Cap Seafoods Pvt. Ltd. V. Union of India and Central Board of Direct Taxes and Commissioner of Income Tax(TDS) and Deputy Commissioner of Income Tax

WP(C)/17151/2014

AI Insights

The case revolves around the legality of demand notices issued to Cap Seafoods Pvt. Ltd. for late filing fees under Section 234E of the Income Tax Act, 1961, concerning tax deducted at source. The petitioner challenged the notices on the grounds that the procedural framework for levying such fees was not in place until June 1, 2015, despite Section 234E being enacted on July 1, 2012. The court examined the amendments to Section 200A, which provided the procedure for fee collection under Section 234E, and referenced decisions from the Karnataka and Gujarat High Courts. The court's decision was influenced by the interpretation that the procedural amendments to Section 200A were substantive and not merely regulatory, thus affecting the enforceability of Section 234E fees prior to the specified date.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 801746 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 09-08-2023
• Assessment Year: misc
• Other Referred Cases: Olari Little Flower Kuries Pvt. Ltd. v. Union of India, Sree Narayana Guru Smaraka Sangam Upper Primary School v. Union of India
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NAVNEETH NATH
• Assessee Lawyers: K N SIVASANKARAN; SUNIL SHANKER
• Keywords: Demand notices; Fee under section 234E; Illegal; Tax deducted at source; Unconstitutional; Late returns
• Section: 234E; 194J; 200A(1); 200(1)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH WEDNESDAY, THE 9TH DAY OF AUGUST 2023 / 18TH SRAVANA, 1945 WP(C) NO. 17151 OF 2014 PETITIONER/S: CAP SEAFOODS PVT. LTD. 1/71, VYPEEN AZHEEKAL.P.O., ERNAKULAM-682510, REPRESENTED BY ITS DIRECTOR SHERAZ ANWAR. BY ADVS.SRI.K.N.SIVASANKARAN SRI.SUNIL SHANKER RESPONDENT/S: 1 UNION OF INDIA, REPRESENTED BY THE SECRETARY TO THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE, NEW DELHI-110001. 2 CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NEW DELHI-110001. 3 COMMISSIONER OF INCOME TAX(TDS) CENTRAL REVENUE BUILDING, IS PRESS ROAD, ERNAKULAM, COCHIN-682018. 4 DEPUTY COMMISSIONER OF INCOME TAX CENTRALISED PROC ESSING CELL-TDS, AYAKAR BHAVAN, SECTOR-3, VAISHALI, GHAZIABAD, UTTAR PRADESH-201010. OTHER PRESENT: NAVNEETH N. NATH-SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.17151/2014 -2- J U D G M E N T Heard Mr Sunil Shankar, learned Counsel for the petitioner, and Mr Navneeth N Nath learned Standing Counsel for the Income Tax Department. 2. The present writ petition under Article 226 of the Constitution of India has been filed impugning Ext.P2 series of demand notices for payment of fee under Section 234E, in respect of the filing of late returns in relation to tax deducted at source under Section 194J and Section 200(1) of the Income Tax Act 1961 (hereinafter referred to as ‘IT Act’). The main ground for the challenge of the notices is that Section 200A(1) was amended with effect from 01.06.2015 by insertion of clause (c), which provided the procedure for levying the fee under Section 234E. Therefore, in the absence of the procedure provided for collection of the fee, Section 234E, which was W.P.(C) No.17151/2014 -3- brought in the Statute Book with effect from 01.07.2012, was not enforceable. 3. A Division Bench of this Court has dealt with the issue in Olari Little Flower Kuries Pvt. Ltd. v. Union of India1. The Division Bench has considered the divergent views of the Gujarat High Court and the Karnataka High Court on the issue and has placed reliance on the Karnataka High Court judgment. 4. This Court has therefore held that if Section 234E providing for the fee was brought on the statute book, keeping in view the aforesaid purpose and the intention, then the other mechanism provided for computation of fee and failure for payment of fee under Section 200A, which has been brought about with effect from 01.06.2015, cannot be said as only by way of a regulatory mode or a regulatory mechanism, but it 1 Judgment dated 22.10.2021 in W.A. No.600/2017 and connected cases W.P.(C) No.17151/2014 -4- can rather be termed as conferring substantive power upon the authority. It has been said that the amended provisions of Section 200A for computation and intimation for payment of fees under Section 234E would be applicable for the period of the respective assessment year only after 01.06.2015. The Division Bench also clarified that if any deductor has already paid the fee after intimation received under Section 200A, the said position will not be permitted in such cases unless the deductor has made payment of the fee under protest. The Division Bench further held that the intimation of the demand notices issued for the period prior to 01.06.2015 could be said to be without any authority of law. Therefore, the same would be illegal and invalid. 5. In the present case, the intimation for payment of fee under Section 234E is for the period prior to 01.06.2015. Therefore, considering the ratio laid down by this court in Olari Little Flower Kuries Pvt. Ltd. (supra), the impugned notices W.P.(C) No.17151/2014 -5- are without the authority of law and therefore are illegal. The same is hereby set aside. 6. A coordinate Bench of this Court has already repelled the constitutional validity of Section 234E in the case of Sree Narayana Guru Smaraka Sangam Upper Primary School v. Union of India2. Therefore, I am refraining from recording any finding inasmuch as the issue has already been covered against the assessee. However, on the first point, the writ petition stands allowed, and the intimation of the demand notices has been set aside. 7. Learned Counsel for the Revenue submits that the Department/Revenue has preferred Special Leave Petition before the Supreme Court against the decision of the Division Bench. If the Supreme Court decides the issue in favour of the Revenue, the Department would be at liberty to proceed 2 (2017) 392 ITR 457 (Ker) W.P.(C) No.17151/2014 -6- against the assessee pursuant to the impugned notices. The writ petition is disposed of as above. Sd/- DINESH KUMAR SINGH JUDGE W.P.(C) No.17151/2014 -7- APPENDIX OF WP(C) 17151/2014 PETITIONER EXHIBITS P1. TRUE COPY OF THE TDS RETURNS -FORM 24Q FOR JUNE (FIRST QUARTERS) DATED 28-5-2014. P1A. TRUE COPY OF THE TDS RETURNS -FORM 24Q FOR JUNE (FIRST QUARTERS) DATED 28-5-2014. P1B.TRUE COPY OF THE TDS RETURNS -FORM 24Q FOR SEPTEMBER (SECOND QUARTER) DATED 30-5-2014. P1C.TRUE COPY OF THE TDS RETURNS -FORM 24Q FOR SEPTEMBER (SECOND QUARTERS) 30-5-2014. P1D.TRUE COPY OF THE TDS RETURNS -FORM 24Q FOR DECEMBER (THIRD QUARTER) DATED 2-6-2014. P1E.TRUE COPY OF THE TDS RETURNS -FORM 24Q FOR DECEMBER (THIRD QUARTER) DATED 2-6-2014. P1F. TRUE COPY OF THE TDS RETURNS -FORM 24Q FOR MARCH (FOURTH QUARTER) DATED 4-6-2014. P1G.TRUE COPY OF THE TDS RETURNS -FORM 24Q FOR MARCH (FOURTH QUARTER) DATED 4-6-2014. P2. TRUE COPY OF THE INTIMATION OF THE 4TH RESPONDENT DATED 5-6-2014. P2A. TRUE COPY OF THE INTIMATION OF THE 4TH RESPONDENT DATED 6-6-2014. P2B. TRUE COPY OF THE INTIMATION OF THE 4TH RESPONDENT DATED 7-6-14 P2C.TRUE COPY OF THE INTIMATION OF THE 4TH RESPONDENT DATED 7-6-2014. P2D.TRUE COPY OF THE INTIMATION OF THE 4TH W.P.(C) No.17151/2014 -8- RESPONDENT DATED 5-6-14 P2E TRUE COPY OF THE INTIMATION OF 4TH RESPONDENT DATED 6-6-14 P2F. TRUE COPY OF THE INTIMATION OF THE 4TH RESPONDENT DATED 7-6-2014 P2G.TRUE COPY OF THE INTIMATION OF THE 4TH RESPONDENT DATED 7-6-14 P3. TRUE COPY OF INTERIM ORDER IN WPC NO. 31498/2013 DATED 18-12-13. "