E OF THE IT ACT BY THE FINANCE ACT 2012 AS UNCONSTITUTIONAL BEING ARBITRARY, DISCRIMINATORY & UNREASONABLE. THE RELEVANT EXTRACT OF SEC.234E IS ENCLOSED AS ANNEXURE-A.

14 W.P.NOs.12097-12121/2014:

BETWEEN:

15 AGED ABOUT 43 YEARS, NO.995/B, KATTRIGUPPE MAIN ROAD, ASHOKNAGAR, BANGALORE-560 050.

16 10. M/s. TECHNOART CONSTRUCTIONS PVT. LTD, REP. BY ITS DIRECTOR MR.N.KARTHIK, AGED ABOUT 35 YEARS, NO.19 & 19/1, 3RD FLOOR, SOUTH END ROAD, BASAVANAGUDI, BANGALORE-560 004.

... PETITIONERS

(BY SRI. RAMA MURTHY R, ADVOCATE)

AND:

INCOME TAX (TDS) HMT BHAVAN, BELLARY ROAD,

17 GANGANAGAR, BANGALORE-560 032. ... RESPONDENTS

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUION OF INDIA PRAYING TO DECLARE & STRIKE DOWN PROVISIONS OF SEC. 234E OF THE INCOME TAX ACT, 1961 AS UNCONSTITUTIONAL & VIOLATIVE OF ARTICLE 14 OF THE CONSTITUTION OF INDIA.

W.P.NOs.13065-13074/2014:

BETWEEN:

18 PROPRIETOR SRI PIYUSH S SHAH AGED ABOUT 61 YEARS, S/O SRI SHANTILAL SHAH)

19 GENERAL AGENCIES NO.111/71, 1ST FLOOR, 6TH MAIN, 5TH BLOCK, JAYANAGAR BANGALORE-560 041 (REPRESENTED BY ITS PROPRIETOR SRI BABULAL CHOUHAN AGED ABOUT 67 YEARS, S/O SRI SHESHMAL)

... PETITIONERS

(BY SMT CHYTHANYA K K, ADVOCATE)

20 AND:

(BY SR K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE NEWLY INSERTED SECTION 234E OF THE IT ACT, BY THE FINANCE ACT 2012 AS UNCONSTITUTIONAL BEING ARBITRARY, DISCRIMINATORY & UNREASONABLE, THE REVEVANT EXTRACT OF SEC.234E IS ENCLOSED AS ANNEXURE-A.

21 W.P.NOs.14294-14295/2014 & 30565-30567/2014

BETWEEN:

(BY SRI.M.V. SESHACHALA SR. COUNSEL FOR SRI ARAVIND V CHAVAN, ADVOCATE)

AND:

22 3. THE CHIEF COMMISSIONER OF INCOME TAX-I C.R.BUILDINGS QUEENS ROAD BANGALORE-560001.

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A DECLARATION THAT SEC. 234E OF THE INCOME TAX ACT, 1961 INTRODUCED BY FINANCE ACT NO.2/2012 FOR THE VARIOUS GROUNDS RAISED IN THIS WRIT PETITION AS UNCONSTITUTIONAL AND VOID.

W.P.NOs.14296-14297/2014 & 29363-29365/2014:

BETWEEN:

23 R/AT PLOT NO. 86 III PHASE, PEENYA INDUSTRIAL AREA, BANGALORE-560058 ... PETITIONERS

(BY SRI.M.V. SESHACHALA SR. COUNSEL FOR SRI ARAVIND V CHAVAN, ADVOCATE)

AND:

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A DECLARATION THAT SEC.234E OF THE INCOME TAX ACT, 1961, INTRODUCED BY FINANCE ACT NO.2/2012 FOR THE VARIOUS GROUNDS RAISED IN THIS WRIT PETITION AS UNCONSTITUTIONAL & VOID.

W.P.NOs.14669/2014 & 15513-15514/2014:

BETWEEN:

ECOLE SOLUTIONS PVT., LTD., LEVEL 3, BRIGADE BUSINESS SUITES ASHOKA PILLAR JAYNAGAR 2ND BLOCK BANGALORE -560011, REP. BY ITS DIRECTOR, MR. VENKATESH L.S. S/O SHRINIVASAN IYENGAR AGED ABOUT 46 YEARS.

... PETITIONER

(BY SMT LAKSHMY IYENGAR, ADVOCATE)

AND:

25 JEEVAN DEEP BUILDING PARLIAMENT STREET NEW DELHI -110001.

(BY SRI K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE NOTICES DATED 26.10.2013 AND 17.11.2013 AND ISSUED UNDER THE PROVISIONS OF THE INCOME TAX ACT 1961 PROPOSING TO LEVY FEE FOR DELAY IN FURNISHING STATEMENT U/S 200[3] OF PROVISO TO SUB SECTION [3] OF SECTION 206C OF THE INCOME TAX ACT 1961, VIDE ANNEXURES-A1 TO A3.

W.P.NOs.16939-16950/2014:

BETWEEN:

26 MRS.S.USHA AGED ABOUT 56 YEARS, D/O SRI.A.P.NATH)

27 6. M/s.GOVERNMENT HIGH SCHOOL PRANTHYA, MOODBIDRI-574197 (REPRESENTED BY ITS HEAD MISTRESS SMT.RAJASHREE B AGED ABOUT 43 YEARS, D/O SRI.JAGATHPALA HEGDE M )

28 10. M/s.BENEFIT FILMCITY INDIA LTD., PANDITH S HEALTH RESPORT & SPA, ALANGAR, MOODBIDRI-574227, (REPRESENTD BY ITS DIRECTOR RUBY AGARWAL AGED ABOUT 40 YEARS, D/O SRI.HARISH AGARWAL)

... PETITIONERS

(BY SMT CHYTHANYA K K, ADVOCATE)

AND:

29 2. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRALIZED PROCESSING CELL-TDS, AAYKAR BHAVAN, SECTOR-3, VAISHALI, GHAZIABAD, U.P.-201010.

... RESPONDENTS

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE NEWLY INSERTED SECTION 234E OF THE IT ACT, BY THE FINANCE ACT, 2012 AS UNCONSTITUTIONAL BEING ARBITRARY, DISCRIMINATORY AND UNREASONABLE. THE RELEVANT EXTRACT OF SECTION 234E IS ENCLOSED AS ANNEXURE-A.

W.P.NOs.18788-18791/2014 & 18792/2014:

BETWEEN:

M/s.NEW MEDIA COMPANY NO.12/1, KAMAL VAIBHAV, SOWRASTRAPET MAIN ROAD,

30 BANGALORE-560 005 (REPRESENTED BY ITS PARTNER SRI SHREEKANTH PARASHAR AGED ABOUT 58 YEARS, S/O SRI J P PARASHAR).

... PETITIONER

(BY SMT CHYTHANYA K K, ADVOCATE)

AND:

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE NEWLY INSERTED SECTION 234E OF THE IT ACT, BY THE FINANCE ACT, 2012 AS

31 UNCONSTITUTIONAL BEING ARBITRARY, DISCRIMINATORY AND UNREASONABLE. THE RELEVANT EXTRACT OF SECTION 234E IS ENCLOSED AS ANNEXURE-A.

W.P.NOs.19398-19399/2014:

BETWEEN:

SYNDICATE BANK TAX CELL, HEAD OFFICE, MANIPAL-576 104 REPRESENTED BY ITS ASSISTANT GENERAL MANAGER MR R RAMALINGAM.

... PETITIONER

(BY SRI. K.P. KUMAR SR. COUNSEL FOR SRI T. SURYANARAYANA, ADVOCATE)

AND:

32 GANGANAGAR, BENGALURU-560 032.

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT SECTION 234E OF THE INCOME TAX ACT, 1961 INSERTED BY THE FINANCE ACT, 2012 WITH EFFECT FROM 1.7.2012, IS ARBITRARY UNFAIR AND UNREASONABLE AND THUS ULTRA VIRES THE CONSTITUTION OF INDIA AND OTHER PROVISIONS OF THE ACT.

W.P.NOs.19407-19421/2014:

BETWEEN:

33 REP. BY ITS SECRETARY MR MOHAMMED NIAZ RASHID

34 REP. BY ITS PARTNER SRI G JANARDHAN

S/O SRI.SHIVATHANU AGED ABOUT 58 YEARS NO.3, SHARADA STREE SAMAJA BUILDING, 1ST CROSS CHAMARAJPET, BANGALORE-560018.

35 12. SRI GIRISH S POOJARY S/O SRI SOMAPPA PROP.- M/s.INDUSTRIAL CATERERS AGED ABOUT 49 YEARS NO.910, K N EXTENSION 6TH CROSS, 2ND MAIN YESHWANTHPUR BANGALORE-560022.

... PETITIONERS

(BY SRI. ASHOK A KULKARNI, ADVOCATE)

AND:

36 OF INCOME TAX CENTRALIZED PROCESSING CELL-TDS, AAYKAR BHAWAN, SECTOR-3, VAISHALI, GHAZIABAD, U.P-201010.

... RESPONDENTS

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH ANNEXURE-A DTD.15.2.2014 WITH REFERENCE DTD.18.11.2013 VIDE ANNEX-A1 REFERENCE DTD.8.9.2013 VIDE ANNEX-A2 REFERENCE DTD.14.11.2013 VIDE ANNEX-A3 REFERENCE DTD.14.11.2013 VIDE ANNEX-A4, A5, A6, A7, REF. DTD.4.5.2013 VIDE ANNEX-A8, REF. DTD. 14.11.2013 VIDE ANNEX-A9, REF. DTD.13.11.2013 VIDE ANNEX-A10, REF.DTD.7.9.2013 VIDE ANNEX-A11, REF. DTD. 6.12.2013 VIDE ANNEX-A12, REF. DTD.10.11.2013 VIDE ANNEX-A13 AND A14, REF.NO.10.11.2013 VIDE ANNEX-A14, REF. DTD. 3.2.2014 VIDE ANNEX-A15 TO THE EXTENT THEY PURPORT TO LEVY AND COLLECT FEE U/S.234E AS INDICATED THEREIN ABOVE SAID ALL ANNEXURES PASSED BY R-1.

W.P.NOs.19762-19775/2014:

BETWEEN:

37 SRI K.K.PANDURANGA, AGED 57 YEARS, NO.312, 10TH MAIN, 5TH CORSS, I BLOCK, JAYANAGAR, BANGALORE-560 011.

... PETITIONERS

(BY SRI. RAMA MURTHY R, ADVOCATE)

AND:

38 INCOME TAX, CENTRALIZED PROCESSING CELL-TDS, AAYKAR BHAVAN, SECTOR-3, VAISHALI, GHAZIABAD, U.P.201010.

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONERS ARE FILED UNDER ARTICLES 226 & 227 OF THE INDIAN CONSTITUTION OF INDIA PRAYING TO DECLARE & STRIKE DOWN PROVISIONS OF SEC.234E OF THE INCOME TAX ACT 1961 AS UNCONSTITUTIONAL & VIOLATIVE OF ARTICLE 14 OF THE CONSTITUTION OF INDIA.

W.P.NOs.23541-23549/2014:

BETWEEN:

39 S/O LATE M.SRINIVAS HEGDE, R/AT JANAKI KUTEERA, BEEDINAGUDDE, UDUPI-576 101.

40 S/O SRI VASU SHETTY, R/AT 16-58B, CHANDRAMAA, ANANATHNAGAR, FIRST STAGE, MANIPAL, UDUPI-576 101.

... PETITIONERS

(BY SRI. S PARTHASARATHI, SRI P DINESH AND MS.JINITA CHATTERJEE, ADVOCATES)

AND:

41 MINISTRY OF FINANCE, NEW DELHI-110 001.

... RESPONDENTS

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AND TO HOLD THE PROVISIONS OF SECTION 234E OF THE ACT AS ULTRA VIRES OF THE CONSTITUTION OF INDIA.

W.P.NOs.25841-25848/2014:

BETWEEN:

42 BANGALORE-560 010 BY ITS MANAGING PARTNER SRI.AYAZ AHMED KHAN, S/O IQBAL AHMED KHAN, AGED 44 YEARS

43 BANGALORE-560047, BY ITS DIRECTOR SRI.TEDDY JOSEPH S/O THOOMBUNKAL THOMAS JOSE AGED 41 YEARS.

(BY SRI. S R SHIVAPRAKASH, ADVOCATE, SRI.CHAITANYA V.M., ADVOCATE)

AND:

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE FINANCE ACT N0.2 OF 2012 BY WAY OF INSERTION OF SECTION 234E TO INCOME TAX ACT, 1961 IS UNREASONABLE AND UNCONSTITUTIONAL BEING OPPOSED TO ARTICLE 265 AND 277 OF THE CONSTITUTION OF INDIA, WHEREFORE, IT IS MOST RESPECTFULLY AND MOST HUMBLY SUBMITTED THAT THIS HON'BLE COURT BE PLEASED TO HOLD THE SAID IMPUGNED PROVISION OF SECTION 234E OF THE INCOME-TAX ACT, 1961 AS VIOLATIVE OF THE CONSTITUTION OF INDIA FOR THE REASONS SET OUT IN THIS PETITION AND FOR WHICH THE PETITIONER SHALL EVER BE GRATEFUL.

W.P.NOs.26586-26587/2014:

BETWEEN:

M/s.BUILDMET PRIVATE LIMITED 45, YAMUNABAI ROAD MADHAVANAGAR BANGALORE - 560 001 REPRESENTED BY ITS DIRECTOR , SRI H N VARADARAJAN AGED ABOUT 74 YEARS SON OF SRI H R NIGAMANTHAN ... PETITIONER

(BY SRI. S PARTHASARATHI, SRI P DINESH AND MS.JINITA CHATTERJEE, ADVOCATES)

AND:

... RESPONDENTS

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLE 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AND TO HOLD THE PROVISIONS OF SEC.234E OF IT ACT AS ULTRA VIRES OF THE CONSTITUTION OF INDIA.

W.P.NO.26588/2014:

BETWEEN:

M/s. MEDHA PROJECTS 9, 17TH CROSS MALLESWARAM BANGALORE -560 055 REPRESENTED BY ITS MANAGING PARTNER SMT SANDHYA S

46 AGED ABOUT 51 YEARS WIFE OF SRI G R SURESH.

... PETITIONER

(BY SRI. S PARTHASARATHI, SRI P DINESH AND MS.JINITA CHATTERJEE ADVOCATES)

AND:

... RESPONDENTS

(BY SRI. K V ARAVIND, ADVOCATE)

THIS WP FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH & HOLD THE PROVISIONS OF SEC.234E OF IT ACT AS ULTRA VIRES OF THE CONSTITUTION OF INDIA.

W.P.NOs.10243/2014 & 11891-11894/2014:

BETWEEN:

DR V. NARAYANASWAMY AGED ABOUT 43 YEARS, S/O VENKATAPPA, RESIDING AT #133, LEELA HOSPITAL, 10TH CROSS, MARGOSA ROAD,

47 MALLESHWARAM, BANGALORE-560003.

... PETITIONER

(BY SRI. BALRAM R RAO, ADVOCATE)

AND:

(BY SRI. K V ARAVIND, ADVOCATE)

48 THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ONLINE INTIMATIONS/ORDERS OF THE R-5 DTD.14.11.2013 AND 15.11.2013 PASSED UNDER SECTION 200A OF THE ACT FOR THE FINANCIAL YEAR 2012-13 AND 2013-14 IN COMMUNICATION VIDE ANNEXURES-A1-A5.

W.P.NOs.15476/2014 & 16111-16113/2014:

BETWEEN:

CENTRAL POWER RESEARCH INSTITUTE P B NO.8066, PROF. SIR C V RAMAN ROAD BANGALORE-560080 REPRESENTED BY ITS CHIEF ADMINISTRATIVE OFFICER SRI.N R PADMANABHA S/O SRI N S RANGANATHA RAO ABOUT 56 YEARS.

... PETITIONER

(BY SMT.VANI H, ADVOCATE)

AND:

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE NEWLY INSERTED SECTION 234E TO INCOME TAX ACT 1961 BY FINANCE ACT 2012 AS VIOLATIVE OF ARTICLES 14, 265 AND 277 AND THUS ULTRA VIRES THE CONSTITUTION OF INDIA IN SO FAR AS THE PETITIONER IS CONCERNED.

W.P.NO.24023/2014:

BETWEEN:

CENTRAL POWER RESEARCH INSTITUTE, P B NO.8066, PROF. SIR C V RAMAN ROAD, BANGALORE-560080 REPRESENTED BY ITS CHIEF ADMINISTRATIVE OFFICER, SRI. N R PADMANABHA, S/O SRI.N S RANGANATHA RAO AGED ABOUT 56 YEARS

... PETITIONER

(BY SMT.VANI H, ADVOCATE)

AND:

(BY SRI. K V ARAVIND, ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE NEWLY INSERTED SECTION 234E TO INCOME TAX ACT, 1961 BY FINANCE ACT, 2012 AS VIOLATIVE OF ARTICLES 14, 265 AND 277 AND THUS ULTRA VIRES THE

51 CONSTITUTION OF INDIA IN SO FAR AS THE PETITIONER IS CONCERNED.

W.P.NO.46360/2014:

BETWEEN:

CENTRAL POWER RESEARCH INSTITUTE, P.B. NO.8066, PROF. SIR C V RAMAN ROAD, BANGALORE-560 080, REPRESENTED BY ITS CHIEF ADMINISTRATIVE OFFICER, SRI N R PADMANABHA, S/O SRI N S RANGANATHA RAO, AGED ABOUT 56 YEARS.

... PETITIONER

(BY SMT. VANI H, ADVOCATE)

AND:

52 4. THE DEPUTY COMMISSIONER OF INCOME TAX, TDS RECONCILIATION ANALYSIS AND CORRECTION ENABLING SYSTEM, TDS CPC, AAYAKAR BHAWAN, SECOTR-3, VAISHALI, GHAZIABAD, UTTAR PRADESH-201010. ... RESPONDENTS

(BY SRI. K V ARAVIND, ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE NEWLY INSERTED SECTION 234E TO INCOME TAX ACT, 1961 BY FINANCE ACT, 2012 AS VIOLATIVE OF ARTICLES 14 AND 265 AND THUS ULTRA VIRES THE CONSTITUTION OF INDIA IN SO FAR AS THE PETITIONER IS CONCERNED.

W.P.NOs.41614-41617/2014:

BETWEEN:

53 RACE COURSE ROAD, BANGALORE-560 001

... PETITIONERS

(BY SRI SHANKAR A, ADVOCATE)

AND:

54 QUEENS ROAD, BANGALORE-560 001

(BY SRI. K.V. ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE FINANCE ACT NO.2 OF 2012 BY WAY OF INSERTION OF SECTION 234E TO INCOME TAX ACT, 1961 IS UNREASONABLE AND UNCONSTITUTIONAL BEING OPPOSED TO ARTICLE 265 AND 277 OF THE CONSTITUTION OF INDIA. WHEREFORE, IT IS MOST RESPECTFULLY AND MOST HUMBLY SUBMITTED THAT THIS HON'BLE COURT BE PLEASED TO HOLD THE SAID IMPUGNED PROVISION OF SECTION 234E OF THE INCOME-TAX ACT, 1961 AS VIOLATIVE OF THE CONSTITUTION OF INDIA FOR THE REASONS SET OUT IN THIS PETITION AND FOR WHICH THE PETITIONER SHALL EVER BE GRATEFUL.

W.P.NO.41618/2014:

BETWEEN:

M/s.SUN ZONE SOLAR SYSTEMS REP. BY ITS MANAGING PARTNER SRI.PADMANABH.S.T AGED ABOUT 52 YEARS, SON OF SRI.SHIVARAPPA T

55 NO.1/4, BALAGANGADHAR NAGAR, BEHIND KANYAKUMARI SCHOOL, MALLATHAHALLI, BANGALORE-560 056.

... PETITIONER

(BY SRI. SHANKAR A, ADVOCATE)

AND:

REP. BY DEPUTY COMMISSIONER OF INCOME TAX

56 CENTRALISED PROCESSING CELL-TDS.

... RESPONDENTS

(BY SRI. K.V. ARAVIND, ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO A WRIT OF DECLARATION OR ANY OTHER APPROPRIATE WRIT, ORDER OR DIRECTION DECLARING THAT THE FINANCE ACT NO.2 OF 2012 BY WAY OF INSERTION OF SECTION 234E TO INCOME TAX ACT, 1961 IS UNREASONABLE AND UNCONSTITUTIONAL BEING OPPOSED TO ARTICLE 265 AND 277 OF THE CONSTITUTION OF INDIA, AND HOLD THE SAID IMPUGNED PROVISION OF SECTION 234E OF THE INCOME-TAX ACT, 1961 AS VIOLATIVE OF THE CONSTITUTION OF INDIA FOR THE REASONS SET OUT IN THIS PETITION AND FOR WHICH THE PETITIONER SHALL EVER BE GREATFUL.

W.P.NOs.38130-38134/2014:

BETWEEN:

57 KHB COLONY, KORAMANGALA, BANGALORE-560034.

... PETITIONERS

(BY SRI. S R SHIVA PRAKASH, ADVOCATE & SRI.CHAITANYA V.M., ADVOCATE)

AND:

58 4. TDS RECONCILIATION ANALYSIS AND CORRECTION ENABLILNG SYSTEM TDS CPC, AAYKAR BHAWAN, SECTOR-3, VAISHALI, GHAZIABAD, U.P-201010. ... RESPONDENTS

(BY SRI. K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLE 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE FINANCE ACT NO.2 OF 2012 BY WAY OF INSERTION OF SECTION 234E TO INCOME TAX ACT, 1961 IS UNREASONABLE AND UNCONSTITUTIONAL BEING OPPOSED TO ARTICLE 265 AND 277 OF THE CONSTITUTION OF INDIA. WHEREFORE, IT IS MOST RESPECTFULLY AND MOST HUMBLY SUBMITTED THAT THIS HON'BLE COURT BE PLEASED TO HOLD THE SAID IMPUGNED PROVISION OF SEC. 234E OF THE INCOME- TAX ACT, 1961 AS VIOLATIVE OF THE CONSTITUTION OF INDIA FOR THE REASONS SET OUT IN THIS PETITION AND FOR WHICH THE PETITIONER SHALL EVER BE GRATEFUL.

W.P.NOs.53286-53289/2014 & 53290-53291/2014:

BETWEEN:

59 2. M/s. SUDHA MELTCHMES PRIVATE LIMITED REP. BY ITS MANAGING DIRECTOR SRI RAJARAM BHUTARA AGED ABOUT 64 YEARS, S/O SRI SUGAN CHAND BHUTARA THE COMPANY IS SITUATED AT NO.3, MAHRISHI MANSION, 3RD CROSS, MYSORE ROAD, BANGALORE-560 026.

... PETITIONERS

(BY SRI. SHANKAR A, ADVOCATE)

AND:

60 CENTRAL REVENUE BUILDING, QUEENS ROAD, BANGALORE-560 0001.

(BY SRI.K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE FINANCE ACT NO.2 OF 2012 BY WAY OF INSERTION OF SECTION 234E TO INCOME TAX ACT, 1961 IS UNREASONABLE AND UNCONSTITUTIONAL BEING OPPOSED TO ARTICLE 265 AND 277 OF THE CONSTITUTION OF INDIA, AND HOLD THE SAID IMPUGNED PROVISION OF SECTION 234E OF THE INCOME-TAX ACT, 1961 AS VIOLATIVE OF THE CONSTITUTION OF INDIA FOR THE REASONS SET OUT IN THIS PETITION AND FOR WHICH THE PETITIONER SHALL EVER BE GRATEFUL.

W.P.NOs.38127-38129/2014:

BETWEEN:

SREE C B EDUCATIONAL AND CULTURAL TRUST SY NO.122 & 124,CBIT SRINIVASPURA ROAD TORADEVANDA HALLI (V) KOLAR- 563 101

61 BY ITS SECRETARY SRI V KRISHNA REDDY S/O SRI LATE BENKATASWAMY AGED 52 YEARS.

... PETITIONER

(BY SRI. S R SHIVA PRAKASH, ADVOCATE & SRI.CHAITANYA V.M., ADVOCATE)

AND:

(BY SRI. K V ARAVIND, ADVOCATE)

62 THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE FINANCE ACT NO.2/12 BY WAY OF INSERTION OF SEC.234E TO INCOME TAX ACT, 1961 IS UNREASONALBE & UNCONSTITUTIONAL BEING OPPOSED TO ARTICLE 265 & 277 OF THE CONSTITUTION OF INDIA & BE PLEASED TO HOLD THE SAID IMPUGNED PROVISON OF SEC.234E OF THE INCOME TAX ACT 1961 AS VIOLATIVE OF THE CONSTITUTION OF INDIA FOR THE REASONS SET OUT IN THIS PETITION & FOR WHICH THE PETITIONER SHALL EVER BE GRATEFUL, VIDE ANNEXURES-A1 TO A3 SO FAR PETITIONER CONCERNED.

W.P.NO.37689/2014:

BETWEEN:

M/s.PRAKASH BUS CORPORATION PVT., LTD., SURVEY NO.26 & 1, KENDATTI GOLOLAHALLI VILLA, VAKKALERI HOBLI, KOLAR TALUK-563133, REPRESENTED BY ITS DIRECTOR, SIR SUBASH KAUL, AGED ABOUT 52 YEARS, S/O SRI AVTAR KRISHEN KAUL. ... PETITIONER

(BY SRI. S PARTHASARATHI, ADVOCATE & SRI P. DINESH AND JINITA CHATTERJEE ADVOCATES)

AND:

63 AAYKAR BHAWAN, SECTOR-3, VAISHALI, GHAZIABAD, UP-201010.

... RESPONDENTS

(BY SRI. K V ARAVIND, ADVOCATE)

THIS W.P. FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH AND TO HOLD THE PROVISIONS OF SECTION 234E OF THE ACT EXTRACTED AT PAGE NO. 5 ABOVE AS ULTRA VIRES OF THE CONSTITUTION OF INDIA VIDE ANNEXURES-A, A1 & A2.

W.P.NOs.5641-5658/2015

BETWEEN:

64 DAVANGERE-577002 BY ITS SECREARY SMT T N TANUJA AGED 46 YEARS.

65 BANGALORE-560065 BY ITS MANAGING PARTNER SRI A NARASIMHA RAJU S/O A SATYNARAYANA RAJU AGED 46 YEARS.

(BY SRI. S R SHIVA PRAKASH, ADVOCATE & SRI.CHAITANYA V.M., ADVOCATE)

AND:

66 DEPARTMENT TO REVENUE 4TH FLOOR, JEEVAN DEEP BUIDLING, PARLIAMENT STREET NEW DELHI-110001.

(BY SRI.K V ARAVIND, ADVOCATE)

THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE FINANCE ACT NO.2/2012 BY WAY OF INSERTION OF SEC. 234E TO INCOME TAX ACT, 1961 IS UNREASONABLE AND UNCONSTITUTIONAL BEING OPPOSED TO ARTICLE 265 AND 277 OF THE CONSTITUTION OF INDIA. WHEREFORE, IT IS MOST RESPECTFULLLY AND MOST HUMBLY SUBMITTED THAT THIS HON'BLE COURT BE PLEASED TO HOLD THE SAID IMPUGNED PROVISION OF SEC. 234E OF THE INCOME-TAX ACT, 1961 AS VIOLATIVE OF THE CONSTITUTION OF INDIA FOR THE REASONS SET OUT IN THIS PETITION FOR WHICH THE PETITIONER SHALL EVER BE GRATEFUL.

67 THESE WRIT PETITIONS BEING HEARD AND RESERVED, COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:

O R D E R

In all these petitions the constitutional validity of Section 234E of the Income Tax Act, 1961 (for short `Act’) has been challenged contending it is ultra vires of Constitution of India and/or to declare by an appropriate writ that under the newly inserted Section 234E of the Act, fee could be levied only after affording the petitioners a reasonable opportunity and for consequential relief of quashing the intimations whereunder fee has been levied under Section 234E for late filing of TDS statements.

68 Chavan, T.Suryanarayana, Smt.Lakshmy Iyengar, Ashok A. Kulkarni, Balram R. Rao, Smt.Vani H., Shankar A., learned advocates appearing for petitioners and Sri.K.V.Aravind, learned Senior standing counsel along with Sri.Jeevan J. Neeralagi appearing for respondents.

69 service being rendered to them is wholly unjustified and leads to arbitrary and high pitched demands being raised under the Act, more so without an opportunity of hearing being extended to the deductors. (c) For levy of `fee’ services should be rendered by the State and it is quid- pro-quo. In the absence of any services being rendered by the State to demand `fee’ or levy of such fee would be without authority of law. There being no rational or nexus to `levy’ of fee under the impugned provision for `service’ being rendered by the State (which is none), such imposition is bad-in-law, unconstitutional and ultra vires of the Constitution.

(d) The impugned provision overrides the charging Section namely Section 4(1) of the Act or in other words it militates against Section 4 and as such the impugned provision is unconstitutional. (e) When the reasons for introduction of impugned provision indicates that as a deterrence against delayed filing of the TDS statements, Fee is sought to be recovered under Section 234E, it is levy of penalty in disguise though the impugned Section is included under Chapter XVII of the Act. (f) Section 271H provides for penalties imposable and if the delay in filing TDS statements is beyond one

71 year, then both Sections 234E and 271H will be attracted for the same default and no person can be punished for the same default/offence more than once and it is hit by Article 20(2) of the Constitution of India. (g) Impugned provision is against the principle of “audi alterum partem” - no one should be condemned unheard, inasmuch as Section 272A(2)(k) was replaced by introduction of two Sections namely Section 234E and 271H and undisputedly as per repealed Section 272A(4) of the Act such penalty could not had been levied unless opportunity of being heard is extended to the person. Whereas the impugned

72 provision does not afford an opportunity of being heard to the deductor before levy of penalty. (h) The impugned provision is beyond the legislative competence of Parliament under Article 246(1) read with Entry 82 of List I of Schedule 7 of the Constitution of India since by the impugned provision it seeks to impose a `fee’ for delay in filing the statement of taxes deducted at source visa-viz., `taxes on income’ as envisaged in Entry 82 of List I of Schedule 7. (i) Taxes having been deducted at source and having been remitted to the credit of the Central Government by the deductors within the stipulated time, no loss is caused to exchequer

73 and as such the impugned levy under Section 234E of the Act amounts to abuse of legislative power. (j) The impugned provision is violative of Article 19(1)(g) of the Constitution of India as it imposes unreasonable restriction on the business carried on by petitioners by imposing unnecessary and excessive levies under the garb of a `fee’. (k) When various causes for delay in filing of the statements of taxes deducted at source would be there, if same is not taken into account, it would lead to unreasonable and unwarranted hardship to the deductors and therefore imposition of fee without affording an opportunity of hearing to

74 explain the cause for such delay has to be struck down as being opposed to principles of natural justice. (l) The Department itself is not clear as to whether it is a ‘fee’ or a ‘penalty’ or what service is being rendered and if so, to whom. But on the other hand, the objects or reasons for introducing the impugned Section 234E would indicate it is qualitatively imposition of penalty. (m) When there is a civil obligation and consequences which flow from non compliance entails such person of being extended an opportunity to explain. In the absence of such in built provision being available the

75 provision would be against principles of natural justice. (n) On the principles of proportionality the impugned provision has to be struck down since fee is not levied on quantum of income but on the number of days delay. (o) The scheme of Section 234E appears to be irrational and failure to classify properly amongst deductors, there is intelligible differentia between the same class of persons.

In support of their submissions they have relied upon the following Judgments:

(1) High Court of Judicature at Bombay - W.P.771/2014 – Mr.Rashmikant Kundalia and another Vs Union of India and others

76 (2) 2006 STC Vol.145 544 –

Jindal Stainless Ltd., and another Vs State of Haryana and others

(3) AIR 1996 SC 767 –

Secretary to Government of Madras and anr Vs P.R.Sriramulu and anr

(4) AIR 1989 SC 100 –

P.M.Ashwathanarayana Setty and others

Vs State of Karnataka and others

(5) AIR 2003 SC 4650 –

State of U.P. and others Vs Vam Organic Chemicals Ltd., and others

(6) AIR 1974 SC 555 –

E.P.Royappa Vs State of Tamil Nadu and another

(7) (2001)2 SCC 386 –

Om Kumar and others Vs Union of India

(8) 1993 ITR Vol.199 530 –

C.B.Gautam Vs Union of India and others

(9) 2002 ITR Vol.254 755 –

Dr.Prannoy Roy and another Vs Commissioner of Income Tax and another

(10) 2009 ITR Vol.309 231 –

Commissioner of Income-Tax and another Vs Pranoy Roy and another

77 (11) (2007)10 SCC 342 –

State of Uttar Pradesh and others Vs Deepak Fertilizers and Petrochemical Corporation Ltd.

(12) ITA Nos.2564/2005 C/W 2565/2005 – Commissioner of Income Tax and anr Vs Manjunatha Cotton and Ginning Factory

(13) (2006) 206 CTR 0175 –

Civil Appeal No.4633/2006 – Rajesh Kumar and ors Vs Deputy Commissioner of Income tax and others

(14) (2008)216 CTR 0303 – Civil Appeal Nos.2783 & 2784/2008 – Sahara India (Firm) Vs Commissioner of Income Tax and anr

(15) (2010)234 CTR 0153 – Civil Appeal Nos.7541 & 7542/2010- GE India Technology Centre (P) Ltd. Vs Commissioner of Income Tax and anr

(16) AIR 1954 SC 282 (Vol.41) –

The Commissioner, Hindu Religious Endowments, Madras Vs Sri.Lashmindra Thirtha Swamiar of Sri.Shirur Mutt

(17) (1995)1 SCC 655 – Krishi Upaj Mandi Samiti and others Vs Orient Paper and Industries Ltd.

78 (18) AIR 1981 SC 1863 –

Southern Pharmaceuticals and Chemicals, Trichur and others Vs State of Kerala and others

(19) W.P.6918-6938/2014

(20) (1980) 1 SCC 416 – Kewal Krishan Puri and anr Vs State of Punjab and another

79 so deducted against his tax liability and same can be taken note off by the jurisdictional assessing Officer of deductee only on the information that would be furnished by the deductor to the Department. It is contended that the significance of TDS lies in the fact that it prepones the collection of tax to ensure regular source of revenue and wider base for tax.

80
Confidence of a general tax payer being eroded.
Late payment of refund results in payment of interest.
Delay in receipt of refund results into cash flow crunch –especially for business activity.

81 attracted to the facts of the present case and even otherwise if remote nexus to services rendered is present, it would suffice to sustain the constitutional validity.

(1) (1983) 3 SCC 229- Municipal Corporation of Delhi & others vs. Mohd. Yasin

(2) (1983) 3 SCC 353- Sreenivasa General Traders & Others vs. State of Andhra Pradesh & Others

(3) (1995) 1 SCC 655- Krishi Upaj Mandi Samiti & Others vs. Orient Paper & Industries Ltd.,

(4) (2004) 8 SCC 556- State of H.P & Others vs. Shivalik Agro Poly Products & others

(5) (1995) 215 ITR 758 (kar.) Union Home Products Ltd & Others vs. Union of India & others

(6) 1989 Supp(1) SCC 696- P.M. Aswathanarayana Setty & Others vs. State of Karnataka

(7) (1996) 1 SCC 345- Secretary Government of Madras vs. P.R. Sriramulu and another

(8) (2008) 4 SCC 720- Government of Andhra Pradesh vs. P. Laxmi Devi

83 is of the considered view that only issue which requires to be examined is: “Whether Section 234E of the Income Tax Act, 1961 inserted by Finance Act, 2012 is to be struck down or its validity is to be upheld?

PREFACE: 9. The Courts normally lean against a construction which reduces the statute to a futility. The maxim “ut res magis valeat quam pereat” – a liberal construction should be put upon written instruments, so as to uphold them, if possible, and carry into effect the intention. It is on application of this principle that Courts while pronouncing upon the constitutionality of a statute start with a presumption in favour of constitutionality and prefer a construction which keeps the statute within the competence of the legislature. Lord Denning stated the principle in FAWCETT PROPERTIES VS BUCKINGHAM COUNTY COUNCIL

84 reported in (1960) 3 All England Report 503 to the following effect: “But when a statute has some meaning even though it is obscure or several meanings, even though it is little to choose between them, the Courts have to say what meaning the statute is to bear, rather than reject it as a nullity”.

85 legislation or in other words a construction which would reduce the legislation to futility would normally would not be eschewed. Thus, the purposive interpretation will have to be taken note of while examining the legislative competence of a statute or a provision in a statute when the same is under challenge.

86 be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of, this Act in respect of the total income of the previous year of every person: Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly.

Instructions to subordinate authorities. 119. (1) xxx (2) Without prejudice to the generality of the foregoing power,—

(a) the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of Sections [115P, 115S, 115WD, 115WE,115WF, 115WG, 115WH, 115WJ, 115WK,] [139,] 143, 144, 147, 148, 154, 155 [158BFA], [sub-section (1A) of Section 201, Sections 210, 211, 234A, 234B, 234C], 271 and 273 or otherwise), general or special orders in respect of any class of incomes [or fringe benefits] or class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be

87 followed by other income-tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information;

Duty of person deducting tax.-

(1) Any person deducting any sum in accordance with [the foregoing provisions of this Chapter] shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs.

(2) Any person being an employer, referred to in sub-section (1A) of Section 192 shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board directs.

(3) Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person being an employer referred to in sub-section (1A) of Section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, [prepare such statements for such period as may be prescribed] and deliver or cause to be delivered to the prescribed income-tax authority or the

88 person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed.

1(Provided that the person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be specified by the authority)

Fee for defaults in furnishing statements.

234E. (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.

(2) The amount of fee referred to in sub- Section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.

(3) The amount of fee referred to in sub- section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of Section

1 . Inserted by Finance Act (No.2) Act, 2014 w.e.f. 1-10-2014

89 200 or the proviso to sub-section (3) of Section 206C. (4) The provisions of this section shall apply to a statement referred to in sub- section (3) of Section 200 or the proviso to sub-section (3) of Section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.

Penalty for failure to furnish statements, etc.— 271H. (1) Without prejudice to the provisions of the Act, (the Assessing Officer may direct that a person shall pay by way of) penalty, if, he— (a) 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 ; or (b)furnishes incorrect information in the statement which is required to be delivered or cause to be delivered under sub-section (3) of Section 200 or the proviso to sub-section (3) of Section 206C. (2) The penalty referred to in sub- section (1) shall be a sum which shall not be less than ten thousand rupees but which may extend to one lakh rupees. (3) Notwithstanding anything contained in the foregoing provisions of this Section, no penalty shall be levied for the failure

90 referred to in clause (a) of sub-section (1), if the person proves that after paying tax deducted or collected along with the fee and interest, if any, to the credit of the Central Government, he had delivered or cause to be delivered the statement referred to in sub-section (3) of Section 200 or the proviso to sub-section (3) of Section 206C before the expiry of a period of one year from the time prescribed for delivering or causing to be delivered such statement. (4) The provisions of this section shall apply to a statement referred to in sub- section (3) of Section 200 or the proviso to sub-section (3) of Section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.

Penalty for Failure to Answer Questions, Sign Statements, Furnish Information, Returns or Statements, Allow Inspections, Etc.

272 (1) xxx

(2) If any person fails-

(a) to (f) xxx (g) to furnish a certificate as required by Section 203 (or Section 206C); or

(h) to (j) xxx

(k) to deliver or cause to be delivered a copy of the statement within the time specified in sub-section (3) of

91 Section 200 or the proviso to sub- section (3) of Section 206C.

He shall pay, by way of penalty, a sum [of one hundred rupees] for every day during which the failure continues:

Penalty not to be imposed in certain cases.-

273B. Notwithstanding anything contained in the provisions of (clause (b) of sub-section (1) of) (Section 271, Section 271A, Section 271AA), Section 271B, (Section 271BA), (Section 271BB), Section 271C, (Section 271CA), Section 271D, Section 271E, (Section 271F, Section 271FA), (Section 271FB), (Section 271G), (Section 271H), clause (c) or clause (d) of sub-section (1) or sub-section (2) of Section 272A, sub-section (1) of Section 272AA) or (Section 272B or) sub-section (1) (or sub-section (1A)) of Section 272BB or) (sub-section (1) of Section 272BBB or) clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of Section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure).

INCOME TAX RULES, 1961

Statement of deduction of tax under sub- section (3) of Section 200.

31A. (1) Every person responsible for deduction of tax under Chapter XVII-B,

92 shall, in accordance with the provisions of sub-section (3) of Section 200, deliver, or cause to be delivered, the following quarterly statements to the Director General of Income-tax (Systems) or the person authorised by the Director General of Income-tax (Systems), namely:—

(a) Statement of deduction of tax under Section 192 in Form No. 24Q;

(b) Statement of deduction of tax under Sections 193 to 196D in—

(i) Form No. 27Q in respect of the deductee who is a non- resident not being a company or a foreign company or resident but not ordinarily resident; and

(ii) Form No. 26Q in respect of all other deductees.

2) Statements referred to in sub-rule (1) for the quarter of the financial year ending with the date specified in column (2) of the Table below shall be furnished by—

(i) the due date specified in the corresponding entry in column (3) of the said Table, if the deductor is an office of Government; and

(ii) the due date specified in the corresponding entry in column (4) of the said Table, if the deductor is a person other than the person referred to in clause (i)

3) (i) The statements referred to in sub- rule (1) may be furnished in any of the following manners, namely:—

(a) furnishing the statement in paper form; (b) furnishing the statement electronically under digital signature in accordance with the procedures, formats and standards specified under sub-rule (5); (c) furnishing the statement electronically along with the verification of the statement in Form 27A or verified through an electronic process in accordance with the procedures, formats and standards specified under sub-rule (5).

(ii) Where,—

(a) the deductor is an office of the Government; or

(b) the deductor is the principal officer of a company; or

(c) the deductor is a person who is required to get his accounts audited under Section 44AB in the immediately preceding financial year; or

(d) the number of deductee's records in a statement for any quarter of the financial year are twenty or more,

the deductor shall furnish the statement in the manner specified in [item (b) or item (c) of clause(i)].

(iii) Where deductor is a person other than

94 the person referred to in clause (ii), the statements referred to in sub-rule (1) may, at his option, be delivered or cause to be delivered in the manner specified in [item (b) or item (c) of clause (i)].

(3A) A claim for refund, for sum paid to the credit of the Central Government under Chapter XVII-B, shall be furnished by the deductor in Form 26B electronically under digital signature in accordance with the procedures, formats and standards specified under sub-rule (5)].

(4) The deductor at the time of preparing statements of tax deducted shall,—

(i) quote his tax deduction and collection account number (TAN) in the statement;

(ii) quote his permanent account number (PAN) in the statement except in the case where the deductor is an office of the Government;

(iii) quote the permanent account number of all deductees;

(iv) furnish particulars of the tax paid to the Central Government including book identification number or challan identification number, as the case may be;

(v) furnish particulars of amount paid or credited on which tax was not deducted in view of the issue of certificate of no deduction of tax under Section 197 by the Assessing Officer of the payee;

(vi) furnish particulars of amount paid or credited on which tax was not deducted in view of the compliance of provisions of sub-section (6) of Section 194C by the payee;]

(vii) furnish particulars of amount paid or credited on which tax was not deducted in view of the furnishing of declaration under sub-section (1) or sub-section (1A) or sub- section (1C) of Section 197A by the payee]

(viii) furnish particulars of amount paid or credited on which tax was not deducted in view of the notification issued under sub- section (1F) of Section 197A]

(5) The Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of the statements or claim for refund in Form 26B and shall be responsible for the day- to-day administration in relation to furnishing and verification of the statements or claim for refund in Form 26B in the manner so specified.]

(6) Where a statement of tax deducted at source is to be furnished for tax deducted before the 1st day of April, 2010, the provisions of this rule and rule 37A shall apply as they stood immediately before their substitution or omission by the Income-tax (Sixth Amendment) Rules, 2010].

96 ANALYSIS OF STATUTORY PROVISIONS: 12. Section 4 of the Act is the charging Section. The scheme of Section 200 of the Act would indicate that the duty is cast on the person deducting the tax to pay within the prescribed time the sum so deducted to the credit of the Central Government. When the tax has been deducted at source, it does not lie at the risk of the revenue and unless the tax so deducted is deposited or paid, the person who has deducted, continues to be responsible. Sub-section (3) of Section 200 would indicate that a person deducting any sum is required to deliver to the prescribed authority such statement in the form verified by setting forth the particulars within the time prescribed. Rule 31A of the Rules prescribe the various Forms under which quarterly statements are required to be delivered or cause to be delivered by the deductor in accordance with Section 200(3) of the Act to the Director General of Income Tax (Systems) or

97 the person authorised by him. Section 200A inserted by Finance Act 2/2009 effective from assessment year 2011-12 is an enabling provision necessitated by the centralized electronic processing system consequent on mandatory e-filing of return. Section 201 spells out the consequences which would follow the assessee, who fails to deduct tax and deposit the same within the time permissible under the statute. Section 202 makes it clear that the power to recover tax by deduction of tax at source under the foregoing provisions of Chapter XVII is in addition to and without prejudice to any other mode of recovery provided in the Act. Section 203 makes it obligatory on the person deducting tax to issue a certificate to the person from whom the tax has been deducted. Section 203A provides that it is obligatory on the part of a person who is liable for tax deduction at source to get this number within the prescribed time and it is also obligatory for such person to quote this

98 number in all challans for payment of any sum under Section 200, all certificates under Section 203 and in all returns filed under Sections 206, 206A and 206B, besides any other documents which may be included for this purpose. Section 203AA provides that prescribed Income Tax Authority or the person authorised by such authority should prepare and deliver a statement containing the details of tax deducted or paid and such other prescribed particulars on or after 01.04.2008 to every person from whose income, tax has been deducted or in respect of whose income, tax has been paid. Section 204 defines persons responsible for paying the tax deducted at source. Such responsibility depends upon category of payment. Section 205 makes it clear that where tax is deductible at source under the provisions of the Act, the assessee himself will not be called upon to pay the tax to the extent to which tax had been deducted from the income. Section 206

99 makes it obligatory on the part of the person deducting the tax at source to file a return within the prescribed time in the prescribed form. Section 206C deals with the procedure of tax collection at source. Section 200(3) or proviso to Section 206C(3) would require a person to deliver a statement as required in the respective section. If the statement is not furnished within the time prescribed, deductor is liable to pay, by way of fee, a sum of Rs.200/- for every day during which the failure continues and such fee would not exceed the tax deductible or collectable as per Section 234E of the Act.

DISCUSSION AND CONCLUSION: 13. The main thrust of the arguments addressed by the learned advocates appearing on behalf of the petitioners as noticed hereinabove is that the levy of fee under Section 234E for default in furnishing the statements is in the guise of penalty and there is no nexus to the services rendered by the department. In

100 order to examine as to whether the fee charged under Section 234E is in fact fee or penalty or compensatory tax, it could be seen from Section 199 of the Act that any deduction made in accordance with Section 200 to Section 206 would be treated as a payment of tax on behalf of the person from whose income the deduction was made. An assessee while computing his income for being assessed under self assessment as provided under Section 140A will construe the deductions made on his behalf as a component in his return of income for claiming deduction in the payment of tax. A bare perusal of Section 244A of the Act would indicate that where refund of any amount becomes due to the assessee under the Act, such assessee would be entitled to receive in addition to the amount of refund of tax, simple interest at the rate of one-half percent for every month or part of a month comprised in the period from the 1st day of April of the assessment year to the date on

101 which refund is granted as indicated in sub-section(1)(a) of the Act. A bare perusal of Section 271H which came to be inserted by Finance Act, 2012 with effect from 01.07.2012 would indicate it provides for levy of penalty for failure to furnish statements of tax deducted at source under Section 200(3) or under proviso to Section 206C or for furnishing incorrect information. As per sub-section (2), penalty will be not less than 10,000/- and it may extend upto `1,00,000/-. Section 273B indicates that no penalty shall be imposable on the person or the assessee for any failure referred to in the said provision if he proves that there was reasonable cause for such failure. Section 273B has also been amended by adding Section 271H and as already noticed under Section 271H(2)(k) penalty can be imposed for failure to furnish statement within prescribed time. However, by incorporating Section 271H in Section 273B, it would indicate that penalty

102 need not be imposed under Section 271H if reasonable cause is shown. The contention of the assessee is that there is no similar provision in the impugned provision namely Section 234E and as such it takes away the valuable right of the assessee. The said contention does not hold water inasmuch as Section 119(2)(a) enables the Board to issue general or special orders in respect of any class of incomes or class of cases from time to time, which includes sub-section(1A) of Section 201 and as such no hardship would be caused to the assessees. As such contention raised in this regard cannot be accepted.

103 Government and fee is an amount received towards expenditure for rendering the service. The Hon’ble Apex Court in the case of THE COMMISSIONER, HINDU RELIGIOUS ENDOWMENTS, MADRAS V. SRI LAKSHMINDRA THIRTHA SWAMIAR OF SRI SHIRUR MUTT, reported in AIR 1954 SC 282 has succinctly laid down the law on this issue having explained the distinction of these levies. It has been held that a tax is a compulsory extraction of money by public authority for public purposes enforceable by law and is not payment for services rendered. A fee is generally defined to be a charge for a special service rendered to individuals by some Governmental agencies. The said Judgment came to be followed by the Hon’ble Apex Court in KRISHI UPAJ MANDI SAMITI &OTHERS VS. ORIENT PAPER & INDUSTRIES LTD., reported in (1995) 1 SCC 655 and held that the power of any legislature to levy a fee is conditioned by the fact that it

104 must be by and large quid pro quo for the services rendered. However, co-relationship between the levy and services rendered is one of general character and not of mathematical exactitude. It came to be held by the Hon’ble Apex Court, all that is necessary is that there should be relationship between levy of the fees and services rendered. After analyzing the various Judgments on this aspect, it came to be held as under: “21. Thus what emerges from the conspectus of the aforesaid decisions is as follows: (1)Though levying of fee is only a particular form of the exercise of the taxing power of the State, our Constitution has placed fee under a separate category for purposes of legislation. At the end of each one of the three Legislative Lists, it has given power to the particular legislature to legislate on the imposition of fee in respect of every one of the items dealt with in the list itself, except fees taken in Court.

(2)The tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered. There is no quid pro quo

105 between the taxpayer and the public authority. It is a part of the common burden and the quantum of imposition upon the taxpayer depends generally upon his capacity to pay.

(3)Fee is a charge for a special service rendered to individuals or a class by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service though in some cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay. These are various kinds of fees and it is not possible to formulate a definition that would be applicable to all cases.

(4)The element of compulsion or coerciveness is present in all kinds of impositions though in different degrees and it is not totally absent in fees. Hence it cannot be the sole or even a material criterion for distinguishing a tax from fee. Compulsion lies in the fact that payment is enforceable by law against an individual in spite of his unwillingness or want of consent and this element is present in taxes as well as in fees.

106 (5)The distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of the common burden while a fee is a payment for a special benefit or privilege. Fees confer a special capacity although the special advantage is secondary to the primary motive of regulation in the public interest. Public interest seems to be at the basis of all impositions but in a fee it is some special benefit which is conferred and accruing which is the reason for imposition of the levy. In the case of a tax, the particular advantage if it exists at all, is an incidental result of State action. A fee is a sort of return or consideration for services rendered and hence it is primarily necessary that the levy of fee should on the face of the legislative provision be correlated to the expenses incurred by Government in rendering the services. As indicated in Article 110(2) of the Constitution ordinarily there are two classes of cases where Government imposes fees upon persons. The first is of grant of permission or privilege and the second for services rendered. In the first class of cases, the cost incurred by the Government for granting of permission or privilege may be very small and the amount of imposition levied is based not necessarily upon the costs incurred by the Government but upon the benefit that the individual receives. In such

107 cases, the tax element is predominant. If the money paid by privilege holders goes entirely for the expenses of matters of general public utility, the fee cannot but be regarded as a tax. In the other class of cases, the Government does some positive work for the benefit of persons and the money is taken as the return for the work done or services rendered.

(6)There is really no generic difference between tax and fee and the taxing power of the State may manifest itself in three different forms, viz., special assessments, fees and taxes. Whether a cess is tax or fee, would depend upon the facts of each case. If in the guise of fee, the legislature imposes a tax it is for the Court on a scrutiny of the scheme of the levy, to determine its real character. In determining whether the levy is a fee, the true test must be whether its primary and essential purpose is to render specific services to a specific area or classes. It is of no consequence that the State may ultimately and indirectly be benefited by it. The amount of the levy must depend upon the extent of the services sought to be rendered and if they are proportionate, it would be unreasonable to say that since the impost is high it must be a tax. Nor can the method prescribed by the legislature for recovering the levy by

108 itself alter its character. The method is a matter of convenience and though relevant, has to be tested in the light of other relevant circumstances.

(7)It is not a postulate of a fee that it must have relation to the actual service rendered. However, the rendering of service has to be established. The service, further, cannot be remote. The test of quid pro quo is not to be satisfied with close or proximate relationship in all kinds of fees. A good and substantial portion of the fee must, however, be shown to be expended for the purpose for which the fee is levied. It is not necessary to confer the whole of the benefit on the payers of the fee but some special benefit must be conferred on them which has a direct and reasonable correlation to the fee. While conferring some special benefits on the payers of the fees, it is permissible to render service in the general interest of all concerned. The element of quid pro quo is not possible or even necessary to be established with arithmetical exactitude. But it must be established broadly and reasonably that the amount is being spent for rendering services to those on whom the burden of the fee falls. There is no postulate of a fee that it must have a direct relation to the actual services rendered by the authorities

109 to each individual to obtain the benefit of the service. The element of quid pro quo in the strict sense is not always a sine qua non for a fee. The element of quid pro quo is not necessarily absent in every tax. It is enough if there is a broad, reasonable and general corelationship between the levy and the resultant benefit to the class of people on which the fee is levied though no single payer of the fee receives direct or personal benefit from those services. It is immaterial that the general public may also be benefited from some of the services if the primary service intended is for the payers of the fees.

(8)Absence of uniformity is not a criterion on which alone it can be said that the levy is of the nature of a tax. The legislature has power to enact appropriate retrospective legislation declaring levies as fees by denuding them of the characteristics of tax.

(9)It is not necessary that the amount of fees collected by the Government should be kept separately. In view of the provisions of Article 266, all amounts received by the Governments have to be credited to the Consolidated Funds and to the public accounts of the respective Governments.”

110 15. As to whether the `fee’ are the amounts paid for a privilege and or not an obligation, but the payment is voluntarily came to be examined by the Hon’ble Apex Court in SOUTHERN PHARMACEUTICALS & CHEMICALS, TRICHUR & ORS. ETC. V. STATE OF KERALA & ORS. ETC., AND MUNICIPAL CORPORATION OF DELHI & ORS., V. MOHD. YASIN reported in AIR 1991 SC 1863 and held: “25. `Fees’ are xxx consolidated fund. It is also increasingly realized that the element of quid pro quo stricto senso is not always a sine qua non of a fee. It is needless to stress that the element of quid pro quo is not necessarily absent in very tax. We may, xxx (AIR 1980 SC 1008 at p.1015): the element of quid pro quo xxx it par took the nature of a tax. It seems that the Court proceeded on the assumption that the element of quid pro quo must always be present in a fee. The traditional concept of quid pro quo is undergoing transformation.

111 544 while laying down the parameters of the judicially evolved concept of `compensatory tax’ vis-a-vis Article 301 has explained the difference between a tax, a fee and a compensatory tax in the following manner: 42. To sum up, the basis of every levy is the controlling factor. In the case of "a tax", the levy is a part of common burden based on the principle of ability or capacity to pay. In the case of "a fee", the basis is the special benefit to the payer (individual as such) based on the principle of equivalence. When the tax is imposed as a part of regulation or as a part of regulatory measure, its basis shifts from the concept of "burden" to the concept of measurable/quantifiable benefit and then it becomes "a compensatory tax" and its payment is then not for revenue but as reimbursement/ recompense to the service/facility provider. It is then a tax on recompense. Compensatory tax is by nature hybrid but it is more closer to fees than to tax as both fees and compensatory taxes are based on the principle of equivalence and on the basis of reimbursement/recompense. If the impugned law chooses an activity like trade and commerce as the criterion of its operation and if the effect of the operation of the enactment is to impede trade and commerce then Article 301 is violated”.

112 17. The element of quid pro quo would not be always a sine qua non for levy of fee. If there is broad correlationship between the two it would suffice. The Hon’ble Apex Court in MUNICIPAL CORPORATION OF DELHI & OTHERS VS. MOHD. YASIN reported in (1983) 3 SCC 229 has held to the following effect: “9. What do we learn from these precedents? We learn that there is no generic difference between a tax and a fee, though broadly a tax is a compulsory exaction as part of a common burden, without promise of any special advantages to classes of taxpayers whereas a fee is a payment for services rendered, benefit provided or privilege conferred'. Compulsion is not the hall-mark of the distinction between a tax and a fee. That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax. Though a fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct, a mere causal relation may be enough. Further, neither the incidence of the fee nor the service rendered need be uniform. That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers of the fees may even be secondary as compared

113 with the primary motive of regulation in the public interest. Nor is the Court to assume the role of a cost accountant. It is neither necessary nor expedient to weigh too meticulously the cost of the services rendered etc. against the amount of fees collected so as to evenly balance the two. A broad correlationship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee; nor is it necessarily absent in a tax.”

114 a tax. In regard to fees there is, and must always be, correlation between the fee collected and the service intended to be rendered. In determining whether a levy is a fee, the true test must be whether its primary and essential purpose is to render specific services to a specified area or class; it may be of no consequence that the State may ultimately and indirectly be benefited by it. The power of any legislature to levy a fee is conditioned by the fact that it must be “by and large" a quid pro quo for the services rendered. However, correlationship between the levy and the services rendered (sic or) expected is one of general character and not of Mathematical exactitude. All that is necessary is that there should be a reasonable "relationship” between levy

of the fee, and the services rendered. If authority is needed for this pro position, it is to be found in the several decisions of this Court drawing a distinction between ‘tax’ and ‘fee’. See: The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, supra; H. H. Sundhundra Thirtha Swamiar v. Commissioner for Hindu Religious &

Charitable Endowments, Mysore, The Hingir-Rampur Coal Co. Ltd. v. State of Orissa; H.H. Shri Swamiji of Shri Admar Mutt vs. Commissioner,

Hindu Religious & Charitable Endowments Department; Southern Pharmaceuticals & Chemicals, Trichur & Ors. etc. v. State of Kerala & Ors. etc., and Municipal Corporation of Delhi & Ors., v. Mohd. Yasin,

115 32. There is no generic difference between a tax and a fee. Both are compulsory exactions of money by public authorities. Compulsion lies in the fact that payment is enforceable by law against a person inspite of his unwillingness or want of consent. A levy in the nature of a fee does not cease to be of that character merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service. It is now increasingly realized that merely because the collections for the services rendered or grant of a privilege or licence are taken to the consolidated fund of the State and not separately appropriated towards the expenditure for rendering the service is not by itself decisive. Presumably, the attention of the Court in the Shirur Mutt case was not drawn to Art. 266 of the Constitution. The Constitution nowhere contemplates it to be an essential element of fee that it should be credited to a separate fund and not to the consolidated fund. It is also increasingly realized that the element of quid pro quo in the strict sense is not always a sine qua non for a fee. It is needless to stress that the element of quid pro quo is not necessarily absent in every tax: Constitutional Law of India by H.M. Seervai, Vol.2, Second Edn., p. 1252, paras 22, 39.”

116 19. It has been noticed by the Hon’ble Apex Court that the indica for levy of fee as indicated in Shirur Mutt’s case referred to supra was too technical and rigid and was not in tune with the requirement of the prevailing social conditions and held that there is no generic difference between a tax and a fee and the requirements for levy of fee is separate appropriation of receipts, if necessary and possible and also held that the true test is the comprehensive level of the value of the totality of the services set off against the totality of the receipts. It has been held in STATE OF H.P & OTHERS VS. SHIVALIK AGRO POLY PRODUCTS & OTHERS reported in (2004) 8 SCC 556 as under: “9. After independence of the country the Governmental functions increased manifold and various legislations were enacted and schemes were introduced for upliftment of the society. Many measures were introduced which contained provisions for imposing compensatory and regulatory fees. It was realized that the indicia of fee indicated in Shirur Mutt case was too technical and rigid and was not in tune with the requirement of the

117 prevailing social conditions. The characteristics of tax and fee were then examined in considerable detail by a three Judge Bench in Sreenivasa General Traders. vs. State of Andhra Pradesh (AIR 1983 SC 1246) and in paragraphs 30 and 31 of the judgment, the Court held as under: (SCC pp.380-81, paras 31-32) "The traditional view that there must be actual quid pro quo for a fee has undergone a sea change subsequent to decision in Kewal Krishan Puri vs. State Of Punjab (AIR 1980 SC 1008). Correlationship between the levy and the services rendered/expected is one of general character and not of mathematical exactitude. All that is necessary is that there should be a "reasonable relationship" between the levy of the fee and the services rendered. Moreover, there is no generic difference between a tax and a fee. Both are compulsory exactions of money by public authorities. Compulsion lies in the fact that payment is enforceable by law against a person in spite of his unwillingness or want of consent. A levy in the nature of a fee does not cease to be of that character merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service. It is now increasingly realized that merely because the collections for the services rendered or grant of a privilege of licence are taken to the consolidated fund of the State and not separately appropriated towards the expenditure for

118 rendering the service is not by itself decisive. It is also increasingly realized that the element of quid pro quo in the strict sense is not a sine quo non for a fee." 9.1. It is necessary to mention here that the observation made in para 47 of the judgment in the Shirur Mutt case that: (SCR p. 1043) “(i)f the money thus paid is set apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general public, it could be counted as fee and not a tax" may not be very accurate at least where the fee is being realized by the Government, Central or State, in view of a constitutional provision. Article 266 of the Constitution provides that all revenues received by Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled "the Consolidated Fund of India", and all revenues received by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled "the Consolidated Fund of the State". In view of this specific provision any amount realized by way of fee by the Central Government or State Government

119 has to be credited to Consolidated Fund of India or of the State concerned, as the case may be, and will thus necessarily get merged in the public revenues and cannot be set apart.”

120 21. A person responsible for deduction of tax namely deductor is required to furnish periodical statements containing the details of deduction of tax within the prescribed due date. Any delay in furnishing TDS statements would result in perennial problems being faced by the department while processing the return of income filed by the assessees. When a return of income is filed by an assessee a statutory obligation is cast on the department to process the said return of income within the specified period from the date of filing. If for want of details such return of income not being processed or assessment order not being framed or would be stalled or in other words the return of income filed by an assessee on whose behalf the tax has already been deducted by the deductor is not furnished within the prescribed time by such deductor, it would consequently have cascading effect namely, it would stall the processing of the return of income filed by the

121 deductee. In a given case, there might be instances of where the assessee would be entitled to refund and on account of delay occurring due to non delivery of TDS statements by the deductors, it would result in delay in extending the credit of TDS to the person on whose behalf tax is deducted and consequently it would result in delayed issuance of refunds to the deductee or raising of consequential demands against the deductee which otherwise would not have been raised. In this lengthy and unwarranted process it may erode the confidence reposed by the tax payer on the department. Last but not the least, it would result in financial burden to the Government namely on account of late payment of refund interest is to be paid on such refunds and it would also result in cash flow crunch, especially for business entities.

122 case of RASHMIKANTH KUNDALIA AND ANOTHER VS UNION OF INDIA AND OTHERS in W.P.No.771/2014 disposed of on 06.02.2015 had an occasion to examine the constitutional validity of Section 234E and while upholding its validity and arriving at a conclusion that it is intra vires of the Constitution has opined as under: “18. We are therefore clearly of the view that the fee sought to be levied under Section 234E of the Income Tax Act, 1961 is not in the guise of a tax that is sought to be levied on the deductor. We also do not find the provisions of Section 234E as being onerous on the ground that the Section does not empower the Assessing Officer to condone the delay in late filing of the TDS return/statements, or that no appeal is provided for from an arbitrary order passed under Section 234E. It must be noted that a right of appeal is not a matter of right but is a creature of the statute, and if the Legislature deems it fit not to provide a remedy of appeal, so be it. Even in such a scenario it is not as if the aggrieved party is left remediless. Such aggrieved person can always approach this Court in its extra ordinary equitable jurisdiction under Article 226/227 of the Constitution of India, as the case may be. We therefore cannot agree with the argument of the Petitioners that simply because no remedy of appeal is provided for, the provisions of Section 234E are

123 onerous. Similarly, on the same parity of reasoning, we find the argument regarding condonation of delay also to be wholly without any merit”.

This Court is in complete agreement with the view expressed by Mumbai High Court and as such contention of the petitioners cannot be accepted for this reason also.

124 uphold the constitutional validity of the statute even if it requires giving a constrained construction or narrowing down its scope. The Courts would not sit in arm chair of the legislature to examine as to whether the impugned legislation in its opinion is wise or unwise. Further the statutes relating to economic activities of the State would be viewed with greater latitude than other laws, inasmuch as the Courts do not possess the economic expertise or has administrative expertise and as such judicial restraint is exhibited particularly when economic legislation is under challenge. These facets have been extensively dealt with by the Hon’ble Supreme Court in the case of GOVERNMENT OF ANDHRA PRADESH AND OTHERS VS P.LAXMI DEVI SMT. reported in (2008) 4 SCC 720 and held as under: “46. In our opinion, there is one and only one ground for declaring an Act of the legislature (or a provision in the Act) to be invalid, and that is if it clearly violates some provision of the Constitution in so evident a manner as to leave no manner of doubt. This violation can, of course, be in

125 different ways, e.g. if a State legislature makes a law which only the Parliament can make under List I to the Seventh Schedule, in which case it will violate Article 246(1) of the Constitution, or the law violates some specific provision of the Constitution (other than the directive principles). But before declaring the statute to be unconstitutional, the Court must be absolutely sure that there can be no manner of doubt that it violates a provision of the Constitution. If two views are possible, one making the statute constitutional and the other making it unconstitutional, the former view must always be preferred. Also, the Court must make every effort to uphold the constitutional validity of a statute, even if that requires giving a strained construction or narrowing down its scope vide Rt. Rev. Msgr. Mark Netto v. State of Kerala SCC para 6: AIR para 6. Also, it is none of the concern of the Court whether the legislation in its opinion is wise or unwise.

126 68. The Court must, therefore, make every effort to uphold the constitutional validity of a Statute, even if that requires giving the statutory provision a strained meaning, or narrower or wider meaning, than what appears on the face of it. It is only when all efforts to do so fail should the Court declare a statute to be unconstitutional. 80. However, we find no paradox at all. As regards economic and other regulatory legislation judicial restraint must be observed by the Court and greater latitude must be given to the legislature while adjudging the constitutionality of the statute because the Court does not consist of economic or administrative experts. It has no expertise in these matters, and in this age of specialization when policies have to be laid down with great care after consulting the specialists in the field, it will be wholly unwise for the Court to encroach into the domain of the executive or legislative (sic legislature) and try to enforce its own views and perceptions.”

127

Ordered accordingly.

Sd/- JUDGE

SBN