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2015 (9) TMI 807 - RAJASTHAN HIGH COURT

2015 (9) TMI 807 - RAJASTHAN HIGH COURT - TMI - Validity of fee levied u/s 234E - late filing of the TDS returns - Fee for default in furnishing statements - Held that:- The constitutional validity of the statutory provision is not amenable to challenged on the ground that the performance insisted upon by the statutory provision is too onerous or that the statute does not leave sufficient time or does not allow reasonable cause to be considered for violation of the provision. In G.P. Singh's Pri .....

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the face of it. It is only when all efforts to do so fail should the Court declare a statute to be unconstitutional.

In the present case, the fee was levied under section 200 for late filing of the returns, prior to the amendments made by the Finance Act, 2015 with effect from 1.6.2015 in Sections 200A, 246A and 272A providing for computation and appeal. We do not find that even prior to these amendments the imposition of fee was illegal. We do not in exercise of the power under Artic .....

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ddharth Ranka assisted by Mr.Muzaffar Iqbal For The Respondent Mr.R.D.Rastogi, Addl.Solicitor General with Mr.Ashish Kumar, Mr.R.B.Mathur ORDER (Reportable) BY THE COURT (Per Hon'ble Sunil Ambwani, Chief Justice) 1. We have heard learned counsel for the petitioners and learned counsel for the Union of India as well as learned counsel for the Income Tax Department. 2. By this writ petition, the petitioners have prayed for the following reliefs:- 1. That Hon'ble Court may declare section 2 .....

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3 to quash the demand raised in respect of all the petitioners as stated in Annexure 1 to Annexure 7. 4. That any other relief deemed beneficial be also awarded; 3. The validity of Section 234E was challenged in the Bombay High Court. In Rashmikant Kundalia and ors. V/s Union of India & ors. ((2015) 229 Taxman 596 (Bom)) (Writ Petition No.771 of 2014) decided on 06.02.2015, the Bombay High Court has upheld the validity of Section 234E of the Income Tax Act, 1961, on the ground that the levy .....

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ed time in sub-section (3) of section 200. The fee prescribed is ₹ 200/- for every day during which the failure continues. Sub-section (2) further stipulates that the amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible as the case may be. 13. It is not in dispute that as per the existing provisions, a person responsible for deduction of tax (the deductor) is required to furnish periodical quarterly statements containing the details of d .....

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escribed time. The timely processing of returns is the bedrock of an efficient tax administration system. If the income tax returns, especially having refund claims, are not processed in a timely manner, then (i) a delay occurs in the granting of credit of TDS to the person on whose behalf tax is deducted (the deductee) and consequently leads to delay in issuing refunds to the deductee, or raising of infructuous demands against the deductee; (ii) the confidence of a general taxpayer on the tax a .....

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tional work burden upon the Department due to the fault of the deductor by not furnishing the information in time and which he was statutorily bound to furnish. It is in this light, and to compensate for the additional work burden forced upon the Department, that a fee was sought to be levied under section 234E of the Act. Looking at this from this perspective, we are clearly of the view that section 234E of the Act is not punitive in nature but a fee which is a fixed charge for the extra servic .....

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he fee as prescribed under section 234E of the Act. In other words, the late filing of the TDS return/statements is regularised upon payment of the fee as set out in section 234E. This is nothing but a privilege and a special service to the deductor allowing him to file the TDS return/statements beyond the time prescribed by the Act and/or the Rules. We therefore cannot agree with the argument of the Petitioners that the fee that is sought to be collected under section 234E of the Act is really .....

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has been inserted under section 246A against the order under sub-section (1) of Section 200A or sub-section (1) of Section 206CB, it was held by the Bombay High Court, in the facts of the case prior to the amendment, that simply because there was no remedy of filing appeal, the provisions of Section 234E cannot be said to be onerous. Now, since an appeal has been provided, this argument is no longer available for challenging the vires of Section 234E of the Income Tax Act. 5. Learned counsel for .....

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month. The fee thus assumes the character of penalty. He also submits that prior to the amendment by the Finance Act 2015 by which sub-section (c) was added to Section 200A(1), there was no provision for computation of the fee for late filing of the TDS returns under section 200A and thus, in the absence of any machinery provisions, the levy of fee under section 200, which imposes a duty on the person deducting tax, was not justified. 6. We have considered the arguments and do not find any good .....

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dies etc. are manifestations of the exercise of the taxing power. The primary purpose of a taxing statute is the collection of revenue. On the other hand, regulation extends to administrative acts which produces regulative effects on trade and commerce. The difficulty arises because taxation is also used as a measure of regulation. There is a working test to decide whether the law impugned is the result of the exercise of regulatory power or whether it is the product of the exercise of the taxin .....

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ce discipline or conduct under which the trade has to perform or if the payment is for regulation of conditions or incidents of trade or manufacture then the levy is regulatory. This is the way of reconciling the concept of compensatory tax with the scheme of Articles 301, 302 and 304... 7. The constitutional validity of the statutory provision is not amenable to challenged on the ground that the performance insisted upon by the statutory provision is too onerous or that the statute does not lea .....

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