Thursday, July 20, 2017

Dept. can levy fee under Sec. 234E even without regulatory provision Sec. 200A for computing fee: HC

Fact of the case :

a) Assessee filed the petition challenging the demand of fee in terms of section 234E raised by Assessing Officer (AO) under section 200A. He argued that section 200A didn’t authorize the AO to make adjustment of the fee to be levied under section 234E. 

b) The provision introduced with effect from 01.03.2016 wasn’t retrospective and therefore, for the period between 01.07.2012 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. 

The High Court held in favour of revenue as under :

1) Section 200A is a machinery provision providing mechanism for processing a statement of deduction of tax at source and for making adjustments, which are, arithmetical or prima facie in nature.

2) With effect from 1-6-2015, this provision specifically provides for computing the fee payable under section 234E. On the other hand, section 234E is a charging provision creating a charge for levying fee for certain defaults in filing the statements.

3) Under no circumstances a machinery provision can override or overrule a charging provision. Section 200A does not create any charge in any manner. It only provides a mechanism for processing a statement for tax deduction and the method in which the same would be done.

4) Even in absence of section 200A with introduction of section 234E, it was always open for the revenue to demand and collect the fee for late filing of the statements. Section 200A would merely regulate the manner in which the computation of such fee would be made and demand raised.

5) Thus, the view that without a regulatory provision being found for section 200A for computation of fee, the fee prescribed under section 234E couldn’t be levied was unacceptable. - [2017] 83 137 (Gujarat)

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