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TMI Blog2015 (2) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... oner Nos.2 and 3 under section 200A of the Act are null, void and bad-in-law being ultra vires the Constitution of India. 3. It is stated in the Petition that Petitioner No.1 is a practising Chartered Accountant who has received several notices under section 200A of the Act that were served by the Revenue on his various clients. According to the Petitioners, section 234E is ultra vires and violative of Article 14 of the Constitution of India and therefore deserves to be struck down by this Court. Consequently, even the notices issued by the Revenue ought to be set aside. 4. To challenge the constitutional validity of section 234E, the main thrust of the argument of the Petitioners was that what was sought to be levied under the said section was a "fee" which necessarily could be levied only for a service that was rendered, failing which the levy of such a fee was unconstitutional. It was argued that a "fee" is known in the commercial and legal world to be a recompense of some service or some special service performed, and it cannot be collected for any dis-service or default. The learned counsel for the Petitioners submitted that by using the word "fee", the Legislature has not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase for tax. At the same time, to the tax payer, it distributes the incidence of tax and provides for a simple and convenient mode of payment. 7. Keeping this object in mind, the learned Additional Solicitor General submitted that timely submission of TDS statements containing the details of persons on whose behalf tax is deducted, becomes very crucial because unless and until the Revenue receives the details of the tax deducted (through the TDS statements), timely processing of income tax returns of assessees seeking credit of TDS is not possible. In case the Department goes ahead and processes the income tax return of the assessee without giving credit for TDS due to non-filing of TDS return/statements by the deductor, then the grievance of the deductee would be multiplied in as mush as instead of issuing a refund to the assessee (in a given case), infructuous demands would to be raised. Hence non-filing of the TDS return/statements by the deductor in a timely manner has multitude effects eroding the credibility of an efficient tax administration system, was the submission of the learned Additional Solicitor General. 8. The learned Additional Solicitor General further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, prepare such statements for such period as may be prescribed and deliver or cause to be delivered to the prescribed income tax authority or the person authorised by such authoriy such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed. Inserted by Finance Act (No.2) Act, 2014 w.e.f. 1-10-2014 [Provided that the person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be specified by the authority.]" 10. On a perusal of section 200, it is clear that sub-section (3) thereof, and with which we are concerned, inter alia stipulates that any person responsible for deducting any sum by way of tax, on or after 1st April, 2005 in accordance with the foregoing provisions of Chapter XVII or, as the case may be, any person being an employer referred to in subsection (1A) of section 192 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of this section shall apply to a statement referred to in sub-section (3) of Section 200 or the proviso to sub-section (3) of Section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012." 12. On a perusal of sub-section (1) of section 234E, it is clear that a fee is sought to be levied inter alia on a person who fails to deliver or cause to be delivered the TDS return/statements within the prescribed time in sub-section (3) of section 200. The fee prescribed is Rs. 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 deduction of tax made during the quarter, by the prescribed due date. Undoubtedly, delay in furnishing of TDS return/statements has a cascading effect. Under the Income Tax Act, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling 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. 16. We are supported in our view by a judgement of a division bench of the Calcutta High Court in the case of Howrah Tax Payers' Association Vs. The Government of West Bengal and Anr. (2011) 5 CHN 430 : 2010 SCC OnLine Cal 2520 Before the Calcutta High Court, the constitutional validity of imposition of a "late fee" under section 32(2) of the West Bengal Value Added Tax Act, 2003 came up for consideration. After analysing the provisions of the Bengal Value Added Tax Act, the Calcutta High Court held as under:- "10. In case of levying tax there is no quid pro quo between the Tax payer and the State. But element of quid pro quo is a must in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e traditional concept of quid pro quo in a fee has undergone considerable transformation. So far as the regulatory fee is concerned, the service to be rendered is not a condition precedent and the same does not lose the character of a fee provided the fee so charged is not excessive. It was not necessary that service to be rendered by the collecting authority should be confined to the contributories alone. The levy does not cease to be a fee merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have a direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service. Quid pro quo in the strict sense was not always a sine qua non for a fee. All that is necessary is that there should be a reasonable relationship between the levy of fee and the services rendered. It was observed that it was not necessary to establish that those who pay the fee must receive direct or special benefit or advantage of the services rendered for which the fee was being paid. It was held that if one who is liable to pay, receives general benefit from the authority levying the fee, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forts to do so fail should the Court declare a statute to be unconstitutional. 20. It is equally well settled that a statute relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, freedom of religion etc. As regards economic and other regulatory legislation it is imperative that the Court exercises judicial restraint and grants greater latitude to the legislature whilst judging the constitutional validity of such a statute. This is for the simple reason that the Court does not consists of economic and administrative experts and has no expertise in these matters. 21. These well settled principles have been very succinctly set out in the judgment of the Supreme Court in the case of Government of Andhra Pradesh and Others versus P. Laxmi Devi (Smt)4, and more particularly, paragraphs 46, 67, 68, 78, 79 and 80 thereof, which read thus:- 4 (2008) 4 SCC 720 "46. In our opinion, there is one and only one ground for declaring an Act of the legislature (or a provision in the Act) to be invalid, and that is if it clearly violates some provision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench decision in R.K. Garg case [R.K. Garg v. Union of India, (1981) 4 SCC 675 : 1982 SCC (Tax) 30] it was observed (as quoted above) that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, freedom of religion, etc. Thus, the Constitution Bench decision in R.K. Garg case [(1981) 4 SCC 675 : 1982 SCC (Tax) 30] is an authority for the proposition which has been stated herein, namely, when a law of the legislature encroaches on the civil rights and civil liberties of the people mentioned in Part III of the Constitution (the fundamental rights), such as freedom of speech, freedom of movement, equality before law, liberty, freedom of religion, etc., the Court will not grant such latitude to the legislature as in the case of economic measures, but will carefully scrutinise whether the legislation on these subjects is violative of the rights and liberties of the citizens, and its approach must be to uphold those rights and liberties, for which it may sometimes even have to declare a statute to be unconstitutional. 79. Some scholars regarded it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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