2023 (5) TMI 406 - AT - Income Tax

Tribunal Overturns Late Filing Fees Pre-2015

Klug Avalon Mechatronics Private Limited, Amit Abhay Chordia Versus ITO, TDS-1, Pune

Klug Avalon Mechatronics Private Limited, Amit Abhay Chordia Versus ITO, TDS-1, Pune - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether levy of fee under section 234E for delay in furnishing TDS statement is sustainable where the statement was furnished before 31 May 2015 but the processing/authorising provision in section 200A(1)(c) came into force only on 1 June 2015. 2. Whether fees levied under section 234E for defaults occurring prior to the coming into force of the enabling provision (section 200A(1)(c)) are borne out by any statutory authority or are ultra vires. 3. Whether identical facts across multiple appeals justify a consolidated decision and identical relief. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of levy under section 234E where TDS statement was filed before 31 May 2015 Legal framework: Section 234E prescribes a fee for delay in furnishing TDS statements. Section 200(3) imposes obligation to furnish statements. Section 200A(1)(c) (as amended) provides for processing of statements and came into force on 1 June 2015. The statutory scheme requires both the penal provision (s.234E) and the enabling/processing mechanism (s.200A(1)(c)) to operate together for post-processing levies. Precedent treatment: The Tribunal followed the decision of the High Court (Karnataka) in an earlier authoritative pronouncement holding that levies under section 234E cannot be sustained in the absence of the enabling provision authorising processing (citing the principle that statutory penalties require authorising provision to be effective). Interpretation and reasoning: The Tribunal notes that although section 234E was introduced with effect from 1 July 2012, the provision authorising processing/acceptance of statements for the purpose of levying fees (section 200A(1)(c)) was brought into force only on 1 June 2015. The Tribunal analyses the temporal interplay: where a TDS statement was furnished before 31 May 2015, there was no statutory mechanism on the statute-book to process that statement and thereby trigger s.234E. Consequently, any fee claimed to have been levied for delay with respect to such statements lacks statutory authorization (sine auctoritate) and is unsustainable in law. The Tribunal reasons that the effective operation of s.234E in respect of a particular filing requires the enabling processing provision to be in force at the relevant time; absent that, the fee cannot be levied retroactively or without statutory backing. Ratio vs. Obiter: Ratio - The levy under section 234E is invalid where the TDS statement was furnished before the enabling provision (s.200A(1)(c)) came into force, because there was no statutory authority to process the statement and thereby attract s.234E. Obiter - Observations on tabulated dates and general applicability to all assessment years where statements were filed prior to 31 May 2015 are consequential to the principal ratio but not broader than necessary. Conclusions: Fee levied under section 234E for statements furnished before 31 May 2015 is deleted as being without statutory authority; the levy is unsustainable. Issue 2 - Validity of section 234E levy for defaults occurring before the enabling provision came into force (sine auctoritate) Legal framework: Principle of legality requires that a penalty or fee must have express statutory authorization. A charge under a penal provision cannot be sustained where the complementary enabling provision required for its operation is not in force at the relevant time. Precedent treatment: The Tribunal follows High Court authority holding that levies under s.234E are invalid in the absence of a contemporaneous enabling processing provision. Interpretation and reasoning: The Tribunal emphasises that though s.234E exists on statute from 1 July 2012, the charging of fees post-processing presupposes processing rules and an express statutory provision enabling such processing for triggering the fee. Because s.200A(1)(c) was not effective until 1 June 2015, any fee levied for filing or processing events occurring prior to that date lacks statutory foundation and is therefore ultra vires. The Tribunal explicitly characterises such levies as 'sine auctoritate' and 'bad in law.' Ratio vs. Obiter: Ratio - Penal levy without the contemporaneous enabling provision is ultra vires and must be deleted. Obiter - None significant beyond the necessary reasoning. Conclusions: Levies under s.234E imposed for defaults prior to the coming into force of s.200A(1)(c) are invalid and must be deleted. Issue 3 - Consolidation and application to multiple, factually identical appeals Legal framework: Where multiple appeals involve identical facts and identical legal questions, the Tribunal may hear and decide them together and apply a common conclusion. Precedent treatment: The Tribunal proceeded on the accepted procedural practice to dispose of a bunch of appeals together where issues are identical and no contrary facts are shown by the Revenue. Interpretation and reasoning: The Tribunal found that in all appeals the initial TDS statements for the relevant quarters were filed before the threshold date (31 May 2015). The Revenue did not place any contrary facts before the Tribunal to distinguish any appeal. Accordingly, the legal conclusion on invalidity of s.234E levies applies mutatis mutandis to all appeals in the bundle. Ratio vs. Obiter: Ratio - Identical relief follows across all appeals where facts and legal issues are the same; no separate analysis required. Obiter - Procedural admonition that different facts would require separate consideration. Conclusions: All appeals with identical facts succeed and the impugned s.234E levies are deleted in each appeal. Overall Disposition The Tribunal allowed the appeals, deleted the levies under section 234E for statements filed before 31 May 2015 (being without enabling authority as s.200A(1)(c) came into force only on 1 June 2015), and applied the same result to all factually identical appeals in the consolidated batch.