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TMI Blog2017 (7) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... charge the fee in terms of section 234E of the Act. By amendment, this adjustment was brought within the fold of section 200A of the Act. Upon introduction of the recasted clause (c), this situation also would be obviated. Even prior to 01.06.2015, it was always open for the Revenue to calculate fee in terms of section 234E of the Act Section 200A is not a source of substantive power. Substantive power to levy fee can be traced to section 234E of the Act. Further the fee under section 234E of the Act is not in lieu of the penalty of section 271H of the Act. Both are independent levies. Section 271H only provides that such penalty would not be levy if certain conditions are fulfilled. One of the conditions is that the tax with fee and interest is paid. The additional condition being that the statement is filed latest within one year from the due date. The decision of Supreme Court in case of B C Srinivasa Setty (1981 (2) TMI 1 - SUPREME Court) was rendered in entirely different background. Issue involved was of charging capital gain on transfer of a capital asset. In case on hand, the asset was in the nature of goodwill. The Supreme Court referring to various provisions conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in accordance with the provisions of section 234E of the Act. This provision was made only with effect from 01.06.2015. 5. In the petition, the petitioner has raised following threefold grievances: I. That section 234E of the Act is ultravires and unconstitutional. II. Rule 31A of the Rules insofar as it prescribes longer period for the Government to file the statements as compared to the other assessees is discriminatory and arbitrary and therefore unconstitutional. III. Prior to 01.06.2015, section 200A did not authorize the Assessing Officer to make adjustment of the fee to be levied under section 234E of the Act. This provision introduced with effect from 01.03.2016 is not retrospective and therefore, for the period between 01.07.2002 i.e. when section 234E was introduced in the Act and 01.06.2015 when proper mechanism was provided under section 200A of the Act for collection of fee, the department could not have charged such fee. 6. Appearing for the petitioner, learned advocate Shri Parth Contractor at the outset, stated that in view of the judgment of the Bombay High Court in case of Rashmikant Kundalia and another v. Union of India and Others reported i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 200A, counsel submitted that the charging provision is section 200E of the Act. Section 200A merely provides a mechanism. Such a provision cannot govern the charging provision. Even in absence of amendment in section 200A, the Assessing Officer was always authorized to levy fee in terms of section 200E of the Act. At best, the amendment in the said provision should be seen as clarificatory or providing a mechanism which till then was missing. Counsel referred to the decision of Rajasthan High Court in case of Dundlod Shikshan Sansthan v. Union of India reported in [2015] 63 taxmann.com 243 (Rajasthan), where, in the context of challenge to the vires to the section 234E of the Act, incidentally this issue also came up for consideration. 10. In order to appreciate the rival contentions, we may take a closer look at the statutory provisions applicable. Section 200 of the Act pertains to duty of the person deducting tax and imposes a duty on a person deducting tax in accordance with the foregoing provisions of chapterXVII to pay such sum to the credit of the Central Government within the time prescribed. Subsection (3) of section 200 requires such a person to prepar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (3) of section 206C of the Act. As per subsection (2) of section 271H in case of default to file the statements, the assessee may be liable to penalty of not less than rupees ten thousand but not more than rupees one lakh. Under subsection (3) of section 271H however, such penalty would be avoided if the assessee proves that he had paid the tax deducted or collected alongwith interest and he had filed the necessary statement within one year from the time prescribed for filing such statements. We may also record that clause (k) of subsection (2) of section 272A provides for penalty for failure to deliver the statement within the time specified in subsection (3) of section 200 or the proviso to subsection (3) of section 206C at a rate of rupees one hundred for every date during which the failure continues. However, with effect from 01.07.2012, a proviso was added limiting the effect of this provision upto 01.07.2012. In other words, after 01.07.2012, the penalty provision of section 271H would apply in such cases of defaults. 14. Section 200A(1) of the Act prior to 01.06.2015 provided as under: Section 200A(1) Processing of statements of tax deducted at sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing of statements of tax deducted at source. 200A . (1) Where a statement of tax deduction at source [or a correction statement] has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely:- ( a )the sums deductible under this Chapter shall be computed after making the following adjustments, namely:- ( i )any arithmetical error in the statement; or ( ii )an incorrect claim, apparent from any information in the statement; ( b )the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement; ( c ) the fee, if any, shall be computed in accordance with the provisions of section 234E; ( d )the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of the amount computed under clause (b) and clause (c) against any amount paid under section 200 or section 201 or section 234E and any amount paid otherwise by way of tax or interest or fee; ( e )an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15th July of the financial year 2 30 th September 31st October of the financial year 15th October of the financial year 3 31 st December 31st January of the financial year 15th January of the financial year 4 31st March 15th May of the financial year immediately following the financial year in which the deduction is made. 15th May of the financial year immediately following the financial year in which the deduction is made. This rule thus, while laying down the last date by which such statements should be filed, draws two categories; in case of deductor is an office of government and in case of a deductor is a person other than the office of the government. Consistently, the office of the government is granted 15 days extra time as compared to the other deductors. For example, the statement for the date of the quarter ending on 30th June, an ordinary deductor would have to file a statement latest by 15th July of the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/and ₹ 1 lakh. No penalty would be imposed if the tax is deposited with fee and interest and the statement is filed within one year of the due date. With addition to these two provisions prescribing fee and penalty respectively, clause (k) of subsection (2) of section 272A became redundant and by adding a proviso to the said section, this effect was therefore limited upto 01.07.2012. 17. In essence, section 234E thus prescribed for the first time charging of a fee for every day of default in filing of statement under subsection (3) of section 200 or any proviso to subsection (3) of section 206C. This provision was apparently added for making the compliance of deduction and collection of tax at source, depositing it with Government revenue and filing of the statements more stringent. 18. In this context, we may notice that section 200A which pertains to processing of statements of tax deducted at source provides for the procedure once a statement of deduction of tax at source is filed by the person responsible to do so and authorizes the Assessing Officer to make certain adjustments which are primafacie or arithmetical in nature. The officer would then send an intimati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision, as noted, it was always open for the Revenue to charge the fee in terms of section 234E of the Act. By amendment, this adjustment was brought within the fold of section 200A of the Act. This would have one direct effect. An order passed under section 200A of the Act is rectifiable under section 154 of the Act and is also appealable under section 246A. In absence of the power of authority to make such adjustment under section 200A of the Act, any calculation of the fee would not partake the character of the intimation under said provision and it could be argued that such an order would not be open to any rectification or appeal. Upon introduction of the recasted clause (c), this situation also would be obviated. Even prior to 01.06.2015, it was always open for the Revenue to calculate fee in terms of section 234E of the Act. The Karnataka High Court in case of Fatheraj Singhvi (supra) held that section 200A was not merely a regulatory provision, but was conferring substantive power on the authority. The Court was also of the opinion that section 234E of the Act was in the nature of privilege to the defaulter if he fails to pay fees then he would be rid of rigor of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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