Court rules Income Tax Department not liable to refund security transaction tax; petitioners advised to seek recourse from BSE directly. The court held that the Income Tax Department is not obligated to refund the security transaction tax amount to the petitioners as it was collected and ...
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Court rules Income Tax Department not liable to refund security transaction tax; petitioners advised to seek recourse from BSE directly.
The court held that the Income Tax Department is not obligated to refund the security transaction tax amount to the petitioners as it was collected and remitted by the Bombay Stock Exchange (BSE). The petitioners were advised to seek recourse against BSE directly for the shortfall amount. The court dismissed the writ petition, clarifying that the petitioners have alternative remedies available to recover the sum from BSE, and that the Income Tax Department is not liable to refund the tax amount to the petitioners.
Issues: Recovery of shortfall amount from the Department of Income Tax due to security transaction tax deducted by the Bombay Stock Exchange (BSE).
Analysis: The petitioners, through their Fund Manager, instructed the Broker to buy shares on the platform of BSE. The Enforcement Directorate (ED) intervened, directing BSE to annul the trade in shares of a company called KRBL Limited and refund the money back to the petitioners due to certain issues. The petitioners received the refund from BSE but noted a shortfall of approximately Rs. 38 lakhs, considered to be the security transaction tax collected and transferred to the Income Tax Department.
The petition was filed to seek recovery of the shortfall amount from the Income Tax Department as a claim of refund. However, it was revealed that the BSE deducted the security transaction tax and refunded the balance amount to the petitioners. The tax amount deducted by BSE was remitted to the Income Tax Department by BSE. The Income Tax Department contended that it is the BSE's responsibility to seek a refund, not the petitioners. The court agreed with this stance, stating that the petitioners have alternative remedies to recover the sum retained by BSE, such as taking legal action against BSE in a civil court. The court held that the dispute, being factual, cannot be resolved in writ jurisdiction, and the Income Tax Department is not obligated to refund any tax amount to the petitioners as they did not collect any tax from them.
Therefore, the writ petition was disposed of with the clarification that the petitioners have other avenues to recover the amount from BSE, and the BSE can approach the Income Tax Department for a refund if deemed necessary.
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