True Blue Voice India Private Limited Vs Chief CIT-TDS (Madras High Court)
Summary: The writ petitions challenged the impugned orders dated 24.09.2021 passed by the first respondent and sought a direction to the third respondent to delete the levy of fee under Section 234E of the Income Tax Act for the period up to 01.06.2015.
The petitioner submitted that Section 200A of the Act governs processing of statements of Tax Deducted at Source (TDS) and that it had filed TDS statements for assessment years 2012-2013, 2013-2014, 2014-2015 and the first quarter of 2015-2016. According to the petitioner, Section 200A(1)(c), which enabled computation of fee under Section 234E while processing TDS statements, was introduced only with effect from 01.06.2015, although Section 234E itself had been introduced with effect from 01.07.2012.
The petitioner contended that, in the absence of Section 200A(1)(c) during the relevant period, the Department had no authority to impose late fee under Section 234E while processing TDS statements under Section 200A. The petitioner further submitted that its reply dated 16.04.2019 had been treated as a waiver application and rejected without properly considering its submissions.
The respondents, on the other hand, contended that Section 234E had been introduced with effect from 01.07.2012 and that the amendment to Section 200A(1)(c) enabled the Department to impose the late fee while processing TDS statements. Reliance was placed on, among others, Qatalys Software Technologies Private Limited vs. Union of India, Biswajit Das vs. Union of India, Dr. Amrit Lal Mangal vs. Union of India and Rajesh Kourani vs. Union of India.
The Court noted that there was no dispute regarding the validity of Section 234E. The issue was whether late fee under Section 234E could be imposed while processing TDS statements under Section 200A for the assessment years in question.
On examining Section 234E and Section 200A, the Court observed that the Department could impose late fee for the circumstances covered by Section 234E with effect from 01.07.2012, but not while processing TDS statements under Section 200A before the enabling provision was introduced. The Court reproduced Section 200A(1)(c), which provides that the fee, if any, shall be computed in accordance with Section 234E.
The Court also considered the objects and reasons for introducing Section 200A(1)(c). These recorded that, although Section 234E had been inserted to provide for levy of fee for late furnishing of TDS/TCS statements, the existing Section 200A did not provide for determination of fee payable under Section 234E at the time of processing TDS statements. The amendment was therefore proposed to enable computation of the fee under Section 234E at the time of processing the TDS statement under Section 200A.
According to the Court, this made it clear that there had previously been no mechanism for determination of the late fee under Section 234E at the time of processing TDS statements. Section 200A(1)(c) was accordingly introduced with effect from 01.06.2015.
The Court then considered the assessment years 2012-13, 2013-14 and 2014-15 and the applicability of Section 200A(1)(c). Since the TDS statements had been processed under Section 200A, the requirements of that provision had to be followed. As Section 200A(1)(c) had been introduced only with effect from 01.06.2015, the Court held that, prior to its introduction, the authorities were not empowered to impose late fee while processing TDS statements under Section 200A, notwithstanding that Section 234E itself had been introduced from 01.07.2012.
The Court rejected the respondents’ submission that Section 200A(1)(c) could be applied retrospectively. It also noted the respondent’s submission that the authorities had no power to waive the late fee and that the Commissioner of Income Tax was empowered to pass a revised order by applying Section 264C of the Act.
The Court ultimately held that, in the absence of the relevant provision under Section 200A during the assessment years concerned, no late fee under Section 234E could be imposed when the TDS statements were processed under Section 200A. The impugned orders dated 24.09.2021 were therefore set aside.
However, instead of simply directing deletion of the fee, the Court directed the Department to consider the petitioner’s reply dated 16.04.2019 as a revision application, which had earlier been considered as a waiver application, and to pass appropriate orders taking into consideration the order passed by the Court within eight weeks from receipt of a copy of the order. The writ petitions were accordingly disposed of and the connected miscellaneous petitions were closed.
Cases Discussed
- Qatalys Software Technologies Private Limited vs. Union of India, [2020] 115 taxmann.com 345 (Madras) — cited by the respondents in support of the validity and levy of fee under Section 234E.
- Biswajit Das vs. Union of India, [2019] 103 taxmann.com 290 (Delhi) — cited by the respondents in support of the levy of fee under Section 234E.
- Dr.Amrit Lal Mangal vs. Union of India, [2015] 62 taxmann.com 310 (Punjab) — cited by the respondents in support of the levy of fee under Section 234E.
- Rajesh Kourani vs. Union of India, [2017] 83 taxmann.com 137 (Gujarat) — cited by the respondents in support of the proposition that the authorities could impose fee under Section 234E.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
These writ petition have been filed challenging the impugned orders dated 24.09.2021 in DIN.Nos.ITBA/COM/S/91/2021- 22/1035865330(1) and ITBA/COM/S/91/2021-22/1035864785(1) passed by the first respondent and to direct the third respondent to delete the levy of fee under Section 234E of the Income Tax Act (hereinafter referred as “the Act”) for the period upto 01.06.2015.
2. The learned counsel for the petitioner would submit that Section 200A of the Act deals with the manner in which the statement of Tax Deducted at Source (TDS) shall be processed. Accordingly, the petitioner had filed the statement of TDS for the assessment years 2012-2013, 2013-2014, 2014-2015 and for the first quarter of 2015-2016 in accordance with the aforesaid provisions of Section 200A of the Act, for 3/16 which, the petitioner had received the intimation for processing of the said statement of TDS.
3. The case of the petitioner is that when the petitioner had processed the statement of TDS under Section 200A of the Act, the Authorities have no power to impose the late fee under Section 234E of the Act for the assessment years 2012-2013 to 2014-2015, since Section 200A(1)(c) of the Act was introduced only with effect from 01.06.2015 whereas Section 234E of the Act was introduced with effect from 01.07.2012. Further, Section 234E of the Act empowers the Authority to impose late fee of a sum of Rs.200/- for everyday delay in filing the e- TDS returns as mentioned therein.
4. The further contention of the petitioner is that if the Department had independently intend to impose late fee under Section 234E of the Act, they can do it in the normal course of assessment of income tax. However, in the present case, when the petitioner processed the statement of TDS under Section 200A of the Act, the respondent imposed late fee 4/16 under Section 234E of the Act. Though the Authority was empowered to impose the late fee under Section 234E of the Act, they are not empowered to impose the late fee till the commencement of the Financial Bill, 2015 when the TDS is processed under Section 200A of the Act. Therefore, he would contend that in the present case, without considering all those aspects, the Department had imposed the late fee under Section 234E of the Act when the petitioner had processed the statement of TDS under Section 200A of the Act.
5. Further, he would submit that the petitioner had filed the reply dated 16.04.2019 for all the intimations sent under Section 200A of the Act by the respondents and the said reply was considered as a waiver application and the impugned order was passed by the respondent rejecting the request of the petitioner to remove the late fee, which was imposed under Section 234E of the Act while processing the TDS under Section 200A of the Act, for the assessment years 2012-2013 to 2014- 2015, without considering the submissions of the petitioner. Hence, the present writ petitions.
6. On the other hand, the learned counsel for the respondents would submit that the late fee was imposed when they had processed the statement of TDS under Section 200A of the Act, which empowers the Authority to impose the late fee with effect from 01.06.2015. He would further contend that since Section 234E of the Act was introduced with effect from 01.07.2012, during early days also they were empowered to impose late fee. Therefore, since there was no provision for imposing the late fee at the time of processing the statement of TDS under Section 200A of the Act, the Finance Bill was introduced in the year 2015 and he had also referred to the objects and reasons for introduction of Section 200A(1)(c) of the Act.
7. On perusal of the said objects and reasons, it appears that since there is no mechanism to impose the late fee while processing TDS under Section 200A of the Act, the said sub-Section 200A(1)(c) of the Act was brought in with effect from 01.06.2015. Therefore, he would contend that the Authority had taken all these aspects into consideration and passed 6/16 the impugned order that they are not having any power for waiver of the late fee.
8. The learned counsel appearing for the respondent would also submit that Section 234E of the Act was introduced as early as with effect from 01.07.2012 and whatever the amendment brought in the Finance Bill, 2015, the same will take retrospective effect. Further, he would contend that the Authorities are entitled to impose late fee under Section 234E of the Act even if the provision under Section 200A(1)(c) of the Act is not available and he referred to some citations with regard to the upholding provisions of Section 234E of the Act, which are as follows:
(i) Qatalys Software Technologies Private Limited vs. Union of India reported in [2020] 115 taxxmann.com 345 (Madras);
(ii) Biswajit Das vs. Union of India reported in [2019] 103 taxmann.com 290 (Delhi);
(iii) Dr.Amrit Lal Mangal vs. Union of India reported in [2015] 62 taxmann.com 310 (Punjab);
(iv) Rajesh Kourani vs. Union of India reported in [2017] 83 taxmann.com 137 (Gujarat);
9. Heard the learned counsel for the petitioner and the respondents and also perused the materials available on record.
10. There is no dispute on the aspect of validity of the Section 234E of the Act. The only issue that has to be decided in the present case is as to whether the late fee can be imposed under Section 234E of the Act, while processing the statement of TDS under Section 200A of the Act for the subject assessment years?
11. On considering the submissions of both the learned counsel and while reading Section 234E of the Act, it appears that the Department/respondents can impose the late fee for the circumstances mentioned under Section 234E of the Act with effect from 01.07.2012, but not when they process the TDS under Section 200A of the Act. In the Finance Bill, 2015, Section 200A(1)(c) of the Act was introduced, which reads as follows:
“200A. Processing of statements of tax deducted at source.—
(1)………………….
(a)………………….
(b)……………………
(c) the fee, if any, shall be computed in accordance with the provisions of section 234E;”
12. Further, the objects and reasons for introduction of Section 200A(1)(c) of the Act are as follows:
“Rationalisation of provisions relating to Tax Deduction at Source (TDS) and Tax Collection at Source (TCS)
Under Chapter XVII-B of the Act, a person is required to deduct tax on certain specified payment at the specified rate if the payment exceeds the specified threshold. The person deducting tax (‘the deductor’) is required to file a quarterly Tax Deduction at Source (TDS) statement containing the details of deduction of tax made during the quarter by the prescribed due date. Similarly, under Chapter XVII-BB of the Act, a person is required to collect tax on certain specified receipts at the specified rates. The person collecting tax (‘the collector’) also is required to file a quarterly Tax Collection at Source (TCS) statement containing the 9/16 details of collection of tax made during the quarter by the prescribed due date. In order to provide effective deterrence against delay in furnishing of TDS/TCS statement, the Finance Act, 2012 inserted section 234E in the Act to provide for levy of fee for late furnishing of TDS/TCS statement. The levy of fee under section 234E of the Act has proved to be an effective tool in improving the compliance in respect of timely submission of TDS/TCS statement by the deductor or collector.
Finance (No.2) Act, 2009 inserted section 200A in the Act which provides for processing of TDS statements for determining the amount payable or refundable to the deductor. However, as section 243E was inserted after the insertion of section 200A in the Act, the existing provisions of section 200A of the Act does not provide for determination of fee payable under section 234E of the Act at the time of processing of TDS statements. It is, therefore, proposed to amend the provisions of section 200A of the Act so as to enable computation of fee payable under section 234E of the Act at the time of processing of TDS statement under section 200A of the Act.
Currently, the provisions of sub-section (3) of 10/16 section 200 of the Act enable the deductor to furnish TDS correction statement and consequently, section 200A of the Act allows processing of the TDS correction statement. However, currently, there does not exist any provision for allowing a collector to file correction statement in respect of TCS statement which has been furnished. It is, therefore, proposed to amend the provisions of section 206C of the Act so as to allow the collector to furnish TCS correction statement.
Currently, there does not exist any provision in the Act to enable processing of the TCS statement filed by the collector as available for processing of TDS statement. As the mechanism of TCS statement is similar to TDS statement, it is proposed to insert a provision in the Act for processing of TCS statements on the line of existing provisions for processing of TDS statement contained in section 200A of the Act. The proposed provision shall also incorporate the mechanism for computation of fee payable under section 234E of the Act.”
13. A reading of the above makes it clear that since no mechanism was available for determination of late fee payable under Section 234E of 11/16 the Act at the time of processing TDS statements. Thus it was proposed to amend the provisions of Section 200A of the Act, so as to enable the computation of fee payable under Section 234E of the Act at the time of processing of TDS statement under Section 200A of he Act. Thus, the said sub-Section 200A(1)(c) of the Act was came to be inserted with effect from 01.06.2015.
14. Now the dispute is with regard to the assessment years 2012- 13, 2013-14, 2014-15 and the applicability of Section 200A(1)(c) of the Act for relevant assessment years. There is no dispute on the aspect that the TDS statement was filed under Section 200A of the Act and the respondent had also issued the intimation under Section 200A of the Act, which means the respondents have processed the returns under Section 200A of the Act. When the respondent had started to process the returns of the petitioner under Section 200A of the Act, obviously they have to follow the requirements under Section 200A of the Act. Section 200A(1)(c) of the Act was introduced with effect from 01.06.2015. A reading of the objects and reasons of the same makes it clear that since no mechanism was available, Section 200A(1)(c) of the Act was introduced for imposing late fee for the delay in filing statement of TDS. Therefore, from the introduction of the said Sub-Section it is clear that prior to the same, though Section 234E of the Act was introduced with effect from 01.07.2012, the Authorities were not empowered to impose the late fee while processing the statement of TDS under Section 200A of the Act.
15. The learned counsel for the respondent advanced his arguments on the aspect of the imposition of late fee by applying Section 200A(1)(c) of the Act retrospectively. This Court is not in agreement with the said submissions of the respondent. Since, there was no provision for imposing the late fee under Section 234E of the Act while filing and processing the TDS returns under Section 200A of the Act, clause (c) to Sub-Section (1) to Section 200A was introduced with effect from 01.07.2012. Therefore, the aforesaid submission made by the learned counsel for the respondent is rejected by this Court.
16. Further it was stated by the respondent that they have no power to waive the late fee and only the Commissioner of Income Tax is empowered to pass the revised order by proper application of provision of Section 264C of the Act.
17. In view of the above, it is made clear that the respondent had had imposed the late fee only under Section 234E of the Act for the assessment years 2012-2013, 2013-2014, 2015-2015. However, Section 200A(1)(c) of the Act was not introduced during the said assessment years. In the absence of any provisions under Section 200A of the Act, when they have processed the application for TDS under Section 200A, no late fee can be imposed under Section 234E. Hence, in such view of the matter, this Court feels that the impugned orders are liable to be set aside
18. Accordingly, the impugned orders dated 24.09.2021 are set aside and the Department is directed to consider the reply of the petitioner dated 16.04.2019 as a revision application, which was earlier 14/16 considered as a waiver application, and pass appropriate orders by taking into consideration of the order passed by this Court within a period of eight weeks from the date of receipt of copy of this order.
19. With the above directions, these writ petitions are disposed of. Consequently, the connected miscellaneous petitions are also closed.
