M/S.tamil Nadu State Transport Corporation(Villupuram) Ltd v. The Chief Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 07.12.2016 CORAM:THE HONOURABLE MR. JUSTICE RAJIV SHAKDHERW.P.No.42891 of 2016and W.M.P.Nos.36785 & 36786 of 2016 M/s.Tamil Nadu State Transport Corporation(Villupuram) Ltd.,No.3/137, Sala Medu, Valutha Reddy Post,Villupuram – 605 602. ... Petitioner Vs. 1.The Chief Commissioner of Income Tax-4, Aayakkar Bhavan – 121, Mahatma Gandhi Road, Chennai – 600 034. 2.The Deputy Commissioner of Income Tax, Villupuram Circle-I, No.1, Chairman Subbarayar Street, Villupuram – 605 602. 3.State Bank of India, Main Branch, rep by its Branch Manager, No.2, K.K.Road, Rahman Complex, Villupuram – 605 602. 4.State Bank of India – SME Branch, 1[st] Floor, Shri Suswani Towers, No.595 – 597, Nehuruji Road, Villupuram – 605 602. 1[st] Floor, Shri Suswani Towers, No.595 – 597, Nehuruji Road, Villupuram – 605 602. 5.Indian Bank, 793, Nehuruji Road, Villupuram – 605 602. 793, Nehuruji Road, Villupuram – 605 602. 6.Indian Overseas Bank, 793, Nehuruji Road, Villupuram – 605 602. 793, Nehuruji Road, Villupuram – 605 602. 7.Axis Bank, Ravindran Arcade, Trichy Road, Opp to New Bus Stand, Villupuram – 605 602.... Respondents Writ petition filed under Article 226 of the Constitution ofIndia, praying for the issuance of a writ of certiorari to callfor the records of the 1[st] respondent in C.No.124/CC-4/2016-17and to quash the impugned order dated 24.11.2016 for theassessment years 2008-09 to 2010-11 & 2013-14 relating to stayof disputed taxes. 1.Issue notice. Mr.J.Narayanasamy, accepts notice on behalfof the respondent nos.1 & 2. With the consent of the parties,the writ petition is taken up for final disposal. 2.In the writ petition, the petitioner, which is a TamilNadu State Government Transport Undertaking seeks a directionfor quashing of order dated 24.11.2016 passed by the respondentno.1 in respect of the assessment years 2008-09 to 2010-11 &2013-14. 3.Briefly, the challenge to the said order arises in thebackground of the following broad facts: 3.1 It is the case of the petitioner that it is in thebusiness of running and maintaining transport services in theState of Tamil Nadu and as a part of its social obligation andin furtherance of the policies of the State Government, itoffers subsidy qua travel costs incurred by the students both atSchool and College level. 3.2 According to the petitioner, the State Government hasissued a G.O.Ms.No.135 dated 20.05.2004, (G.O.), whereby, allstudents studying in Standard I to XII are provided with freepasses for travelling between their residence and school; andlikewise students enrolled in Colleges are provided withconcessional passes, which involves grant of subsidy to theextent of fifty percent (50%) of the face value of the tickets.Fifty percent (50%) of the subsidy, which is given to theCollege students, is to be reimbursed by the State Government. https://hcservices.ecourts.gov.in/hcservices/ 3.3 Insofar as the mofussil State Corporations areconcerned, the Government of Tamil Nadu, vide the very sameG.O., has apparently, directed State Transport Corporations tobear the burden of 20% of the face value of the tickets, quatickets issued to students. This direction has been also issuedin furtherance of public weal. The petitioner is one suchmofussil State Corporation, and therefore, was required to bearthe burden of 20% of the face value of the tickets issued tostudents. In consonance with the aforesaid scheme, thepetitioner has been declaring as its income, albeit, on actualreceipt basis only 80% of the value of the tickets. 3.4.The averments made in the writ petition show that thepetitioner and the Revenue are engaged in litigation on thisaspect. 3.3 Insofar as the mofussil State Corporations areconcerned, the Government of Tamil Nadu, vide the very sameG.O., has apparently, directed State Transport Corporations tobear the burden of 20% of the face value of the tickets, quatickets issued to students. This direction has been also issuedin furtherance of public weal. The petitioner is one suchmofussil State Corporation, and therefore, was required to bearthe burden of 20% of the face value of the tickets issued tostudents. In consonance with the aforesaid scheme, thepetitioner has been declaring as its income, albeit, on actualreceipt basis only 80% of the value of the tickets. 3.4.The averments made in the writ petition show that thepetitioner and the Revenue are engaged in litigation on thisaspect. 3.5. It is in this context that the Revenue for theassessment years in issue, i.e., 2008-09 to 2010-11 & 2013-14has added back certain amounts towards petitioner's income. Thedetails of the amounts disallowed and added back to thepetitioner's income, and the tax, along with the interest,claimed by the Revenue is set out hereafter: 3.6 The aforesaid table would show that insofar as theassessment years 2011-12 and 2012-13 are concerned, evenaccording to the petitioner, though additions have been made toincome, no tax is claimed by the Revenue. 3.7 It appears that it is in this background that thepetitioner filed appeals, which are pending adjudication beforethe Commissioner of Income Tax (Appeals). 3.8 However, pending appeals, the petitioner sought a stayon the demand. https://hcservices.ecourts.gov.in/hcservices/ 3.9. The record shows that, vide notice dated 26.09.2016,the petitioner was communicated that the Principal Commissionerof Income Tax, Pondicherry had granted stay on the demand raisedon the condition that 15% of the demanded amount i.e.,Rs.85,62,17,539/- is deposited by the petitioner. The relevantextract, as communicated to the petitioner, vide notice dated26.09.2016, is set out hereinafter: “... Please note that your stay petition for stayingthe above demand before the Hon'ble PrincipalCommissioner of Income Tax, Pondicherry has beendisposed of with the following comments:“Considering the facts of the case, theinvolvement of the government policy cost andfinancial status of the assessee Company, itshould be in the fitness of things if pendingdisposal of the first appeal, an amount of 15% ofthe demand for all the years involved becollected. Balance 85% may be stayed till disposalof the first appeal. A.O. may take urgent steps torecover 15% of the outstanding demand within amonth positively”.Hence, you are hereby requested to pay 15% ofabove demands immediately. Failure to do so will leadto coercive recovery steps.” 4. The petitioner being aggrieved, escalated the matterfurther and, accordingly, approached the Commissioner of IncomeTax for stay of the demand. The Revenue, vide communicationdated 24.11.2016, informed the petitioner that the Commissionerof Income Tax had rejected its petition for stay. In otherwords, the Commissioner of Income Tax had confirmed the terms ofstay of demand as set out by the Principal Commissioner ofIncome Tax, Pondicherry, in his order. 5. I have asked the learned counsel for the Revenue as towhether complete copies of the aforementioned orders weresupplied to the petitioner. 5.1 The learned counsel for the Revenue says that the recordwould show that only extracts were supplied, and that, full andcomplete version of the orders passed by the PrincipalCommissioner of Income Tax and Commissioner of Income Tax werenot supplied to the petitioner. 5.2 I must record that the learned counsel for thepetitioner has confirmed the said position. 5. I have asked the learned counsel for the Revenue as towhether complete copies of the aforementioned orders weresupplied to the petitioner. 5.1 The learned counsel for the Revenue says that the recordwould show that only extracts were supplied, and that, full andcomplete version of the orders passed by the PrincipalCommissioner of Income Tax and Commissioner of Income Tax werenot supplied to the petitioner. 5.2 I must record that the learned counsel for thepetitioner has confirmed the said position. 6. According to me, the practice followed by the revenue iscompletely unacceptable. In my opinion, the Revenue shouldsupply a copy of the entire order to the assessee, instead of, https://hcservices.ecourts.gov.in/hcservices/ communicating only the operative directions issued by theconcerned officer, as is done in this case. 6.1. Be that as it may, the orders as found on record, to mymind, do not disclose the reasons, at least not in entirety,which propelled the Revenue to stay the demand on the termsindicated therein. While, the order of the Commissioner ofIncome Tax appears to be completely silent, there is a referencein the Principal Commissioner's order to the fact that sinceGovernment policy is involved and given the financial status ofthe petitioner, the demand is stayed subject to deposit of 15%of the demanded amount by the petitioner. There is nodiscussion, whatsoever, with regard to whether or not thepetitioner had a prima facie case or the balance of conveniencewas in its favour. There is also no reference to harm, if any,which would be caused to the petitioner if, a complete stay ofthe demand, as sought, was not granted. 7. It is the case of the petitioner, as indicated above,that, since, the burden of 20% of the face value of the ticketis borne by it, and therefore, over years, it offered only 80%of the face value of the tickets as income, and accordingly, notax was payable, was an aspect, which had to be taken note of inthe impugned orders. In other words, the prima facie tenabilityof the additions had to be examined. 7.1 Furthermore, before me, the counsel for the petitionersubmits that the petitioner has very little liquid income ashuge amounts are required to be paid towards salary, providentfund and fuel, etc., to run its operations. These are factors,which the Revenue should have kept in mind while passing theimpugned order. 7.2. Moreover, given the fact that the petitioner is a StateGovernment Undertaking, which has sufficient assets in the formof immovable property was also an aspect which requiredconsideration, prior to imposing the impugned condition on thepetitioner. 7.3. What is even more disconcerting is the fact that theRevenue hastily proceeded to attach the bank accounts of thepetitioner. The communication dated 02.12.2016, issued to theState Bank of India by the Revenue, which is appended in page-123 of the typed set of document, exemplifies this fact. 8.Therefore, having regard to the aforesaid fact andcircumstances, the order dated 24.11.2016, is set aside. As aresult of which, four separate orders of even date, i.e.,23.05.2016 in respect of respective assessment years, which areappended at pages-111 to 114 of the typed set of documents, andthe order dated 26.09.2016, which is appended at page-118 of the https://hcservices.ecourts.gov.in/hcservices/ typed set of documents, will also fall by the wayside. 8.1. The Revenue will, once again, consider the applicationfor stay preferred by the petitioner. While considering theapplication, the Revenue will, inter alia, consider the factorsadverted to above. 8.2 Needless to say that the Revenue can also explore theoption of, instead, hearing the appeal finally. 9. Accordingly, with the aforesaid directions in place, thewrit petition is closed. https://hcservices.ecourts.gov.in/hcservices/ typed set of documents, will also fall by the wayside. 8.1. The Revenue will, once again, consider the applicationfor stay preferred by the petitioner. While considering theapplication, the Revenue will, inter alia, consider the factorsadverted to above. 8.2 Needless to say that the Revenue can also explore theoption of, instead, hearing the appeal finally. 9. Accordingly, with the aforesaid directions in place, thewrit petition is closed. 10.In these circumstances, quite logically, the order issuedon 02.12.2016, attaching the bank account of the petitioner willget lifted. There shall, however, be no order as to costs. 11. Consequently, the connected miscellaneous petitions arealso closed. -s/d-Assistant Registrar True CopySub-Assistant RegistrarvaTo1.The Chief Commissioner of Income Tax-4, Aayakkar Bhavan – 121, Mahatma Gandhi Road, Chennai – 600 034. 2.The Deputy Commissioner of Income Tax, Villupuram Circle-I, No.1, Chairman Subbarayar Street, Villupuram – 605 602. +2 ccs to M/s.J.Balachandran Advocate sr 72047/16 +1 cc to M/s.J.Narayanaswamy Advocate sr 72331/16 W.P.No.42891 of 2016and W.M.P.Nos.36785 & 36786 of 2016 cnr(co)aa08/12/2016