Case Law Details
Ahmed Memorial Education Society Vs CIT (Telangana High Court)
The Telangana High Court, in the case of Ahmed Memorial Education Society Vs CIT, pronounced that administrative circulars do not bind the Commissioner of Income Tax (CIT) in tax disputes. The court’s decision came in response to an order directing the petitioner to pay 20% of disputed demands. This article delves into the court’s ruling and its implications on the petitioner.
Background of the Case: The petitioner sought relief against an order demanding payment pursuant to an assessment order, relying on a circular dated 31.07.2017. However, the Telangana High Court referred to the Supreme Court’s decision in the LG Electronics case, clarifying that administrative circulars do not act as constraints on quasi-judicial authorities like the Commissioner.
Challenging the Impugned Order: The petitioner challenged the order dated 30.10.2023, arguing that the authority mechanically applied the circular, disregarding the Supreme Court’s position. The court found the impugned order unjustified, directing a fresh consideration of the interim application, emphasizing the authority’s discretion.
Discretionary Authority and Circulars: The Telangana High Court highlighted that the authority should exercise discretion judiciously based on individual case facts, rather than relying mechanically on administrative circulars. The court found the impugned order legally untenable in the context of the LG Electronics case.
Interim Relief for Educational Institution: Acknowledging the urgency due to impending examination fee payments, the court granted interim relief. The respondents were directed to permit the petitioner to operate the bank account for the purpose of depositing examination fees collected from students. This interim measure aimed to safeguard students’ educational interests.
Fresh Consideration and Personal Hearing: The court ordered the matter to be remitted back to the first respondent for a fresh consideration of the interim application. The authority was directed to provide a personal hearing to the petitioner, emphasizing a fair and thorough examination of the case.
Timeline for Decision: Given the urgency of the matter, the authority was instructed to decide on the interim application before 31.01.2024. Additionally, the petitioner was directed to appear for a personal hearing on 11.01.2023 without the need for further notice issuance.
Conclusion: The Telangana High Court’s ruling reinforces the autonomy of quasi-judicial authorities in tax matters, emphasizing the need for individualized decisions rather than strict adherence to administrative circulars. The court’s interim relief for the educational institution demonstrates a balance between tax compliance and safeguarding the interests of students. The case serves as a reminder of the nuanced approach required in tax disputes, considering the specific circumstances of each case.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Heard Mr. Naga Deepak, representing Mr. Katika Ravinder Reddy, learned counsel appearing for the petitioner, Mr. Radha Krishna and Mr. A. Rama Krishna, learned Senior Counsel for respondent Nos.1 to 5 and Mr. B.Mukharjee, learned counsel appearing on behalf of Mr. Gadi Praveen Kumar, learned Deputy Solicitor General of India, for respondent No.6.
2. The present is a writ petition which has been filed questioning the order dated 30.10.2023 passed by the respondent No.1, whereby the application filed by the petitioner seeking for a stay of collection of demands raised pursuant to the assessment order which has been decided in terms of the Circular dated 31.07.2017 and the petitioner has been directed to pay 20% of the disputed demand.
3. The present writ petition has been filed primarily relying upon the decision of the Hon’ble Supreme Court in the case of Principle Commissioner of Income Tax v. LG Electronics India Private Limited 1 (2018) 18 SCC 447. In the said case, the learned Additional Solicitor General of India on behalf of the Income Tax Department itself has made a statement before the Hon’ble Supreme Court that the administrative circular will not operate as a fetter on the Commissioner since it is a quasi-judicial authority. It was clarified by the Hon’ble Supreme Court that in all cases like the present, it will be open to the authorities, on the facts of individual cases, to grant deposit orders of a lesser amount than 20%, pending the appeal.
4. In the teeth of the said order, the impugned order dated 30.10.2023 under challenge in this writ petition does not seem to be appropriate, legal or justified. The authority concerned had the discretion to pass appropriate order in the given factual circumstances of the appeal which was pending before the authorities concerned. The authority concerned could not have in a mechanical manner relied upon the circular dated 31.07.2017 while passing the said order. We are of the considered opinion therefore, the said impugned order is not sustainable and the same deserves to be and accordingly set aside/quashed and the matter stands remitted back to the 1st respondent for a fresh consideration of the interim application that has been filed by the petitioner. It is expected by the authority concerned that an appropriate decision to be taken at the earliest. Before taking a decision, the authority concerned may also grant an opportunity of personal hearing to the petitioner.
5. Learned counsel for the petitioner at this juncture submits that the petitioner’s establishment is now in a fixed for the reason that they have collected the examination fees from all the students and the examination fees without late fees have to be deposited on or before 17.01.2024.
6. Considering the fact that the educational career of the students are at stake, and if the bank account of the petitioner stands frozen, the students at large may not be able to participate in the examination, hence, we are of the considered opinion that as an interim measure, the respondents should be directed to ensure that the petitioner would be permitted to operate the bank account to the extent of payment of the examination fees required in respect of the students from whom the examination fees have already been collected by the petitioner. It is ordered accordingly. So far as the interim application is concerned, the authority is expected to take a decision on its own merits at the earliest before 31.01.2024 itself.
7. Considering the fact that considerable time has already lapsed, the let the petitioner appear before the concerned authority for personal hearing on the 11.01.2023. There shall be no further requirement of any issuance of notice for personal hearing of the petitioner. The assessing authority shall after due hearing being provided to the petitioner pass appropriate orders.
8. Accordingly, this Writ Petition stands disposed of.
9. As a sequel, miscellaneous applications pending if any in this Writ Petition, shall stand closed. No order as to costs.
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