M/S Dabur India Limited v. Commissioner Of Income Tax (Tds) And Another

Signature Not Verified $~26, 27, 30 to 33, 35 & 40*IN THE HIGH COURT OF DELHI AT NEW DELHI 26 +W.P.(C) 15850/2022 & C.M.Nos.49302-49303/2022 M/S DABUR INDIA LIMITED..... Petitioner Through:Mr.M.P.Rastogi with Mr.ManuK.Giri and Mr.K.N.Ahuja, Advocates. versus COMMISSIONER OF INCOME TAX (TDS) AND ANOTHER ..... RespondentsThrough:Mr.Puneet Rai, Sr.Standing Counselfor the Revenue with Ms.AdeebaMujahid, Advocate. 27 +W.P.(C) 15851/2022 & C.M.Nos.49305-49306/2022 M/S DABUR INDIA LIMITED..... Petitioner Through:Mr.M.P.Rastogi with Mr.ManuK.Giri and Mr.K.N.Ahuja, Advocates. versus COMMISSIONER OF INCOME TAX (TDS) AND ANOTHER ..... Respondents Through:Mr.Puneet Rai, Sr.Standing Counselfor the Revenue with Ms.AdeebaMujahid, Advocate. 30 +W.P.(C) 15878/2022 & C.M.Nos.49436-49437/2022M/S DABUR INDIA LIMITED..... Petitioner Through:Mr.M.P.Rastogi with Mr.ManuK.Giri and Mr.K.N.Ahuja, Advocates. W.P.(C) No.15850/2022 & connected matters Signature Not Verified versus COMMISSIONER OF INCOME TAX (TDS) AND ANOTHER ..... RespondentsThrough:Mr.Puneet Rai, Sr.Standing Counselfor the Revenue with Ms.AdeebaMujahid, Advocate. 31+W.P.(C) 15879/2022 & C.M.Nos.49438-49439/2022M/S DABUR INDIA LIMITED ..... Petitioner Through:Mr.M.P.Rastogi with Mr.ManuK.Giri and Mr.K.N.Ahuja, Advocates.versus COMMISSIONER OF INCOME TAX (TDS) AND ANOTHER ..... RespondentsThrough:Mr.Puneet Rai, Sr.Standing Counselfor the Revenue with Ms.AdeebaMujahid, Advocate. 32 +W.P.(C) 15880/2022 & C.M.Nos.49440-49441/2022M/S DABUR INDIA LIMITED ..... Petitioner Through:Mr.M.P.Rastogi with Mr.ManuK.Giri and Mr.K.N.Ahuja, Advocates. versus COMMISSIONER OF INCOME TAX (TDS) AND ANOTHER ..... Respondents Through:Mr.Puneet Rai, Sr.Standing Counselfor the Revenue with Ms.AdeebaMujahid, Advocate. Signature Not Verified 33 +W.P.(C) 15881/2022 & C.M.Nos.49442-49443/2022 M/S DABUR INDIA LIMITED..... Petitioner Through:Mr.M.P.Rastogi with Mr.ManuK.Giri and Mr.K.N.Ahuja, Advocates. versus COMMISSIONER OF INCOME TAX (TDS) AND ANOTHER ..... RespondentsThrough:Mr.Puneet Rai, Sr.Standing Counselfor the Revenue with Ms.AdeebaMujahid, Advocate. 35 +W.P.(C) 15892/2022 & C.M.Nos.49470-49471/2022 M/S DABUR INDIA LIMITED..... Petitioner Through:Mr.M.P.Rastogi with Mr.ManuK.Giri and Mr.K.N.Ahuja, Advocates. versus COMMISSIONER OF INCOME TAX (TDS) AND ANOTHER ..... RespondentsThrough:Mr.Puneet Rai, Sr.Standing Counselfor the Revenue with Ms.AdeebaMujahid, Advocate. 40+W.P.(C) 15912/2022 & C.M.Nos.49534-49535/2022 M/S DABUR INDIA LIMITED ..... Petitioner Through:Mr.M.P.Rastogi with Mr.ManuK.Giri and Mr.K.N.Ahuja, Advocates. W.P.(C) No.15850/2022 & connected matters versus COMMISSIONER OF INCOME TAX (TDS) AND ANOTHER ..... RespondentsThrough:Mr.Puneet Rai, Sr.Standing Counselfor the Revenue with Ms.AdeebaMujahid, Advocate. Date of Decision: 18[th]November, 2022 CORAM:HON’BLE MR. JUSTICE MANMOHANHON’BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J: 1.Present writ petitions have been filed challenging the order dated26[th]October, 2022 dismissing the Petitioner’s application for stay ofdemand and directing the Petitioner to pay 20% of the total outstandingdemand by 10[th]November, 2022. Petitioner also seeks stay of the demandsraised by virtue of the orders dated 4[th]August, 2021 and 8[th]September,2020 passed by Respondent No. 2 under Section 201/201(1A) of theIncome Tax Act, 1961 [‘the Act’] for Assessment Years 2013-14 to2020-21 till the disposal of the appeals filed before the Commissioner ofIncome Tax (Appeals). 2.Learned counsel for the Petitioner states that the Respondent No. 2passed orders dated 4[th]August, 2021 and 08[th]September, 2020 underSection 201/201(1A) of the Act holding that the Petitioner is an “assesseein default” on account of non-deduction of TDS under Section 194H of the 2.Learned counsel for the Petitioner states that the Respondent No. 2passed orders dated 4[th]August, 2021 and 08[th]September, 2020 underSection 201/201(1A) of the Act holding that the Petitioner is an “assesseein default” on account of non-deduction of TDS under Section 194H of the Act with respect to cost of free samples/goods given by the Petitioner undersales promotion scheme to the stockists thereby treating the cost of items offree samples given under sales promotion scheme as brokerage/commissionunder Section 194H of the Act. He states that a demand of Rs.17,65,67,319/- is outstanding in the case of the Petitioner for the AY 2013-14 to 2020-21. 3.Learned counsel for the petitioner states that the Petitioner filedappeals against the orders passed under Section 201/201(1A) of the Act andalso filed a consolidated application dated 9[th]September, 2022 for seekinga stay on the demand till the disposal of the appeals for all the AYs statingthat the provisions of Section 194H of the Act are not applicable on the freesamples given under the sales promotion scheme as the same is a tradeincentive and not a commission/brokerage as held by this High Court in thecase of CIT vs. Jai Drinks Pvt. Ltd. in 336 ITR 383 (Del). He points outthattheadditionalitemsallowedwiththepurchasesarenotcommission/brokerage as contemplated under Section 194H of the Actbecause the purchaser has not rendered any service to the Petitioner. 4.Learned counsel for the petitioner states that the application for staywas dismissed vide order dated 14[th]September, 2022 holding that thePetitioner has not paid 20% of the disputed demand and has failed toproduce any cogent reasons or financial constraints faced by it in paymentof 20% of the outstanding demand. He states that the Petitioner filedanother application dated 6[th]October, 2022 before the Respondent No. 2seeking stay of the demand till the disposal of the appeal. He howeverstates that the Petitioner’s application for stay was dismissed vide theimpugned order dated 26[th]October, 2022 in an arbitrary and non-speaking manner without dealing with the contentions raised by the Petitioner in itsapplication. He lastly states that the Petitioner’s appeals for the financialyears 2012-13 and 2013-14 have already been heard and judgment(s)reserved. 5.Issue notice. Mr.Puneet Rai, learned senior counsel accepts notice onbehalf of the Respondents-Revenue. He states that the direction to deposit20% of the demand is in accordance with the Office Memorandums dated29[th]February, 2016 and 31[st]July, 2017. 6.Having heard learned counsel for the parties and having perused thetwo Office Memorandums, in question, this Court is of the view that therequirement of payment of twenty percent of disputed tax demand is not apre-requisite for putting in abeyance recovery of demand pending firstappeal in all cases. The said pre-condition of deposit of twenty percent ofthe demand can be relaxed in appropriate cases. Even the OfficeMemorandum dated 29[th]February, 2016 gives instances like where additionon the same issue has been deleted by the appellate authorities in earlieryears or where the decision of the Supreme Court or jurisdictional HighCourt is in favour of the assessee. 7.In fact the Supreme Court in the case of PCIT vs. M/s LG ElectronicsIndia Pvt. Ltd. (2018) 18 SCC 447 has held that tax authorities are eligibleto grant stay on deposit of amounts lesser than twenty percent of thedisputed demand in the facts and circumstances of a case. The relevantportion of the said judgment is reproduced hereinbelow:- ‘HavingheardShriVikramjitBanerjee,learnedASGappearing on behalf of the appellant and giving credence tothe fact that he has argued before us that the administrativeCircular will not operate as a fetter on the Commissioner Signature Not Verified since it is a quasi-judicial authority, we only need to clarifythat in all cases like the present, it will be open to theauthorities, on the facts of individual case, to grant depositorders of a lesser amount that 20%, pending appeal.’ ‘HavingheardShriVikramjitBanerjee,learnedASGappearing on behalf of the appellant and giving credence tothe fact that he has argued before us that the administrativeCircular will not operate as a fetter on the Commissioner Signature Not Verified since it is a quasi-judicial authority, we only need to clarifythat in all cases like the present, it will be open to theauthorities, on the facts of individual case, to grant depositorders of a lesser amount that 20%, pending appeal.’ 8.In the present case, the impugned order is non-reasoned. The threebasic principles i.e. the prima facie case, balance of convenience andirreparable injury have not been considered while deciding the stayapplication. 9.Consequently, the impugned order is set aside and the matter isremanded back to the Commissioner of Income Tax for fresh decision onthe application for stay. However, before deciding the stay application, theCommissioner of Income Tax shall grant a personal hearing to theauthorised representative of the Petitioner. For this purpose, list the matterbefore the Commissioner of Income Tax on 05[th]December, 2022. 10.It is clarified that till the stay application filed by the petitioner is notdecided, no coercive action shall be taken by the Respondents against thePetitioner in pursuance to the demand arising out of the impugned order.With the aforesaid directions, the present writ petition along with pendingapplications stand disposed of. MANMOHAN, J MANMEET PRITAM SINGH ARORA, J NOVEMBER 18, 2022 KA