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In a recent judgment, the Bombay High Court has upheld the constitutional validity of section 234E of the Income Tax Act, 1961. It is notable that earlier in April, 2014 while entertaining the same writ petition, the Bombay High Court had granted an interim stay. Section 234E titled as “Fee for default in furnishing statements” inserted w.e.f. 01-07-2012 provides for a lete fee of Rs. 200/- per day for delay in furnishing quarterly TDS returns. However, the constitutional validity of the same has also been challenged in various High Courts (Madhya Pradesh, Odisha, Kerala) in which interim stays has been granted. Should this judgment be viewed as the fate of all the similar writs pending in various High Courts or there could be a contrary judgment? remained the hot discussion of day.
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Important Excerpts from the Judgment: “……..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 service which the Department has to provide due to the late filing of the TDS statements.” “………..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 nothing but a collection in the guise of a tax” “……. It must be noted that a right of appeal is not a matter of right but is a creature of the statute, and if the Legislature deems it fit not to provide a remedy of appeal, so be it. Even in such a scenario it is not as if the aggrieved party is left remediless. Such aggrieved person can always approach this Court in its extra ordinary equitable jurisdiction under Article 226 / 227 of the Constitution of India.” “ ……..The Court must therefore make every effort to uphold the constitutional validity of a statute, even if it requires giving the statutory provision a strained meaning, or a 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” “Therefore even looking at it from the perspective as set out in the aforesaid judgment, we are of the clear view that Section 234E of the Income Tax Act, 1961 does not violate any provision of the Constitution and is therefore intra vires, Constitution of India.” Download Full Judgment Click Here >>
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