Court Invalidates Late Fees Demands Pre-June 2015

The Division Bench set aside demands for late fees under Section 234E for financial years 2012-13 & 2013-14, made before 01.06.2015, citing the amendment to Section 200A. The judgment emphasized that demands under Section 200A lacked legal authority for pre-June 2015 periods. The ruling directed re-computation of demands in alignment with Sections 234E and 200A, with prospective effect and without reopening fees already paid. The writ petitions were allowed, preventing penalization of the petitioner and requiring compliance with legal provisions and the judgment's directives.

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Issues:
Assailing order relating to financial years 2012-13 & 2013-14; Levy of late fee under Section 234E prior to 01.06.2015; Interpretation of Section 234E and Section 200A; Legal challenge to the validity of Section 234E; Applicability of Division Bench judgment on the case.

Analysis:
The petitioner challenged the order and communications issued by respondent No.2 regarding the financial years 2012-13 & 2013-14, specifically related to the levy of late fee under Section 234E. The petitioner, engaged in software development, contended that the late fee was demanded illegally for the period before 01.06.2015, citing the amendment to Section 200A. The petitioner's counsel argued that the mechanism to levy late fees was introduced post 01.06.2015, rendering the pre-amendment levy illegal. The revenue's counsel did not contest this legal position, acknowledging the discrepancy in the application of late fees.

The legal challenge was supported by a Division Bench judgment and a cognate Bench order, which highlighted the invalidity of demands made under Section 200A for fees under Section 234E for periods before 01.06.2015. The Division Bench's ruling emphasized that demands made under Section 200A lacked legal authority for pre-June 2015 periods. Consequently, the judgment set aside the demands and restored the proceedings to re-compute and raise demands in accordance with Section 234E and Section 200A, aligning with the observations made in the judgment.

The judgment's application was not to permit reopening of fees already paid under Section 234E based on demands under Section 200A for periods before 01.04.2015. It clarified the prospective effect of the judgment and left open the consideration of the constitutional validity of Section 234E for the Division Bench, ensuring that the issue was not conclusively determined by the Single Judge's order. The writ petitions were allowed, setting aside the demands to prevent penalizing the petitioner and directing respondent No.2 to re-compute and raise demands in compliance with the legal provisions and the judgment's directives.

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