Case Law Details
Brief of the Case
Gujarat High Court held In the case of Tata Teleservices vs. Union of India that while amending section 201 by Finance Act, 2014, it has been specifically mentioned that the same shall be applicable w.e.f. 1/10/2014 and even considering the fact that proceedings for F.Y. 2007-08 and 2008-09 had become time barred as limitation under section 201(3)(i) already expired on 31/3/2011 and 31/3/2012, respectively, much prior to the amendment in section 201. Further considering the fact that wherever legislature wanted to give retrospective effect, it so specifically provided as such while amending section 201(3) (ii) as was amended by Finance Act, 2012, it was specifically mentioned that it will be retrospective effect from 1/4/2010. Hence section 201(3), as amended by Finance Act No.2 of 2014 shall not be applicable retrospectively and therefore, no order under section 201(i) can be passed for which limitation had already expired. Under the circumstances, the issued notices / summonses cannot be sustained.
Facts of the Case
The petitioner is engaged in the business of providing tele-communication services and selling service products across the country. According to the petitioner, it is governed by Tele-Communication Interconnection Usage Charges Regulation, 2003 issued by TRAI under the TRAI Act, 1997. The petitioner filed its TDS statement regularly for the F.Y. 2007-08 & 2008-09 for respective quarters. The petitioner was served with the summons dated 09/10/2014 requiring personal attendance in connection with proceedings under the Income Tax Act for A.Y. 2008-2009 and 2009-2010 seeking details regarding TDS for F.Y. 2007-2008 and 2008-2009. The petitioner made submissions dated 15/12/2014 and contended that the assessment proceedings sought to be initiated are time barred in view of Section 201(3) as it stood at the end of the respective FY 2007-2008 and 2008-2009.
Contention of Appellant
The ld counsel of the appellant submitted that the amendment of Section 201 by Finance Act, 2014 was expressly made prospective w.e.f. 01/10/2014 and therefore the impugned notices/summons for FY 2007-2008 and 2008-2009 where erroneously issued since time limit for passing an order under Section 201(3) had already lapsed for the relevant financial years. Therefore revenue had no power or authority under the amended Section 201 by Finance Act, 2014.
He further submitted that the amendment in Section 201(3) vide Finance Act, 2012 was expressly made retrospective w.e.f. 01/04/2010. However the subsequent amendment in Section 201(3)iof the Act by Finance Act, 2014 is not made expressly with retrospective effect but the plain language of the amended section says that it is w.e.f. 01/10/2014. In support of his above submissions, he has heavily relied upon the decision of the Hon’ble Supreme Court in the case of S. S. Gadgil Versus M/s. Lal & Co., reported in AIR 1965 SC 720 (Para 12 and 13) as well as in the case of J.P. Jani, lTO Versus Induprasad Devshanker Bhatt, reported in 1969(1) SCR 714.
He further submitted that the time period for passing an order had lapsed under Section 201 for the relevant financial year and therefore a vested right had accrued in favour of the petitioner which can only be taken away by an express retrospective amendment. Hence the substantive right is conferred by a statute which remains unaffected by subsequent changes in law unless modified expressly or by necessary implication. It is trite law that every gimme is prospective unless it is expressly or by necessary implication made to have retrospective operation. Limitation provision therefore can be procedural in the context of one set of facts but substantive in the context of different set of facts because right can accrue to both the parties. In such a situation test is to see whether the statute, if applied retrospectively to a particular type of case would impair existing rights and obligations. An accrued right to plead a time barred, which is acquired after the lapse of the statutory period, is nevertheless a right, even though it arises under an Act which is procedural and a right which is not to be taken away pleading retrospective operation unless a contrary intention is discernible from the statute. In support of his above submissions, he has heavily relied upon the decision of the Hon’ble Supreme Court in the case of Thirumalai Chemicals Ltd. Versus Union of India & other, reported in 2011(6) SCC 739 (Para 23, 26, 29 to 32) as well as in the case of Yew Bon Tew Versus Kenderaan Bas Mara, reported in (1983) 1 AC 553 (Privy Council).
Contention of the Revenue
The ld counsel of the revenue submitted that it is well settled proposition of law that ordinarily the petition against the Show Cause notice would not be entertained particularly when the petitioners are having adequate statutory remedy under the Income Tax Act itself. In support of his above submission he has heavily relied upon the decision of this Court in the case of INOX AIR PRODUCTS LTD Versus Union of India and others, rendered in Special Civil Application No. 16725 of 2013. It is submitted that in the aforesaid decision, relying upon the decision of the Hon’ble Supreme Court reported in the case of Bellary Steels & Alloys Ltd. Versus CCT, reported in (2009) 17 SCC 547 as well as in the case of Indo Asahi Glass Co. Ltd. Versus ITO, reported in (2002) 10 SCC 444, this court has not entertained the petitions which were filed against the Show Cause Notice.
He further submitted that the contention on behalf of the petitioners that the impugned notices under section 201(1) are barred by proviso to section 201(3) is untenable in law. It is submitted that section 201(3) as amended by Finance Act (No.2) of 2014 specifically provides for consequences of failure to deduct or pay the Income Tax and it further provides that no order shall be made under sub-section (1) deeming a person to be an assessee any default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of 7 years from the end of the Financial year in which payment is made or credit is given. It is submitted that, therefore, the Section itself provides for limitation period of 7 years from the end of the financial year in which payment is made or credit is given. It is submitted that in the instant case, period of 7 years has not elapsed from the end of financial year in which payment is made or credit is given. It is submitted that, therefore, the impugned notices / summonses cannot be said to be barred by period of limitation.
He further submitted that in the present case section 201(3) does not provide that the period is available only where limitation has not expired. It is submitted that as such the law that prevailed at the time of issuance of notice is required to be applied. It is submitted that section 201(3) provides for issuance of notice within 7 years. It is submitted that the language of section 201(3) as amended by Finance Act (No.2) 2014 being plain, unambiguous, literal, the same is required to be applied while giving liberal meaning to it.
Held by High Court
High Court held that under the circumstances, when pure question of law is involved, present petitions cannot be dismissed solely on the ground that the present petitions are against the Show Cause Notices. At this stage decision of the Hon’ble Supreme Court in the case of Harbanslal Sahnia and another Versus Indian Oil Corpn. and others, reported in (2003) 2 SCC 107 (para 7) as well as another decision of the Hon’ble Supreme Court in the case of Filterco and another Versus Commissioner of Sales Tax, Madhya Pradsesh and another, reported in (1986) 24 ELT 180 SC, are required to be referred to and considered. Considering the law laid down by the Hon’ble Supreme Court in the aforesaid decisions and as observed hereinabove, as the present petitions involve pure question of law, the objections raised by the revenue against entertainability and/or maintainability of the present petitions against the show cause notices are hereby overrules and the present petitions are considered on merits.
Whether, section 201(3) as amended by Finance Act (No.2) 2014 would be applicable retrospectively or not?
It is clear that earlier section 201(3) as amended by Finance Act, 2012 amended on 28/5/2012 was specifically made applicable retrospectively we.f. 1/14/2012, whereby limitation period was substituted from four years to six years for passing orders where TDS Statement had not been filed. However, section 201(3) as amended by Finance Act No. 2 of 2014, as mentioned in the memorandum of the Finance Bill No.2 of 2014 is stated to have effect from 1st October, 2014. Thus, wherever the Parliament / Legislature wanted to make provisions applicable retrospectively, it has been so provided.
In the case of S.S. Gadgil AIR 1965 SC 720, the Hon’ble Supreme Court has observed and held that in absence of an express provision or clear implication, legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorize the Income Tax Officer to commence proceedings which before the new Act came into force had upon the expiry of the period provided, become barred. A similar view has been taken by the Hon’ble Supreme Court in the case of J. P. Jani, Income Tax Officer, Circle IV, Ward-G, Ahmedabad and another, versus Induprasad Deveshanker Bhatt, reported in AIR 1969 S.C. 778 and while interpreting section 297(2)(d)(ii) of the Income Tax Act, after considering the earlier decision of the Hon’ble Supreme Court in the case of S. S. Gadgil versus Lal and Co., [1964-53 ITR 231 = AIR 1965 SC 171].
Considering the law laid down by the Hon’ble Supreme Court in the aforesaid decisions, to the facts of the case on hand and more particularly considering the fact that while amending section 201 by Finance Act, 2014, it has been specifically mentioned that the same shall be applicable w.e.f. 1/10/2014 and even considering the fact that proceedings for F.Y. 2007-08 and 2008-09 had become time barred and/or for the aforesaid financial years, limitation under section 201(3)(i) of the Act had already expired on 31/3/2011 and 31/3/2012, respectively, much prior to the amendment in section 201 as amended by Finance Act, 2014 and therefore, as such a right has been accrued in favour of the assessee and considering the fact that wherever legislature wanted to give retrospective effect so specifically provided while amending section 201(3) (ii) of the Act as was amended by Finance Act, 2012 with retrospective effect from 1/4/2010, it is to be held that section 201(3), as amended by Finance Act No.2 of 2014 shall not be applicable retrospectively and therefore, no order under section 201(i) of the Act can be passed for which limitation had already expired prior to amended section 201(3) as amended by Finance Act No.2 of 2014. Under the circumstances, the impugned notices / summonses cannot be sustained and the same deserve to be quashed and set aside and writ of prohibition, as prayed for, deserves to be granted.
Accordingly, appeal disposed of.
