2021 (9) TMI 712 - HC - Income Tax

TDS u/s 194-O - Writ petitioner e-commerce operator on being aggrieved by newly inserted provision of Section 194-O - relief sought of declaration that under the said provision petitioner is not required to deduct tax and deposit under the provisions of Section 194-O where sale of goods or provision of services does not take place and/or through the petitioner company platform and/or purchaser of the goods or recipients of the services does not make payment to the petitioner company or the sale of goods or provision of services and in case of reverse action and when the petitioner s client uses the software sold/licenses by it to them or procuring their requirement of goods and services and alternatively to declare the aforesaid provision as ultra vires and unconstitutional - HELD THAT - As respondents could not justify the inaction on the part of the respondent No.8/CBDT and the act of sitting over the aforesaid representations of the petitioner and not disposing of the same which is causing great difficulties to the petitioner in carrying on its business. Considering the submission of the parties, the respondent No.8 /CBDT is directed to consider and dispose of the aforesaid representations of the petitioners being Annexure P-10 and P-15 of the writ petition within a period of six weeks from the date of communication of this order by passing a reasoned and speaking order after dealing with the contentions raised by the petitioners in its aforesaid representations and after giving effective opportunity of hearing to the petitioner or its authorized representative and to communicate its decision to the petitioner within one week thereafter.

Summary

Issues:
1. Challenge to newly inserted provision of Section 194-O of the Income Tax Act, 1961.
2. Inaction by respondent No.8/CBDT in disposing of representations made by the petitioner.

Analysis:
1. The writ petition challenges the newly inserted provision of Section 194-O of the Income Tax Act, 1961, which requires e-commerce operators to deduct and deposit TDS on sale consideration received from e-commerce participants. The petitioner seeks a declaration that they are not obligated to deduct tax in cases where the sale does not occur through their platform or where payment is not made to them. The representations made by the petitioner highlight practical challenges faced in complying with this provision, such as the inability to deduct TDS when the sales consideration is not routed through the petitioner and the lack of a mechanism to enforce TDS deduction on behalf of buyers.

2. The petitioner is aggrieved by the inaction of respondent No.8/CBDT in not disposing of their representations seeking redressal of grievances related to Section 194-O. The court directs respondent No.8/CBDT to consider and dispose of the representations within six weeks, passing a reasoned order after addressing the contentions raised by the petitioner. The respondent is also instructed to communicate the decision within one week after disposal. In the interim, the petitioner is required to continue depositing TDS without being treated as in default. The petitioner is granted liberty to seek further relief if aggrieved by the decision on their representations.

The court sets deadlines for filing affidavits and schedules the matter for final hearing. Both parties are directed to prepare short written notes of argument for the hearing. The judgment emphasizes the importance of addressing the practical challenges faced by e-commerce operators in complying with tax deduction requirements and ensures a fair opportunity for the petitioner to present their case and seek appropriate relief.