TMI Blog2015 (9) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the constitutionality of a statute, the Court can construe or interpret its general words narrowly or widely. The Court must make every effort to uphold the constitutional validity of a statute, even if that requires giving the statutory provision a strained meaning, or narrower or wider meaning, than what appears on 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extended to other deductors also; 3. That necessary direction may kindly be issued to the respondent No.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 of fee of ₹ 200/- per day on the late filing of the TDS returns, which is a duty cast on the person deducting TDS under section 200 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 administration is eroded; (iii) the late payment of refund affects the Government financially as the Government has to pay interest for delay in granting the refunds; and (iv) the delay in receipt of refunds results into a cash flow crunch, especially for business entities. 14. We find that the Legislature took note of the fact that a substantial number of deductors were not fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the argument of the Petitioners that the fee that is sought to be collected under section 234E of the Act is really nothing but a collection in the guise of a tax. Reliance was also placed on the judgment of the Calcutta High Court in Howrah Tax Payers' Association V/s The Government of West Bengal and anr. ((2011) 5 CHN 430= 2010 SCC OnLine Cal 2520), in which it was held that there exists quid pro quo in imposing late fee. 4. On the question of filing of appeal, for which there was no provision prior to the amendment made by the Finance Act 2015 with effect from 1-6-2015, by which a provision of appeal has been inserted under section 246A against the order under sub-section (1) of Section 200A or sub-section (1) of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion of India ors. (supra). The unamended Section 200 referred to the levy on the late filing of returns as penalty. It was thereafter termed as fee, which is a compensatory in nature. In Jindal Stainless Ltd. V/s State of Haryana ((2006) 152 Taxman 561 (SC), the Constitution Bench of the Supreme Court in paragraph 36 held as follows:- 36. In the generic sense, tax, toll, subsidies 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 dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strue or interpret its general words narrowly or widely. The Court must make every effort to uphold the constitutional validity of a statute, even if that requires giving the statutory provision a strained meaning, or narrower or wider meaning, than what appears on the face of it. It is only when all efforts to do so fail should the Court declare a statute to be unconstitutional. 8. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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