Pre-1 June 2015 234E demands invalid where authority lacked express power under section 200A to compute or collect

The HC held that demands under section 234E for periods before 01.06.2015 could not be sustained where the authority lacked express power under section 200A to compute or collect that fee. Amounts covered by intimations under section 200A towards late fees for delayed TDS returns could not validly be imposed for the pre-amendment period. The writ was allowed and the penalty/demand for the pre-01.06.2015 period set aside.

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Issues Involved:
1. Constitutional validity of Section 234E of the Income Tax Act, 1961.
2. Retrospective application of clause (c) of Section 200A(1) of the Income Tax Act, 1961.
3. Legality of intimations issued for late fee under Section 234E for periods prior to 01.06.2015.
4. Applicability of CBDT Circular No.19 of 2015.

Issue-wise Detailed Analysis:

1. Constitutional Validity of Section 234E:
The challenge to the constitutional validity of Section 234E was addressed in W.A. No.600/2017. The appellant, M/s. Olari Little Flower Kuries Pvt. Ltd, contested the validity of Section 234E. The court relied on the Bombay High Court's judgment in Rashmikant Kundalia v. Union of India, which upheld the constitutionality of Section 234E, declaring it intra vires the Constitution of India. Consequently, the appeal was dismissed.

2. Retrospective Application of Clause (c) of Section 200A(1):
The primary issue in W.A. Nos.722, 752 & 753/2019 was whether clause (c) of Section 200A(1), inserted with effect from 01.06.2015, could be applied retrospectively. The court referenced the Karnataka High Court's judgment in Fatheraj, which held that the provision could not be applied retrospectively. The court noted that the Gujarat High Court in Rajesh Kourani took a contrary view, but preferred the reasoning in Fatheraj, which considered the CBDT Circular No.19 of 2015. The court concluded that clause (c) of Section 200A(1) is prospective and does not have retrospective operation, thus supporting the view that demands for periods prior to 01.06.2015 are not sustainable.

3. Legality of Intimations Issued for Late Fee Under Section 234E for Periods Prior to 01.06.2015:
In W.A. Nos.722, 752 & 753/2019, the court examined the legality of intimations issued under Section 154 of the Act for late fees under Section 234E for periods before 01.06.2015. The court found that the intimations (Exts.P1 to P6) were issued for Financial Years 2012-13 and 2013-14, before the effective date of clause (c) of Section 200A(1). The court held that the intimations were illegal and invalid, as the provision could not be applied retrospectively. This view was reinforced by the Karnataka High Court's judgment, which the court found convincing.

4. Applicability of CBDT Circular No.19 of 2015:
The court considered the CBDT Circular No.19 of 2015, which clarified that clause (c) of Section 200A(1) came into effect on 01.06.2015. The circular was a significant factor in the court's decision to reject the retrospective application of the provision. The court noted that the Gujarat High Court in Rajesh Kourani did not consider this circular, which led to a different conclusion. The court preferred the interpretation that aligned with the circular, supporting the prospective application of the provision.

Separate Judgments Delivered by Judges:
There were no separate judgments delivered by the judges in this case.

Conclusion:
The court dismissed the appeals by the Revenue in W.A. Nos.722, 752 & 753/2019, upholding the view that clause (c) of Section 200A(1) is prospective and does not apply to periods before 01.06.2015. The challenge to the constitutional validity of Section 234E in W.A. No.600/2017 was also dismissed, affirming its constitutionality as per the Bombay High Court's ruling. The writ petition in W.P.(C) No.23205/2017 was allowed, setting aside the intimations for periods prior to 01.06.2015, with liberty for the respondents to issue fresh notices for periods after 01.06.2015.

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