IBM INDIA PVT LTD V. THE CHIEF COMMISSIONER

WA/3013/2013

AI Insights

The case involves IBM India Pvt. Ltd., which opted to be assessed as a Large Taxpayer Unit (LTU) under a scheme that covers assessments under the Income Tax Act, 1961, Central Excise Act, 1944, and Service Tax Regulations. The appellant decided to opt out of the LTU scheme, effective from 1.4.2013, and requested the authorities to acknowledge this change. However, the authorities sought reasons for the opt-out, which led the appellant to file a writ petition. The single judge's interim order allowed the appellant to file returns with the jurisdictional officer outside the LTU post the opt-out date but retained pending matters with the LTU. The appellant contested this order in the writ appeal, arguing against the need to provide reasons for opting out and the complications arising from the interim order.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 727182 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 04-06-2013
• Assessment Year: misc
• Other Referred Cases: KLIN-O-PACK v. UNION OF INDIA
• Laws Referred To: Income Tax Act, 1961, Central Excise Act, 1944, Service Tax Regulations
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: ARVIND DATAR
• Keywords: Interim order; Writ Appeal; Large Taxpayer Unit; Opting Out
• Section: 120

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 4TH DAY OF JUNE, 2013 PRESENT THE HON’BLE MR. JUSTICE D V SHYLENDRA KUMAR AND THE HON’BLE MRS. JUSTICE B S INDRAKALA Writ Appeal No.3013 of 2013 [T-IT] BETWEEN: IBM INDIA PVT. LTD. 12, SUBRAMANYA ARCADE – 1 BANNERGHATTA MAIN ROAD, BANGALORE – 560 029 REP. HEREIN BY ITS DIRECTOR MRS ANITA SANGHI … APPELLANT [By Sri Arvind P Datar, Sr. Adv. for M/s King & Partridge, Advs.] AND: 1. THE CHIEF COMMISSIONER OF CENTRAL EXCISE, LARGE TAXPAYERS’ UNIT COMMISSIONARATE, JSS TOWERS, 100 FEET RING ROAD, BANASHANKARI III STAGE, BANGALORE – 560 085 2. THE COMMISSIONER OF INCOME TAX LARGE TAXPAYERS’ UNIT 2 COMMISSIONARATE JSS TOWERS, 100 FEET RING ROAD, BANASHANKARI III STAGE BANGALORE – 560 085 3. THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX LARGE TAXPAYERS’ UNIT COMMISSIONARATE JSS TOWERS, 100 FEET RING ROAD, BANASHANKARI III STAGE, BANGALORE – 560 085 … RESPONDENTS [By Sri K V Aravind, Standing Counsel] THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT READ WITH RULE 27 OF THE WRIT PROCEEDINGS RULES, 1977, PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETITION NO. 17293/2013 DATED 18/04/2013 AND ETC., THIS WRIT APPEAL COMING ON FOR PRELIMINARY HEARING, THIS DAY, SHYLENDRA KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT This writ appeal is directed against an interim order passed in the pending writ petition. The appellant is an assessee under the Income Tax Act, 1961 [for short ‘the Act’] and had opted for being assessed as a large taxpayer unit [for short ‘LTU’] under a separate scheme. The assessee – a LTU can opt in to become a LTU in terms of a Notification 3 issued under the provisions of section 120 of the Act insofar as the proceedings under the Income Tax Act, 1961 is concerned. Likewise, there are enabling provisions under the provisions of the Central Excise Act, 1944 and Service Tax Regulations. The appellant had opted for being assessed as LTU which automatically ensures that the assessee will be governed by the scheme in respect of assessments under the three enactments, namely, Income Tax Act, 1961, Central Excise Act, 1944 and Service Tax Regulations except for transfer pricing under the provisions of the Income Tax Act, 1961. 2. The assessee while had opted under this scheme by giving its consent on 25.10.2007 and assessments were being done under the scheme, the assessee, it appears had given a notice to opt out of the LTU jurisdiction with effect from 1.4.2013 as per notice dated 28.2.2013. The very notification enables the assessee to opt out of the scheme at the assessee’s option. 4 3. Though the assessee gave such a request, the authorities under the Act, it appears have kept the request of the assessee on hold by calling upon the assessee to disclose the reasons why the assessee is opting out of the LTU. 4. The assessee being aggrieved by this communication dated 2/3.4.2013 [copy at Annexure-G], approached this court seeking for calling of the complete records of the case and permit the appellant – assessee to exit from the LTU scheme with effect from 1.4.2013 and consequential notification to be issued to notify that the jurisdiction within which the assessee can be assessed and the records be forwarded. 5. The learned single Judge examined the matter prima facie and in the light of the interim prayer sought for in the writ petition, passed the following interim order on 18.4.2013 after admitting the writ petition. 5 “Learned counsel for the respondent submits that in terms of the Rules, the petitioner is entitled to file his returns after 1.4.2013 before any other Assessing Officer having jurisdiction other than LTU. All proceedings pending before the LTU and all proceedings that may be initiated and processed before the Officer having jurisdiction other than LTU will be subject to the result of this petition.” 6. It is aggrieved by this order, the present writ appeal. 7. Various contentions have been urged by Sri. Arvind P Datar, learned senior counsel appearing for the appellant. It is firstly urged that under the enabling provision of the scheme of the notification, there is no requirement of an assessee opting in or opting out to give reasons for exercising such option. It is secondly contended when the assessee opted out, not only the authority cannot ask questions, but all pending matters should be transferred. 8. However, the learned single Judge, in the interim order having recorded the submission of counsel for the 6 respondent that the writ petitioner was entitled to file his returns after 1.4.2013 before the assessing officer who has jurisdiction other than the LTU, all pending proceedings before the LTU hitherto will be processed, the learned single Judge has observed that while pending proceedings will continue to be with the LTU, the proceedings after 1.4.2013 will be with the jurisdictional officer. 9. Sri. Arvind P. Datar, learned senior counsel has pointed out several anomalies; that the order passed by the learned single Judge will lead to complications; that the scheme contemplates only one assessing officer for an assessee and therefore the order will bring about an anomaly and dichotomy that is not permissible etc. 10. Sri. Arvind P. Datar, learned senior counsel, would draw support from the decision of the division Bench of the Bombay High Court in the case of ‘KLIN-O-PACK v. UNION OF INDIA’ reported in 2003 [154] ELT 359 [Bom.] by referring to the single Bench decision of Calcutta High Court 7 to submit that it is not open to the authorities to enquire or seek for reasons for an assessee to opt in or opt out. 11. The learned single Judge having admitted the writ petition, being of the view that the matter requires examination as to whether even pending matters will have to be transferred or it can continue with the existing authority and this question being still at large and having not been decided, we are of the view that there is no need to interfere in this writ appeal at this stage only for the purpose of interpretation of the very same provision. Interim order is in the discretion of the court and the learned single Judge in exercise of his jurisdiction has passed the interim order. 12. Even otherwise, we find, in a matter of this nature, an interim order in the nature of a restraint order on the assessing authority whether LTU or otherwise may not be proper or desirable. It is therefore that we are not inclined to entertain this writ appeal only for the purpose of granting interim order. It is open to the appellant to move the 8 learned single Judge for disposal of the writ petition expeditiously. 13. Writ appeal is dismissed. Sd/- JUDGE Sd/- JUDGE AN/- "