HLL BIOTECH LIMITED V. INCOME TAX OFFICER

WP(C)/2396/2018

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HLL Biotech Limited, a subsidiary of HLL Life Care Limited and a government undertaking, challenged the tax demand raised by the Income Tax Department under the Income Tax Act. The dispute centered on the interpretation of the payment required to stay the tax demand under Section 220(6) of the Act, particularly in light of various circulars issued by the Central Board of Direct Taxes (CBDT). The petitioner argued that they had already paid more than 20% of the disputed tax demand through TDS deductions, and thus, no further payment was necessary to obtain a stay. The respondents contended that the petitioner was required to pay 20% of the total demand raised, irrespective of TDS payments. The court, however, chose not to resolve this specific legal interpretation and instead directed the tax authorities to expedite the appeal process.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 763255 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 30-01-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: E K MADHAVAN; V MENON; P VIJAYAMAM; J SURYA; BINI SARAMMA
• Keywords: Income Tax; Stay of demand; Tax dispute; TDS Deductions
• Section: 143(3); 156; 220(6)

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR TUESDAY, THE 30TH DAY OF JANUARY 2018 / 10TH MAGHA, 1939 WP(C).No. 2396 of 2018 PETITIONER HLL BIOTECH LIMITED, HLL BHAVAN, POOJAPPURA P.O., THIRUVANANTHAPURAM-695012, REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER. BY ADVS.SRI.E.K.MADHAVAN SRI.V.KRISHNA MENON SMT.P.VIJAYAMMA SMT.J.SURYA SMT.BINI SARAMMA RESPONDENTS: 1. INCOME TAX OFFICER, WARD II(1),OFFICE OF THE JOINT COMMISSIONER OF INCOME TAX, RANGE-I, KOWDIYAR, THIRUVANANTHAPURAM-695003. 2. COMMISSIONER OF INCOME TAX (APPEALS), AAYAKKAR BHAWAN, KOWDIYAR, THIRUVANANTHAPURAM-695003. 3. PRINCIPAL COMMISSIONER OF INCOME TAX, AAYAKKAR BHAWAN, KOWDIYAR, THIRUVANANTHAPURAM-695003. BY STANDING COUNSEL:SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30-01-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 2396 of 2018 (Y) APPENDIX PETITIONER'S EXHIBITS EXHIBIT P1 TRUE COPY OF THE ORDER DATED 26.12.2016. EXHIBIT P2 TRUE COPY OF THE NOTICE OF DEMAND IN FORM-7 UNDER SECTION 156 OF THE INCOME TAX ACT. EXHIBIT P3 TRUE COPY OF THE MEMORANDUM OF APPEAL BEFORE THE SECOND RESPONDENT. EXHIBIT P4 TRUE COPY OF THE PETITION DATED 8.2.2017. EXHIBIT P5 TRUE COPY OF THE ORDER DATED 29.2.2016. EXHIBIT P6 TRUE COPY OF THE ORDER DATED 5.10.2017. EXHIBIT P7 TRUE COPY OF THE REVISED INSTRUCTION DATED 31.7.2017 ISSUED BY THE BOARD. EXHIBIT P8 TRUE COPY OF THE REVIEW PETITION BEFORE THE THIRD RESPONDENT. EXHIBIT P9 TRUE COPY OF THE ORDER DATED 5.1.2018. RESPONDENT'S EXHIBITS:NIL //TRUE COPY// PA TO JUDGE rsr P.B.SURESH KUMAR, J. -------------------------------------------- W.P.(C).No.2396 of 2018 --------------------------------------------------------------- Dated this the 30th day of January, 2018 J U D G M E N T Petitioner is a subsidiary of HLL Life Care Limited, which is a Government of India undertaking. The petitioner is incorporated with the object of setting up a facility for manufacturing vaccines. Petitioner is an assessee under the Income T ax Act (the Act) on the rolls of the first respondent. Petitioner filed annual return for the assessment year 2014-’15. The return submitted by the petitioner was taken for scrutiny and the self assessment made by the petitioner has been revised in terms of Ext.P1 order under Section 143(3) of the Act, determining the total taxable income of the petitioner at Rs.14,88,64,388/- W.P.(c).No.2396 of 2018 : 2 : and raising a demand for Rs.4,75,17,970/- towards tax. In fact, the tax payable by the petitioner on the determined income comes to Rs.6,23,89,180/- and the demand for Rs.4,75,17,970/- was raised after adjusting the tax deducted at source which comes to Rs.1,48,71,210/-. Petitioner challenged Ext.P1 order in appeal. Thereupon, they moved the first respondent for stay of further proceedings for realization of the amounts covered by Ext.P1 order invoking Section 220(6) of the Act. On the said request, the first respondent passed Ext.P6 order directing the petitioner to pay 20% of the demand raised in Ext.P1 order. The petitioner preferred an application for review of Ext.P6 order before the third respondent and the third respondent confirmed Ext.P6 order in terms of Ext.P9 order. Exts.P6 and P9 orders are under challenge in the writ petition. 2. Heard the learned counsel for the petitioner as also the learned Standing Counsel for the respondents. 3. The exercise of the power under Section 220(6) of the Act was governed by the circular issued by the W.P.(c).No.2396 of 2018 : 3 : Central Board of Direct T axes (the Board) on 21/03/1996. The said circular has been revised by the Board of in terms of Ext.P5 circular on 29.02.2016. Petitioner is directed to pay 20% of the tax demanded pursuant to Ext.P6 order, in the light of the direction contained in Ext.P5 circular. According to the petitioner, Ext.P5 circular was later modified in terms of Ext.P7 circular. It is the case of the petitioner that in terms of Ext.P7 circular, what is to be paid for claiming stay under Section 220(6) of the Act is 20% of the disputed demand. According to the petitioner, the disputed demand in this case is Rs.6,23,89,180/- and since more than 20% of the same has been received by the Department by way of TDS deductions, the petitioner is not liable to pay any further amount for getting stay under Section 220(6) of the Act. It is on that ground the petitioner challenges Exts.P6 and P9 orders in the writ petition. 4. The learned Standing Counsel for the respondents submits that in terms of the circulars issued by the Board from time to time, the petitioner has to pay 20% W.P.(c).No.2396 of 2018 : 4 : of the disputed demand. According to the learned Standing Counsel, the demand made being Rs.4,75,18,970/-, the petitioner has to pay 20% of the said amount, irrespective of the fact as to whether any amount has been recovered by the Department by way of TDS. 5. It is seen that the petitioner is a subsidiary of a Government of India undertaking. The payment, if at all, enforced as claimed by the learned Standing Counsel for the respondents, the same would go from one limb of the Government to the other limb. In the circumstances, I am of the view that it is unnecessary to decide the liability of the petitioner in terms of the guidelines issued by the Board for claiming stay under Section 220(6) of the Act and the writ petition can be disposed of directing the second respondent to consider and pass orders on the appeal preferred by the petitioner against Ext.P1 order, as expeditiously as possible, at any rate, within two months from the date of receipt of a copy of this judgment. Ordered accordingly. Needless to say that until W.P.(c).No.2396 of 2018 : 5 : the appeal is disposed of finally as directed above, further coercive action for realization of the amounts covered by Ext.P1 shall be deferred. Sd/- P.B.SURESH KUMAR JUDGE rsr "